Friday, April 19, 2019

April 19, 2019, T+7, Part 1 -- Nothing About The Bakken

Note: I won't be following mainstream media news for the next week or so, but it's impossible to miss the headlines and/or miss the 30-second news updates on talk radio. Mueller report? Sounds like that train has left the station. Now, the action switches to the "House."

Economy: because of all the "interest" in the Mueller report, a lot of folks, I think, are missing the economic news. This is for the archives.

April 19th: data from the first quarter 2019 is now coming in.

Jobs: first time unemployment claims are at a 50-year low; and fell again this week, after experts forecast there would a jump in claims. There weren't. A 50-year low. And the data point hardly warrants a headline. This is simply incredible. Link here.

US retail sales: this, too, was incredible. Link here. Lost in all the Mueller clutter. For March, 2019: 1.6% increase, month-over-month. Simply incredible. Comes off a miserable February report. But you would never know it if you weren't looking. Historical data at this link. A change of 1.6% is the highest we've seen in a year -- and is well ahead of the previous yearly high of 1.2, back in May, 2018. A "1.6%" is the third highest change in five years and the third or fourth highest going back ten years.

US housing starts: link here. Permits and starts were both less than forecast, but not a big disaster. Will do fine.

Big thinkers: Cory Booker and Kirsten Gillibrand both voted against this year's Missouri River flooding disaster relief.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

ATT: link here. The spin-offs begin. This could well be the story of the decade. First, go back and look at the properties owned by Time Warner at the time ATT bought Time Warner. Link here. Look at the incredible number of companies ATT acquired in one deal. This week ATT sold its minority stake in Hulu. We're talking about a very, very small position -- and ATT sold it's stake for more than $1.4 billion. Time Warner had acquired that stake for $600 million about three years ago. ATT is going to have to divest a lot of assets to pay off its huge (and ballooning debt). Another investor weighs in on ATT.

LNG export: FERC approves two LNG export projects. Some of this may have been previously reported:
  • Houston-based Tellurian Inc.'s Driftwood project on the Louisiana coast
  • San Diego-based Sempra Energy's Port Arthur LNG
This is why this story is important: "FERC is making a lot of headway on processing LNG applications in a more efficient manner, and I’m proud of the work that we are doing," FERC Chairman Neil Chatterjee said in an April 18 press release.
This won't happen under a Biden, Beto, Buttigeig, or Bernie administration. Scary. Pocahontas, herself, has said she will stop issuing new oil and gas permits on federal land. Really scary.

Florida LNG project: hits milestone. Rigzone. Data points:
  • Eagle LNG Partners
  • $500-million project
  • final environmental impact statement from FERC
  • final step in the environmental review process before the final federal authorization decision deadline
  • the developer initiated the FERC process in December, 2014
  • LNG export projects tracked here
  • I don't recall the Florida project on that list, and I don't see it now, but I may have missed it
SLB: earnings fall but revenues tops estimates.

BK: miserable first quarter. And bad news may continue for another quarter.

KSU: also beat forecasts, as did UNP. Railroads reflect the strength of the US economy. CSX also reported a solid quarter; led transports higher.

Inflation / Interest Rate Talk

Inflation is dead. Jerome Powell (the "Fed") appears to be having difficulty accepting this.

Over at ZeroHedge: contrarian alert -- "Is Inflation Dead?" makes the cover of BusinessWeek. Or is it Businessweek? The writer argues:
Belief in the “low inflation” myth stems from the overly rigid reliance on conventional inflation indicators while completely ignoring the inflation in asset prices, which has resulted in extremely large and dangerous bubbles that will ultimately burst with disastrous consequences. As the chart [at the site] shows, assets such as global stocks and bonds have risen at a much higher rate than global real economy prices since the current bull market began in March 2009.

The people who are currently scratching their heads about low inflation while ignoring the massive asset bubbles that are growing right under their noses are the same ones who didn’t see the housing bubble’s warning signs in the mid-2000s. They were the ones justifying the growth of the housing bubble by saying “housing prices are rising because our population is growing,” “Americans are becoming wealthier and want larger, more luxurious homes,” and so on.
During a bubble, the “crowd” will always tell themselves lies so that they don’t have to acknowledge the scary implications of the bubble and its coming burst. Once the bubble pops, they claim it was a freak occurrence that “nobody could have seen coming!” We’re making the same mistakes that we made during the housing bubble, but it’s just occurring in different industries, assets, and countries.
From John Kemp today, a Reuters market analyst:
The U.S. economy hit a soft patch during the first three months of the year with manufacturing output up only slightly compared with the same period a year earlier and freight movements mostly down. 
The current slowdown resembles the summer of 1998, when a similar loss of momentum prompted the Federal Reserve to cut interest rates by 75 basis points between September and November.  
Policymakers have given no indication they will respond the same way this time, but if there is no sign of re-acceleration by the end of June, the central bank is likely to cut rates at least once in the second half of the year.
So, we'll see.

If we see a rate cut, "Katie, bar the door."

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