Thursday, February 6, 2014

OXY USA Has A Huge Bakken Well; EOG Well With 122K In Less Than Four Months; Eight (8) New Permits -- The Williston Basin, North Dakota, USA

Active rigs:

Active Rigs19218220116590

Eight (8) new permits --
  • Operators: Oasis (2), Slawson (2), Hess, Fidelity, Emerald, CLR
  • Fields: Stockyard Creek (Williams), Little Knife (Dunn), Heart River (Stark), Temple (Williams), Boxcar Butte (McKenzie), Tyrone (Williams)
  • Comments: Stockyard Creek continues to amaze me; all the operators; and how they keep squeezing more wells into that relatively small field east of Williston
Wells coming off the confidential list were reported earlier; see sidebar at the right.

Wells coming off the confidential list Friday:
  • 22893, 813, OXY USA, Leiss 2-23-26H-143-96, Fayette, t8/13; cum 56K 12/13;
  • 24536, 711, HRC, Poeckes 1-15-22H, Climax, t9/13; cum 16K 12/13;
  • 25374, 1,414, EOG, Austin 39-3204H, Parshall, t9/13; cum 123K 12/13;
  • 25627, 274, CLR, Kidd 1-19H1,  Bluffton, t10/13; cum 9K 12/13;

22893, see above, OXY USA, Leiss 2-23-26H-143-96, Fayette:

DateOil RunsMCF Sold

25374, see above, EOG, Austin 39-3204H, Parshall (122K in less than 4 months):

DateOil RunsMCF Sold


I apologize at the outset. Regular readers are probably tired of this by now, but I can't help myself. I am still enjoying The Girl With The Dragon Tattoo.  I am reading the novel slowly, perhaps one, maybe two chapters per day, during the day. In the evening, I watch and re-watch the video of the movie as well as the bonus features, such as the director's commentary. It is absolutely captivating.

I have mentioned this on several occasions: my carbon footprint is very, very small. I have access to automobiles, here in Texas and in California, but I try not to drive them. [Exceptions, of course, are the cross-country trips which I really, really enjoy.] My (our?) apartment in Grapevine, Texas, measures 651 square feet, according to the website. It is the perfect size, though I have to agree with my wife, that a second bedroom, or a slightly different one-bedroom floor plan with 787 feet would be "more perfect."

I had not thought about that for quite some time until reading Dragon Tattoo. In that novel the protagonist, Daniel Craig in the movie, lives in a luxury apartment with 700 square feet and absolutely loved it.

Years ago, in my Air Force retirement program -- one of the better programs I had ever seen, by the way -- I had printed this from a Graham Greene novel, The Heart of the Matter, as quoted in Norman Sherry's biography of Graham Greene:
The main room -- thirty by twelve -- to a stranger it would have appeared a bare uncomfortable room but to Scobie it was home. Other men slowly build up the sense of home by accumulation -- Scobie built his home by a process of reduction.
Today, my wife contacted a long lost friend with whom we shared time with during our many years in the US Air Force. She and her husband had separated; he had moved into a sparsely-furnished 700 square-foot apartment and just loved it.

There is obviously a subset of old men, like me, who, like Scobie and Mikael Blomqvist, enjoy building up a home by a process of reduction. A smaller carbon footprint is just fine ... for some, but not for everyone.

The 2014 Iditarod

The Bismarck Tribune is reporting:
Two sled dog mushers with ties to North Dakota are among the 71 listed in this year’s Iditarod sled dog race.
Kelly Maixner, a 38-y/o pediatric dentist, who was raised in Golva, will run his fourth Iditarod. His best time came last year when he finished in 10 days, 16 hours, 57 minutes and 36 seconds.
Ellen Halverson, 53, is a psychiatrist who was born and raised in eastern North Dakota.
Halverson is running her fifth Iditarod.

Warren Buffett And The Railroads; George Carlin On Global Warming

Random musings on Warren Buffett, Burlington Northern Santa Fe (BNSF), and Union Pacific Railroad (UNP).

I can't help but think about the difference between the Scandinavian-German reticence to invest in America as compared to the flamboyant French investment style personified by Warren Buffett.

When the North Dakota legislature authorized the Legacy Fund as a mattress for hiding Bakken oil royalites, the legislators telegraphed their pessimistic view of the future of America.

