Wednesday, July 26, 2017

The Trump Economy -- It Simply Won't Quit -- A Snarky Post -- Nothing To Do With The Bakken -- July 26, 2017

Updates

Later, 8:41 p.m. Central Time: more on the Petronas story, sent in by a reader -- http://www.rigzone.com/news/article.asp?hpf=1&a_id=151161&utm_source=DailyNewsletter&utm_medium=email&utm_term=2017-07-27&utm_content=&utm_campaign=feature_1.

Later, 7:00 p.m. Central Time: more ...
Later, 4:59 p.m. Central Time: see first comment regarding Canadian natural gas --
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  • https://s21.postimg.org/885bzgbo7/Captura_de_pantalla_1290.png
Original Post

Facebook: all those cupcakes, fruitcakes, and snowflakes are using Facebook more than ever before -- to vent, to organize, to raise money -- how do I know -- Reuters just told me: Facebook profit, revenue smash estimates as mobile ad sales soar.

I do believe it was about a year ago that folks were wringing their collective hands, that until Facebook figured out mobile ads, it wasn't going anywhere. LOL.

Facebook's shares have climbed nearly 44 percent this year with the help of all those cupcakes, fruitcakes, and snowflakes. LOL. Facebook just keeps growing and growing; the number of users were up 17% year-over-year.

Net income rose to $1.32/share, up from 78 cents a  year earlier. Total revenue rose almost 45%.

Wow.

And so it goes.

Flaring. What will Canada's prime minister do with all his natural gas? Flare it? LOL. It appears he has two choices: a) flare it; or, b) ship it on US pipelines to America's natural gas processing plants; to the east coast for export; to the Gulf Coast for export. What's happening? BBC just announced that Petronas will cancel it's humongous Canadian Pacific Northwest LNG project -- citing yada, yada, yada.

The big point to be made here is this: this is exactly what would have happened under an Obama third term / Hillary presidency. Sure, exports might be legal, but environmentalists would have found every which way to delay projects with a willing president supporting their efforts (especially if it involved political donations and funding of "the Foundation"). Think Solyndra and 36 other solar failures.

Earlier today I had a reader suggest that, to paraphrase, all this Trump economy stuff is simply due to monetary policy and has nothing to do with the personality in the White House. And so it goes.

Back to the Petronas story. Shipping Canadian LNG through the US might lower the value of our own LNG, but I doubt it. Posted recently: there may not be enough US natural gas to feed all the exports and petrochemical plants being built.

The Trump rally: I do believe the Dow 30 hit an all-time record, closing well above 21,700.  On November 4, 2016, the Dow closed at 17,888. On November 10, 2016, the Dow closed at 18,807 and hasn't looked back. Some would say it's all due to monetary policy. See Facebook story above.  

CNBC suggests the Trump rally is all about monetary policy: "Dow closes at record high after Fed leaves rates unchanged" but does suggest earnings may have played a role, "Boeing jumps." The funny thing is that no one expected the Fed to do anything different(ly). It's hard for me to accept that the Dow 30 surged (again) today simply because Yellen is a) confused; b) a dove; c) wants to keep her job.

By the way, speaking of Janet Yellen, I learned today that the Fed chairperson, once nominated and confirmed, cannot be "fired." That would make her about the only government employee that can't be fired. She's more bullet-proof than James Comey. I guess the president can't be fired; he can be impeached and found guilty but that's not exactly being fired.

Jobs: Amazon's fulfillment centers look like the 21st century version of rural Wal-Marts -- overing "jobs to sleepy towns."

WTI: closed up another 2% (rounding to nearest whole number). Still below $50.

8 comments:

  1. Bruce Oksol said: "It appears he has two choices: a) flare it; or, b) ship it on US pipelines to America's natural gas processing plants...."

    The economics of that should be pretty interesting. Here's a screen shot from Encana's 2Q2017 quarterly earnings statement, and as one can see natural gas sells at a substantial discount in Canada to Henry Hub.

    https://s11.postimg.org/yp6evn1yr/Captura_de_pantalla_1279.png

    https://s21.postimg.org/885bzgbo7/Captura_de_pantalla_1290.png

    ReplyDelete
    Replies
    1. Thank you. That is quite significant. On another note, translate all of this into the negative effect it will have on the Canadian economy. Wow.

