Thursday, August 1, 2019

No More Blogging Until Friday Morning -- August 1, 2019

Tariffs? What tariffs? This is life during wartime!


All this talk about tariffs, cry me a river!


Trump: take a piece of my heart!


Trump: I hate myself for loving you. Not!


NFL season opener, September 5, 2019, Green Bay Packers vs Chicago Bears (pre-season tonight, by the way, Broncos vs Falcons):

I Just Can't Get Too Excited About All This Tariff Talk -- August 1, 2019

Updates

August 3, 2019:

1. It turns out I was wrong in the original post below when I saia a $2,000 Apple computer could jump 10% to $2,200 due to the new 10% tariff on consumer goods coming from China. In fact, the tariff is based on the "cost of manufacturing" the item, not the retail price. So, if the actual cost of manufacturing the Apple computer is $150 in China, then the additional tariff would be $15. But Apple could still jack up the price to $2,200 blaming it on Trump's tariffs.

2. Countries make money from duties/tariffs. As soon as Trump increase import duty by 10%, China could do the same thing; blame it on Trump (retaliation) and then book the extra duty.

3. In the US, and I bet this is true in most other countries, money raised through duties/tariffs goes directly to the Executive Branch (i.e, the President of the US). The money raised does not go into the General Fund and it is not controlled by Congress. It goes directly to the Executive Branch, and the president decides where to "spend" it. That's why you are not hearing much noise from US farmers regarding tariffs. Trump is sending tariff money to those suffering most, in this case, the farmers. I doubt president is sending much money to Nike and/or Kaepernick. My hunch is Kaepernick does not know this. This also explains the meltdown by the spokesman for the US foot apparel industry last Friday (or whenever it was) on CNBC

4. Finally, it's up to the Chinese whether they want to see the 10% increase in tariffs. All they have to do it say they will get to serious negotiations (wink, wink).

Original Post 
 
In round numbers, the GDP of the US is $20 trillion. And increasing every year. By at least 2%. More if the US Congress would get out of the way.

$750 billion trade with China, most of it one way.

750 billion / 20 trillion = 3.75%

Of that 750 billion, maybe 20% in tariffs or $150 billion

$150 billion / $20 trillion = 0.75%

I just can't get too excited about all this tariff talk.

***********************************

WTI: $54

It's not like we haven't been here before.

And, we are no longer dependent on OPEC oil.

I just can't get too excited about all this tariff talk.

***********************************

The US is incredibly rich and getting richer every day.

How rich are we?

The Democrats running for president promise to send each American $1,000 / month.

The Democrats running for president promise free medical care for all, including free medical care for undocumented "residents." They would promise the same for felons behind bars but such felons already get free medical care. Instead, felons will get the right to vote.

The Democrats running for president promise free college for all, and will "erase" all outstanding student debt.

The Democrats running for president are in favor of open borders.

That's how rich we are.

The Democrats running for president have the math to prove that we can afford all the above.

No one in the mainstream media has been able to prove them wrong.

Even Nobel Laureate Paul Krugman says deficits no longer matter.

I just can't get excited about all this tariff talk.

********************************

How many times in the past year were we told that tariffs would be increased if China-US trade talks went badly?

Earlier this week there was a headline story that China-US trade were going badly.

I don't take the president literally, but I do take him seriously.

I just can't get too excited about all this tariff talk.

************************************

I lost all "faith" in Apple's commitment to the US when on June 28, 2019, its CEO made the decision to move Mac Pro production from the US to China.

Obviously Apple was not worried about tariffs.

A $2,000 Mac Pro will now cost Americans maybe $2,200. My hunch is that competition will keep the Mac Pro from going up in cost due to tariffs. Apple's margins will decrease from 37% to 36.8% but "services" won't be affected.

I just can't get too excited about all this tariff talk.

************************

Oil plummeted from $58 to $54/bbl in one day.

The price of gasoline should go down next week.

99.9999% of all Americans are going to love cheaper gasoline.

California drivers will send a thank-you note to President Trump; they may even vote for him in 2020.

I just can't get too excited about all this tariff talk.

*****************************

The Fed just cut rates for the first time in a decade.

Cheap money.

I just can't get too excited about all this tariff talk.

**************************************

Automatic reinvestment of dividends.

I just can't get too excited about all this tariff talk.

******************************

But mostly I'm looking forward to:
  • a $1,000 check from the US government every month (actually, for us, a married couple, $2,000 -- that will pay our rent with enough left over for two sushi dinners each month)
  • free medical health care
  • free Harvard college education for our three granddaughters
  • our son-in-law no longer having to pay off his student debt 
And, yes, I just can't get too excited about all this tariff talk.