About the same time, literally, about the very same time the Legacy Fund was being put together, this news story from The Los Angeles Times:
Billionaire investor Warren Buffett's $34-billion acquisition of railroad giant Burlington Northern Santa Fe Corp. is the biggest bet yet on a U.S. economic recovery, one that could resonate from the international sea lanes to the railroads crisscrossing the country.
Burlington Northern is the nation's largest rail transporter of coal and grain and provides a vital link for consumer goods from Asia to the Midwest, many of them flowing through the ports of Long Beach and Los Angeles.
"It's an all-in wager on the economic future of the United States," Buffett said in a statement announcing the deal Tuesday. "I love these bets."
I have since read that "the all-in wager" was not an exaggeration. Apparently, the purchase of the Burlington Northern could have broken Berkshire Hathaway.

I remember that interview: 
"It's an all-in wager on the economic future of the United States," Buffett said in a statement announcing the deal Tuesday. "I love these bets."
I was reminded of that story, that interview, when I happened to note that Union Pacific Railroad announced today an increase in its dividend, payable in February. I didn't think much about it at the time; I just posted it. [It may be just me, but dividend announcements seem to be coming more frequently in energy-related companies lately. I'm thinking of Marathon, PSX, Apache, and now UNP, which I think of an energy-related company.]

A few minutes ago, I took a look at the dividend history for UNP from 2009, the year Warren Buffett bought BNI, through today's announcement. Here are the dates of the dividend increases:
  • February 25, 2009: 27 cents
  • May 26, 2010: 33 cents
  • November 26, 2010: 38 cents
  • May 26 2011: 47.5 cents
  • November 28, 2011: 60 cents
  • November 28, 2012: 69 cents
  • August 28, 2013: 79 cents
  • payable February 28, 2014: 91 cents (announced today, February 6, 2014)
In the meantime, the share price of Union Pacific Railroad has gone from $65/share in November, 2009, when Warren Buffett announced his decision to buy BNSF (BNI), to today's price of $175/share, nearing its 52-week high, at a time when the general market has re-trenched somewhere between 3% and 10%. [One day later, February 7, 2014: UNP is trading at a 52-week high, nearly $178.]

I say all this because we have no idea what BNI would have done during this same time period, but one can probably use UNP as a proxy for BNI. My hunch is that with the demise of coal and a relatively bad economy, UNP has not done as well as BNI, since the latter pretty much has a monopoly on track in the Bakken.

I remember vividly the day that BNSF (BNI) caught my attention and I have told that story often.

A story I don't recall talking about as often is the fascination I had back in the 80's or 90's or whenever it was when The Wall Street Journal had a series of articles on the race between Union Pacific and BNSF to see who would be the first to double-track the entire route between Chicago and Los Angeles. I think an unbiased observer would say the race turned into a draw. A biased observer, like me, suggests Burlington Northern won by a whisker. [Apparently, there are a few miles where double track does not yet exist, and places where, nearing the Grapevine in southern California, there is triple track. Don't quote me on that, I could be wrong. Probably am. I am a biased observer.]

Wow, my memory is really, really, really bad. I just googled "the race." I was way wrong. The race was in the early 2000's. From the December 28, 2004, issue of The Wall Street Journal:
TANGIER, Okla. -- More than 135 years after the completion of the first transcontinental railroad, R. J. Juarez is trying to do it again.
On a hot day in late summer, at this dusty outpost near the Texas-Oklahoma border, Mr. Juarez urged the mammoth machine he was operating to move faster. The yellow beast, more than a quarter of a mile long, should have been capable of laying a mile of railroad in less than five hours but it had been "touchy all day," said Mr. Juarez, a track worker. He had to restart it repeatedly.
"We should have been done earlier," he grumbled. Mr. Juarez is a player in a modern version of the track-laying race that created the U.S.'s cross-country rail link. Today's competition is between two industry giants, Union Pacific Corp., the nation's largest railroad, and Mr. Juarez's employer, Burlington Northern Santa Fe Corp. Both want to be the first to run side-by-side tracks between Chicago and Los Angeles, the nation's busiest freight entry point.
This 2,100-mile, two-lane railroad highway would allow multiple trains to travel the same route at different speeds -- and in opposite directions -- without trains having to stop or use sidings.
Burlington Northern Santa Fe had a head start because a large portion of its Chicago-Los Angeles freight mainline, known as the Transcon, already had two lines. It has now double-tracked about 90%.
That's far ahead of Union Pacific, which had less double track to begin with and constraints on capital spending. Union Pacific has completed only about 30%.
"We're ahead and we prefer to keep it that way," says Lewis Ruder, a construction engineer for Burlington Northern Santa Fe.
Union Pacific is working feverishly to narrow the gap, although there's little chance it can catch up. When Burlington Northern Santa Fe tried to secure another track-laying machine last spring, the company quickly learned that Union Pacific had snagged it.
Idle chatter.