      I've brought your links up to the main post for easier access.

      Delete
  2. Yves Smith has an interesting post today at Naked Capitalism on the geopolitics and economics of natural gas.

    --- Are the Latest Russia Sanctions Really About Forcing US LNG on Europe? ---
    http://www.nakedcapitalism.com/2017/07/latest-russia-sanctions-really-forcing-us-lng-europe.html

    I have no idea what to make of all this. Smith, who has been quite a history of anti-fracking fanatacism, ommitted two key pieces of information:

    1) The oil industry, or at least some sectors of it, came out in opposition to the sanctions:

    --- House GOP Leader Says Energy Tweak Near in Sanctions Bill ---
    http://www.rigzone.com/news/article.asp?a_id=151082

    "A growing number of businesses -- including General Electric Co. and Honeywell International Inc. -- are expressing concern about the impact of the Russia sanctions language in the Senate legislation, McCarthy said. Oil companies, including Royal Dutch Shell Plc, also have raised concern.

    A section of the legislation would prevent U.S. companies from doing business anywhere in the world with Russian interests, causing consternation in the capital-intensive energy industry and among other companies that rely on foreign partnerships."

    ReplyDelete
    Replies
    1. Thank you. I'm glad I'm not the only one perplexed about all this. It's amazing where the blog has led me ... or should I say ... where readers have led me? LOL.

      Delete
  3. Well I hit the publish button by mistake.

    Anyway, GE is buying BakerHughes, so that's why they are protesting the sanctions:

    --- General Electric Is Making a Big Investment in Oil and Gas ---
    http://fortune.com/2017/07/03/ge-baker-hughes-merger/

    2) Trump was opposed to parts the senate sanctions bill originally, but it looks like he may have capitulated after it became obvious there was nothing he could do to stop it:

    --- Trump faces Russia dilemma as Senate overwhelmingly passes new sanctions ---
    http://abcnews.go.com/Politics/trump-faces-russia-dilemma-senate-overwhelmingly-passes-sanctions/story?id=48063956

    "The Senate overwhelmingly passed a bill to slap new sanctions on Russia and prevent the White House from making any changes without Congressional review today despite the reservations expressed by the Trump administration.

    The enormous support from the Senate sets up a showdown between Congress and President Trump. The president expressed a desire to work with Russia throughout his campaign and tasked his secretary of state with improving relations between the two countries, but his policies have faced backlash as several people in Trump's inner circle remain under investigation by Congress and the Department of Justice in probes of Russian meddling in the 2016 election."

    ReplyDelete
    Replies
    1. You wrote: The enormous support from the Senate sets up a showdown between Congress and President Trump. The president expressed a desire to work with Russia throughout his campaign and tasked his secretary of state with improving relations between the two countries, but his policies have faced backlash as several people in Trump's inner circle remain under investigation by Congress and the Department of Justice in probes of Russian meddling in the 2016 election."

      I think this is why Tillerson left for Texas, unannounced vacation ... he may have had it with Congress, Trump.

      Delete
  4. Here's the article on the canceled Canadian LNG plant that Rigzone pulbished:

    --- A Worldwide Gas Glut Claims $27 Billion Victim in Canada ---
    http://www.rigzone.com/news/article.asp?hpf=1&a_id=151161&utm_source=DailyNewsletter&utm_medium=email&utm_term=2017-07-27&utm_content=&utm_campaign=feature_1

    ReplyDelete
    Replies
    1. I know I'm wrong but I will say it anyway: it wasn't just economics that killed this project.

      Economics alone should have killed the natural gas industry in the Bakken - it's an oil play with 94% of hydrocarbons lifted in the Bakken being oil. Natural gas was a nuisance and oil companies simply want to flare it, but faux environmentalists pushed the issue and now we have a thriving natural gas industry in the oily Bakken.

      Certainly if natural gas can survive in the Bakken, a natural gas terminal could have made it in western Canada. But the political pressure was too great. Sort of like the Keystone XL.

      My hunch is that Trudeau is not happy about the outcome.

      Again, I know I'm wrong but that's my world view. Small chuckle.

      Delete