*******************************

And two years from now, we will all be even richer.

A thousand-dollar check to each American each week; free electricity (wind and solar energy); free medical care for the first time in our lives; free college education for all.

I just can't get too excited about all this tariff talk.

I'm simply waiting for 2021 when everything is free and all this talk about tariffs will be a thing of the past.

***********************************

How concerned are we about the tariffs?

Drudge does not mention it.

Fox News does not mention it.

The LA Times barely mentions it.

Fake news (NYT and Washington Post) will cover it in nauseating detail, as will CNBC and MSNBC.

I just can't get too excited about all this tariff talk, and apparently neither can Kim Kardashian.

************************************

Absolutely not a bit concerned with all this talk about tariffs.

Oh, to be five years old again.

EOG Reports 2Q19 -- August 1, 2019

Updates

August 3, 2019: EOG continues to deliver free cash flow in a challenging environment -- SeekingAlpha contributor, Z4 Research. Data points:

  • the 2Q19 numbers
    • oil production was above guidance range
    • oil price above guidance at $1.18 per barrel above WTI (they estimate 2Q realization will be $3.36 / barrel above their peer group; it was $3.79 above last quarter)
    • CAPEX was below guidance at $1.6 B vs guidance of $1.7 B
    • cash operating expenses on a per unit basis were down 7% YoY
    • favorite quote watch: "EOG generated $2.1 billion of discretionary cash flow in the second quarter 2019, one percentmore than the same prior year period despite a 12 percent decline in the NYMEX WTI benchmark price." 
    • after dividends of $127 mm, free cash was $352 mm
  • guidance
    • 2019 volumes: tightened to 794 to 823 MBOEpd (mid of 809 Mboepd) vs prior range of 781 to 842 Mboepd (mid of 811.5 Mboepd) 
    • 2019 CAPEX: unchanged vs prior range of $6.1 to $6.5 B. No change to 740 net well completions
    • well costs down 4% YTD
Original Post

 EOG reports. Link here.
  • production --
    • crude oil production increased 18% year-over-year
    • 455,700 bopd, a new company record
    • NGLs increased 16%
    • natural gas grew by 10%
    • total company production growth of 16%
  • financials --
    • exceeded target with CAPEX below target
    • income of $1.46/share; $0.848 billion
    • compare 2Q18: $0.697 billion or $1.20/share
  • net cash: $2.7 billion
  • wells are costing less
  • discretionary cash flow increased by one percent despite a 12 percent decline in NYMEX WTI benchmark price
Before 2Q19:
  • 1Q17: sets company record -- 315,700 bopd -- about what Libya does when that country gets its act together
  • 1Q16: EOG presentation: 120,000 acres core; 110,000 acres non-core;
  • 3Q15, EOG presentation: 120,000 acres core; 110,000 acres non-core;
  • 1Q14: down to 90,000 acres of Core Bakken; Antelope Extension: 20,000 acres; Core well -- 92% oil, 2% gas, 6% NGL; Antelope well -- 78% oil, 11% gas, 11% NGL
  • 580,000 net acres; November, 2012, NOG says 600,000 acres
  • BEXP presentation says EOG has 600,000 net acres (as does Filloon, June, 2011)
  • Bakken Core: Parshall oil field, for the most part; 100,000 net acres; 640-acre spacing
  • Bakken Lite: Bakken outside the Parshall oil field. e.g., northwest of Williston; 480,000 net acres; 320-acre spacing
  • Three Forks: 
  • February 1, 2011: company says they may be going down to 5 rigs; cut back to 2 frack crews; I don't think EOG fracks during the winter

NOG Reports 2Q19; Beats -- August 1, 2019

NOG reports. Remember, forecast, 11 cents. Actual results for 2Q19:
  • production increased 66% year-over-year
  • cash flow: $93 million, a 7% increase over the first quarter
  • CAPEX: a 3% decrease over first quarter
  • 2Q19 production: 3.2 million boe; averaging 34,965 boepd; 66% increase year-over-year
  • net income: 12 cents (a beat)
  • adjusted: 12 cents
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, career, or relationship decisions based on what you read here or think you may have read here.

No need to look at share price today; WTI dropped over 7%. Bad day for oil bulls.

NOG is tracked here.