The following is not (don't tempt me; I am tempted to post this daily from here on out):

George Carlin On Global Warming, George Carlin

Random Update On Activity In The Parshall

A reader noted this some time ago; it's fascinating. I report on it periodically.

One can pretty much divide the prolific EOG-owned Parshall oil field in half: the north half outside the reservation, and the south half inside the reservation. Again, a reader first noted this. I'm just the messenger. Don't blame me.

In the south half, inside the reservation:
  • no (0) rigs actively drilling
  • one (1) well on DRL status
  • four (4) wells on CONF status
In the north half, outside the reservation:
It may strictly be due to the fact that the wells in the north are much better than the wells in the south, but the difference in activity is striking. 

Michelle's Worst Nightmare: 22 More Dunkin' Donuts In Her Backyard; Apache Increases Dividend -- Again; Bookends In The Best Decade Ever -- Apache (1960), Steppenwolf (1969); Do Readers Still Want The Content "The Times" Provides?

Disclaimer: this is not an investment site. Do not make any decisions based on anything you might read here or what you think you might have read here. 

Born To Be Wild, Steppenwolf

Nine companies announce increased dividends or distributions.

Dunkin Brands: Dunkin' Donuts plans 22 new restaurants throughout the Greater Baltimore / Washington, D.C. area: Dunkin' Donuts announced the signing of a multi-unit store development agreement with five existing franchise groups to develop 22 new restaurants throughout the Greater Baltimore/Washington, D.C. area over the next several years. Remember: in 1,080 days, the President moves to Hawaii, Michelle plans to stay in DC. Dunkin' is on a roll: Dunkin Brands increases quarterly dividend by 21% to $0.23 per share from $0.19 per share. The rich get richer.

Apache increases common dividend 25% to $0.25/share: The latest increase follows an 18-percent increase in the quarterly dividend approved in 2013 and a 13-percent increase approved in 2012. 

Union Pacific announces 15% dividend increase and a $3.9 bln capital plan for 2014: Co announced that its Board of Directors voted today to increase the quarterly dividend on the company's common shares by 15 percent, or 12 cents, to 91 cents per share. The increased dividend is payable April 1, 2014, to shareholders of record on February 28, 2014.

Apache, The Shadows

Listen to Apache, seriously listen to Apache, maybe play it really, really loud, and then look at the smiles on their faces, and tell me there isn't a personal God. Cigarettes in the video? I have the same opinion of cigarettes in this video as Roger Ebert did with regard to Humphrey Bogart in Casablanca.

Noble Energy misses by $0.10, beats on revs; reaffirms FY14 guidance: Reports Q4 (Dec) earnings of $0.50 per share, excluding non-recurring items, $0.10 worse than the Capital IQ Consensus Estimate of $0.60; revenues rose 13.8% year/year to $1.33 bln vs the $1.31 bln consensus.

The Doomsday Chronicles: The Mainstream Media

Breitbart is reporting:
The New York Times announced Thursday that operating profits had fallen 12% in the fourth quarter of 2013 compared to the same period a year before. Earnings per share dropped by roughly two-thirds, from $0.76 to $0.24. Total revenues were down 5.2% and advertising revenues were down 6.3%, with print advertising revenues falling by 7.0% and digital by 4.3% over 2013.
The company added digital subscribers, up 19% in the fourth quarter of 2013 compared to same period in 2012, but its circulation revenues were down, too.
The Times' results will surprise analysts who had predicted healthy results for the last three months of 2013.
Analysts have tended to focus on the increase in digital subscriptions to the New York Times, which has been a focus for new CEO Mark Thompson, formerly of the BBC. However, the rise in digital readers has not come with a corresponding rise in digital advertising revenues. Ultimately, the question is whether readers still want the content the Times is providing. That remains to be seen, since online competition for center-left news is tight.
It is not the first time that the Times has experienced such a decline in advertising revenues—print revenues fell 13.3% and digital revenues fell 4% in the first quarter of 2013, for example—but the Times had been expected to do far better, given a rise in online subscriptions. The company has also parted with non-core assets in an effort to build its core business.
A report in the New York Observer this week suggested deep differences at the paper between the news and editorial divisions as the company defends its institutional status in the media.
The Doomsday Chronicles: The Mainstream Media is tracked here

Flaring; Work On Panama Canal Comes To A Screeching Halt -- Almost; Railcar Safety Lawsuits; Power Outages To Last For Days In Northeast; USPS Stocking Up On Guns, Ammo

Active rigs:

Active Rigs19118220116590

RBN Energy: expanding infrastructure at Edmonton and Hardisty due to conventional as well as unconventional oil. When you read this post, think about the effect this is having on Saudi's outlook for oil. Canadians are producing way more oil than they can ship on a daily basis; think arbitrage, just like OPEC.
Rapid growth of heavy oil sands crude production in Alberta is prompting considerable expansion of storage and pipeline infrastructure at Edmonton and Hardisty. Less well publicized is the growth in conventional Canadian crude oil production – in many cases using horizontal drilling technology. In Saskatchewan, crude volume passing though the Kerrobert hub is increasing and a large rail-loading terminal is planned to open there in 2015 to supplement existing takeaway capacity on the Enbridge Mainline. Today we conclude our analysis of Canadian storage hubs, focusing on Kerrobert.
This blog concludes our series on Canadian crude oil storage. In Part 1 we looked at increasing Canadian crude oil production and expanding pipeline capacity in the two crude marketing hubs of Edmonton and Hardisty. These hubs are the staging posts for crude oil exports to the US as well as the distribution point for diluent supplies coming into the oil sands production region.
The Bismarck Tribune

"Someone" is complaining that North Dakota is ... well, let me cut and paste the first paragraph or so --
North Dakota is losing nearly $1 million monthly in natural gas tax revenue as vast amounts of the byproduct of oil production goes up in smoke, state Tax Department records show.
About 30 percent of the state’s gas production is being burned off because development of the pipelines and processing facilities needed to handle it has not kept pace with production. Oil producers can flare gas without paying taxes on it for up to a year, but are routinely being granted waivers after that.
The lost tax revenue — often overlooked in the oil-rich state that has a more than $2 billion savings account — could help fund the $240 million set aside through 2015 to help counties experiencing rapid growth from the state’s unprecedented oil bonanza.
So many story lines here. One trivial point: the $1 million in monthly royalties is directly related to the price of natural gas; once natural gas plummets in price, later this spring, that $1 million will also plummet. And, of course, more natural gas processing will come on line by then and that will also lower the figure.

The reporter might ask where the majority of the flaring is occurring, on a percentage basis. I believe it's in the BLM-managed reservation where conservation is "job #1." Well, if not "job #1," second only to saving "extraordinary sites."

But this is the bigger story. Regardless of where the price of natural gas goes, the state is leaving much more than $1 million monthly on the table due to Legacy Fund investment goals. I have posted this before, asking to be corrected; I have not been corrected, so I assume a) no one is interested; or, b) I am correct.

It is my understanding that the Legacy Fund is not invested in equities. It remains in cash. The North Dakota legislature is concerned about the safety of the US stock market [Under President Obama, I am not surprised, but presidents come and go]. So, money coming into the Legacy Fund is put under the mattress.

The linked story says the fund now has $2 billion in it. Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here. MDU pays 2.2% and could not possibly be a safer investment for North Dakotans. $2 billion x 2.2% = $44 million. Over a 12-month period = $3.6 million/month.

MDU has a history of raising their dividends yearly, so the $3.6 million would increase; if the dividends were reinvested in MDU, the figure would further increase. And, as noted, the monthly natural gas royalty will drop later this spring.

There was a headline in yesterday's Drudge Report that suggested "social media" was preventing folks from thinking analytically. I don't know. I think it was a just slow news day, and a lazy job of reporting. We've been hearing about flaring since 2007. I can expect a story on flaring at least monthly from the regional newspapers.