Compare with earnings / production one year ago:
2Q18 earnings: adjusted earnings, 9 cents; beats by one cent; raises full year production guidance by 60% over 2017; 2Q18 production exceedes expectations, increased 53% y/y and 17% sequentially; now averaging 21,046 boepd; exited the quarter with 16.4 net wells in production; added 8.1 organic net wells; three acquisitions this year: Salt Creek; Pivotal; and W Energy; Salt Creek closed June 4, 2018;

WTI Plunges Over 7%; Down $4.28; Trading At $54.30

Oil: worst day since 2016; WTI suffers worst day in four years (?); blamed on Trump tariff announcement.

10-year bond: lowest since 2016.

Dividends: automatic reinvesting -- making America great.

Jobs (link here):
  • prior: 206K
  • revised prior: 207K
  • forecast: 214K
  • actual: 215K
Warning: China and American tech companies (Apple, e.g.) were given warning at least a year ago Trump would raise tariffs if there was no movement toward a more level playing field. This, too, will pass. 

Kellogg: up almost 10% today; who wudda guessed?


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

***************************************
Back to the Bakken
Active rigs:

$54.308/1/201908/01/201808/01/201708/01/201608/01/2015
Active Rigs5863603474


Five new permits, #36805 - #36809, inclusive:
  • Operator: RimRock
  • Field: Heart Butte (Dunn County)
  • Comments:
    • RimRock has permits for a 5-well "gem" pad in lot 1 / 2cion 18-148-92, Heart Butte oil field
One permit renewed:
  • Enerplus: a Wallaby permit in McKenzie County
One permit canceled:
  • Petro-Hunt: a USA permit in McKenzie County
producing wells (DUCs) reported as completed: pending

Bakken Pipelines -- Tallgrass Update -- S&P Global -- August 1, 2019

Wow, isn't this interesting? With all the recent discussion regarding pipelines in the Bakken and the Permian, we now have this story from S&P Global. Data points here:
  • Tallgrass execs see themselves in "catbird seat"
  • reminder: Tallgrass Energy has plans to partner with a Kinder Morgan subsidiary for Bakken takeaway
From the article:
"The Bakken has kind of recovered. It's kind of [reached] some new highs. But I think the question in my mind that everybody needs to be asking themselves long term is if $50 to $60 [per barrel] oil in the Bakken [is] going to [facilitate] that 2-million-barrel-a-day-plus market that it probably needs to be to support everything that's being talked about that is not yet built," [Tallgrass CEO] Dehaemers said.
 Meanwhile, the midstream company's Cheyenne Connector pipeline and affiliated Cheyenne Hub Enhancement projects remain in limbo without a blanket certificate from the Federal Energy Regulatory Commission to begin building infrastructure designed to ship up to 600 MMcf/d from the DJ Basin to Tallgrass' Rockies Express Pipeline LLC and Cheyenne Hub and improve bidirectional gas flows at the hub.
This is concerning, coming out of the Trump administration:
"We were supposed to get the certificate in March with the intent of being done in Q4," Moler said. "[Now] we are hoping to stay in Q1 [of 2020]. We have 99.9% of the materials on-site, we have a contractor and equipment on hold, and the day that we get the certificate ... we start excavating and moving forward." 
He added that "the FERC approval process has become much slower than what we or others in the industry would like or have experienced in the past."
**********************************
The Book Page

Two books from "Half-Price Books" that together cost less than one of the books would have cost at Amazon. Whoo-hoo.

The Battle For New York: The City at the Heart of the American Revolution, Barnet Schecter, c. 2002. On first glance it looks like it will be a "so-so" book; it's the author's freshman outing. No worthwhile illustrations and very, very weak on maps. Eager to see if it improves my understanding of geography of New York City and its environs.

The Annotated Wuthering Heights, Emily Brontë, edited by Janet Gezari, c.2014. This looks like a "top shelf" book. A real keeper. Published by the Belknap Press of Harvard University Press, Cambridge, MA, and London, England. This looks really, really good. I can't believe the price at Half-Price Bookstores. And in mint condition. 

Apple Page -- August 1, 2019

Apple: gets it right this year. Wow. MacBook Pro -- just in time for new school year and get this: starts at $1,299.

Apple computers at "this level" used to be be sold upwards of $3,000. A MacBook Pro for college freshman for $1,299 is incredible. It's now a more difficult choice for newbies and those who want to upgrade: MacBook Air or the new MacBook Pro?
That said, the 2019 MacBook Air weighs less than the older MacBook Air model did; 1.25kg compared to 1.35kg. In comparison the 13-inch MacBook Pro weighs 1.37kg. ... As both laptops come with Touch ID and things like the Force Touch trackpad, but the Touch Bar on the Pro is really the major design difference between the two.
And note, the price of the MacBook Pro, when reviewed in July, 2019, was $1,799 and $1,999 depending on the specs.