I still think the whole flaring issue is a red herring.  If "they" really wanted to stop flaring, all they have to do is shut down drilling. Completely. The lights would go out overnight -- literally. [This is sort of like the drought story in California: if it is as bad as the media is reporting, why are all water conservation "rules" voluntary?]

[The comment about lazy reporting is substantiated by the reporter not even getting a more recent photograph: the picture accompanying the story was taken near Parshall, ND, -- on the reservation -- on September 23, 2008. Of course, a flare is a flare is a flare. The location of the flare -- on the reservation -- spoke volumes. Not much has changed there based on recent data.]

The Wall Street Journal

The second lost decade, 2008 - 2016: more men in prime working ages don't have jobs.
Mark Riley was 53 years old when he lost a job as a grant writer for an Arkansas community college.
"I was stunned," he said. "It happened on my daughter's 11th birthday."
His boss blamed state budget cuts. That was almost three years ago and he still hasn't found steady work. Mr. Riley, whose unemployment benefits ran out 14 months ago, says his long and fruitless search is proof employers won't hire men out of work too long.
"We're poor, but we're not broke," Mr. Riley said. "We still have property. We have cars. We have some assets, we just can't liquidate them."
Mr. Riley's frustration is widely shared. More than one in six men ages 25 to 54, prime working years, don't have jobs—a total of 10.4 million. Some are looking for jobs; many aren't. Some had jobs that went overseas or were lost to technology. Some refuse to uproot for work because they are tied down by family needs or tethered to homes worth less than the mortgage. Some rely on government benefits. Others depend on working spouses.
Why do spouses (generally "wives") have jobs and the men don't?

 Mortgage rates hit lowest level in three months.  That can be interpreted two different ways. I don't see it as good news unless one is buying/selling a house. For the other 99% in the United States, this is a bad news story.

Snow and frigid air make a mess of air travel. More than 50,000 flights have been canceled this winter, due to global warming climate change extreme weather. 

The GOP is looking to raise pensions for military veterans as part of the looming debt limit compromise. What a great country.

Argentina and Venzuela face inflationary crises. Regular readers are well aware of this. Warmsthe cockles of my heart. But Argentina is taking a page from the Obama economics handbook: Argentina is set to unveil a new inflation index next week have economists disputed the official figures, though no one knows whether it will match economists' expectations. Sort of like how our own administration changes the definition and indices of leading economic data.


Wow! Work on the Panama Canal expansion project has pretty much come to a standstill. Work to expand the Panama Canal has virtually halted, and the group in charge of construction said the projects is on the "brink of failure" after talks to resolve $1.6 billion in cost overruns broke down. Sounds like a banana republic, like the one located between Maryland and Virginia.


Lawsuits shine spotlight on railcar safety.
Now, at a time when a series of train derailments have raised alarms over rail safety, two major railroads are battling the contractors in court. They are charging that, in some cases, the contractors created hazards by failing to do repair work properly.
The two sides are also fighting over who should be blamed for derailments caused by broken axles and thus bear the cost of damages. Railroad operator Union Pacific Corp. has sued both Progress Rail Services Corp., a unit of Caterpillar Inc., and Greenbrier Cos., the owner of a rival repair service, over what it alleges was inadequate work that led to several derailments in the past few years.
BNSF Railway Co., another big railroad, has sued Progress Rail on similar grounds over a December 2010 derailment near Jamestown, N.D. Representatives of Progress Rail and Greenbrier declined to comment on the suits, which both companies are contesting in court. Despite the litigation, Progress Rail is "a valued supplier," a BNSF spokesman said. Both Progress Rail and Greenbrier said they follow railroad-industry standards in doing their repair work.
More data dribbling out from the Target security breach. It appears hackers targeted vulnerabilities in retailers' checkout systems. Will, duh. Where was Homeland Security? Where was the NSA? And, yet to come, the investigations of HHS contracting the ObamaCare website out to Belarus software engineers.


More lenders (i.e., banks like Bank of America) are introducing fees on checking accounts, just as consumers and business are pouring record amounts into the most basic of banking services. 
The trend marks the steepest annual drop in the percentage of banks and other financial institutions offering free checking since 2010, and follows a trend of less-generous deposit accounts since the recession. Besides higher costs, consumers have fewer options to choose from as most banks have shifted from offering as many as 20 different checking accounts to a maximum of eight, according to the Moebs survey.
twenty different checking accounts? Say what? Probably only a concern for Bakken billionaires.