There is a huge difference between $1,299 and $1,799 when buying Apple.

And even a bigger difference between $1,799 and $1,099. 

If that's still the main difference between the two -- the Touch Bar on the Pro -- it's hard to convince me go with that instead of the MacBook Air.

MacBook Air: 2.75 pounds, starts at $1,099.

MacBook Pro: 3.02 pounds, starts at $1,299.

College students, limited budget:
  • serious gamers, professional bloggers, serious graphic designers: MacBook Pro.  
  • everyone else, 90% of those going to college, the MacBook Air
College students, unlimited budget:
  • and don't mind the extra bulk (think backpacks): MacBook Pro
College student, limited budget;
  • thinking about extra bulk; bohemians: MacBook Air
For me (backpacker -- weight makes a difference; no gaming; semi-professional blogger; no concern about graphics): MacBook Air is still the best choice -- mostly because of the weight and thinness (think backpacking).

One will spend an extra $19 for the required USB-C to Lightning cable.

***************************
1922

From page 233, Kevin Birmingham's The Most Dangerous Book: The Battle for James Joyce's Ulysses, c. 2015:
People think of 1922 as the year modernism came of age because it was the year Ulysses and T. S. Eliot's The Waste Land appeared. It was also the year Ernest Hemingway came of age. Posterity focuses on his fraught tutelage under Gertrude Stein, whom he met in February, but Shakespeare and Company did more to usher him into the literary world than Stein did. Hemingway met Ezra Pound by chance, also in February, at Beach's bookshop, and within a week Pound was reading his manuscripts and spreading the word about him around Paris and the States. Over the course of the  year Pound sent six of Hemingway's prose vignettes to The Little Review, where they were published in the spring of 1923. Later that year, Beach encouraged Robert McAlmon to publish Hemingway's first book. 
Hemingway met Joyce within weeks of meeting Pound, and before long the admiring young American began drinking with the great Irish novelist...
The Great Gatsby, the story was set in 1922 -- published in 1925.

Notes From All Over, Part 1 -- August 1, 2019

Bakken earnings: in light of WLL's earnings report and subsequent fallout this week, the following become incredibly important:
  • CLR, reports August 6, EPS forecast of 63 cents
  • NOG, reports August 2, EPS forecast of 11 cents
Disclaimer: this is not an investment site. Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.

Market reaction yesterday:
  • bizarre
  • one and done
  • I'm not sure how the Fed chairman could have made "it" any worse
  • LOL
  • great, great buying opportunity
  • easy money continues
  • Wall Street traders were poised to hit the send / execute button as soon as the announcement was made and then the algos took over
  • [if you say / write "algos" it makes you look like you know what you are talking about]
  • hope springs eternal: GS sees one more Fed cut this year
Automatic dividend reinvestment: making America great.

Debates: second night of second debate last night -- Trump, I'm sure, is watching Biden's performance with great interest

Trump tweets: I did not see any this morning. Must be a busy day in the West Wing today.

Business headlines:
  • "They should really be ashamed" -- Wall Street blasts Fed for getting what it wanted
  • GM earnings crush 2Q19 forecasts
  • Verizon earnings beat 2Q19 forecasts
  • Yeti earnings top; guidance raised
  • Qualcomm stock sings after earnings report was "not complicated, merely awful"
  • Impossible Foods' "Whopper" goes nationwide at Burger King
*****************************
Updates

Later, 1:08 p.m. CT: wow, see first comment. Apparently I was very, very wrong about Culver's. I've received two notes, now, that suggest I try Culver's. I stepped on some toes with my note below. Sorry. And as long as I'm at it: it turns out that I'm in the minority in my family. Both my wife and our oldest granddaughter do not like Whataburger at all. Wow, am I on the wrong side of this discussion.

Original Post

Burger poll, link here:
  • In-N-Out: #1 for third straight year
  • Five Guys: #2
  • Whataburger: #3 if Culver's not included
  • Least favorite:
    • Jack in the Box
    • Wendy's
    • Carl's Jr
    • Burger King
    • McDonald's (last place on the list of the 14 chains reported)
  • Comments:
    • In-N-Out over-rated
    • Whataburger #4 but Culver's is #3
    • "Least favorite" list is 1000% correct
    • I've never even seen a Culver's; regional? On google maps, I see three in the DFW area; will have to try; on second thought, absolutely not, sounds like a DQ, mostly known for its "butterburgers" and frozen custard, but also offers cheese curds, chicken sandwiches, chicken tenders, fish, and salads. Culver's advertises that it's "all about the butter."
    • I do have to admit there's something about the dining experience at Five Guys that beats Whataburger, but Whataburger really has the most choices, most variety, best bang for the buck --

*********************************
April, 1921

From pages 202 - 203, Kevin Birmingham's The Most Dangerous Book: The Battle for James Joyce's Ulysses, c. 2015.
Sylvia Beach had never published so much as a pamphlet. She had no experience marketing or publicizing a new book, no background with distributors or printers, no familiarity with plates or proofs or galleys. She had no capital, and she could only guess about costs and financing. Advertising would have to be base don circularss, charitable press and word of mouth. She knew almost nothing about the legal complications of the publishing industry, in France or anywhere else, to say nothing of the complications facing  a book convicted of obscenity before it was even a book. She knew the "Circe' episode was more offense than anything in The Little Review, and she knew it would get worse.

Despite all of this, she decided that Shakespeare and Company -- a company of one, after all, of a thirty-four-year-old American expatriate who was, until recently, sleeping on a cot in the back room of a diminutive bookshop on a street nobody could find -- would issue the single most difficult book anyone had published in decades. It would be monstrously large, prohibitively expensive and impossible to proofread. It was a book without a home, an Irish novel written in Trieste, Zurich and Paris to be published in France in riddling English by a bookseller from New Jersey. Joyce's readership was scattered. The book was at turns obscure and outrageous, its beauty and pleasure were so coy, its tenderness so hidden by erudition, that when it did not estrange its readers it provoked them. Ulysses was not even finished, and already it had been declared obscene in New York and burned in anger in Paris.
None of this mattered. Sylvia Beach wanted to be closer to Joyce and to the center of contemporary literature. She wanted to be successful and to repay the money her mother had given her. She wanted to give the world something more than pajamas and condensed milk. Beach and Joyce worked through the details themselves. Shakespeare and Company would publish a high-quality private edition of one thousand copies. She would send out announcements and gather orders by mail before publication and pay the printer in installments as the money came in. When the book was ready, she would mail copies by registered post to readers around the world. 

Two Wells Coming Off Confidential List Today; Bakken NatGas To Chicago -- RBN Energy -- August 1, 2019

Glut: OPEC sees oil surplus in 2020 admid shale surge. -- Rigzone. 
  • OPEC forecasts:
    • world demand for crude oil rising by 1.4 million bopd in 2020
    • world demand for crude oil flirting with the 100 million b/d threshold
    • OPEC will grow production by 2.4 million bopd
  • EIA now says US shale production will not grow as fast as originally forecast
    • US oil production should rise by 1.36 million bopd to 12.32 million bopd
    • about 140,000 bopd less than original forecast
Oil tankers vanish. From Bloomberg. Don Lemon, CNN, speculates on whether a "black hole" could be in play. The funny thing: The Atlantic Monthly took him seriously. An Ivy League researcher stepped out on a limb when he/she suggested that possibility was "unlikely." Apparently "unlikely"  has different connotations among Ivy League researches than guys like me.

 *****************************************
Back to the Bakken 

Wells coming off confidential list today -- Thursday, August 1, 2019: 2 for the month; 51 for the quarter;
  • 34941, SI/NC, Hess, EN-Kulczyk-154-94-2029H-2, Alkali Creek, no production data,
  • 34176, IA/795, CLR, Ravin 8-1H2, Dimmick Lake, t--; cum --;
Active rigs:

$57.728/1/201908/01/201808/01/201708/01/201608/01/2015
Active Rigs5863603474

RBN Energy: Bakken gas muscling out western Canadian supply from Chicago market. Archived.
The battle between Bakken and Western Canadian natural gas supplies for the Chicago market seems to be advancing toward a final showdown of sorts. Associated gas production from the crude-focused Bakken has been rising sharply, but capacity on the Bakken’s two gas takeaway pipelines — Northern Border and Alliance, also utilized by Western Canadian Sedimentary Basin (WCSB) supplies — has been maxed out for a few years now. The result is that Bakken gas is increasingly encroaching on — and pushing back — imports from the WCSB. Bakken gas flows already overtook Canadian gas receipts on Northern Border a year ago. Since then, the gas-on-gas competition and the resulting pipeline constraints have escalated, and things are likely to get worse. Today, we break down the forces at play in the competition for market access.