Sochi: it will look good on television, but it will be a disaster.

The Los Angeles Times

Power outages could last for days in storm-battered Northeast.

Hundreds of thousands of electricity customers in parts of Maryland, New Jersey and Pennsylvania waited for power to be turned back on as states fought to clean up Thursday from the second major storm this week.
Up to a foot of snow fell in parts of the Northeast on Wednesday, still reeling from the first storm at the beginning of the week. Schools have been closed in many areas, as have businesses and government offices. The cold coated many power lines with heavy ice that brought them down.
As its peak, nearly a million people were without power in storm-socked states. Pennsylvania had the most outages, with about 849,000 customers hit. As many as 3,500 utility workers worked feverishly to repair the damage, according to PECO, the utility. Despite successes, work remained to be done.
Remember: this is not climate change, this is simply the weather. This summer, when we have some sweltering days at the Bronx Zoo, that will be global warming.

NBC yanks Michael J. Fox. I lost a lot of respect for him when ... well, I'll leave it there.

GM disappoints investors. Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you may have read here.

Salt shortage leaving many communities "out in the cold." Cute. That would be fun phrase to diagram: "out in the cold." Must be a tough idiom for foreigners to learn.


US Postal Service to buy large amount of firearms, ammunition
Ironically the Postal Service isn’t the first non-law enforcement agency seeking firearms and ammunition.
Since 2001, the U.S. Dept. of Education has been building a massive arsenal through purchases orchestrated by the Bureau of Alcohol, Tobacco and Firearms.
The Education Dept. has spent over $80,000 so far on Glock pistols and over $17,000 on Remington shotguns.

The Price Of Oil Quietly Melts Up -- Thank Goodness For The Bad Economy

The price of oil continues to "melt up." It's up about a percent today, up over $98. It is in a trading range, $90 - $98, the longest sustained period of "high oil prices."

A Note to the Granddaughters

I was not going to post this story, but when a second reader sent me the link, I thought it must be worth posting.  [In case the link is broken, this is a story of outside agitators, the Portland African American Leadership Forum, who forced Trader Joe's from building on a vacant lot in a neighborhood in much need of economic development. The PAALF, made up of rich men and women who had escaped the neighborhood, had come back to prevent the decaying neighborhood from becoming something different than they remembered. Their actions were based on either nostalgia or jealousy. I assume a little of both.]

Read the story, from Investor's Business Daily: there are many, many story lines. Of course, the big story line -- it exemplifies exactly what the Obama administration fostered during the second lost decade for the United States -- the first lost decade, 2000 - 2008; the second lost decade, 2008 - 2016.

When I read the story last night, my only emotion was a sense of sadness for the neighborhood. Now that I have had a chance to think about it overnight -- yes, it bothered me all night -- I have come to a different conclusion. This is what I sent Don who was the second reader to send me the story:
We must have the same circle of correspondents, or different correspondents with same interests. Someone else sent me this link. I particularly enjoyed the long, long comment at the original article, trying to defend the activists' actions.

I don't know how well you know Trader Joe's but their prices are generally lower than other grocery stores in southern California; that may or may not be true in Portland.

Trader Joe's is a huge jump-up in quality from a Safeway's -- Trader Joe's is definitely a store found only in upper middle-class neighborhoods.
My hunch: this was a win-win for everyone. This was probably not the right neighborhood for a Trader's Joe in the first place, and the local folks, who wanted it, probably would not have appreciated it as much as the Hollywood elite do in west Los Angeles.

Trader Joe's is sort of the elite among grocery stores (but with very, very competitive pricing). Sort of like Starbucks to McDonald's for coffee.
A few years ago "they" put in a Trader Joe's just down the street from where we lived in San Antonio, and that neighborhood was somewhere between upper middle class and lower upper class, with lots of upper class amenities, including a tremendous golf course built inside an old rock quarry.

So, I think both parties won in the Portland case: Trader Joe's was not right for this neighborhood -- it sounds like they were moving into a slum (compared to what they have elsewhere) and the folks would have used it to buy cheap wine but never would have appreciated it.

As long as I'm rambling -- I might as well put this on the blog -- the first "grocery store" I ever saw in California when I arrived in 1973 for four years of graduate school, was a Trader Joe's. My roommate, a Californian, took me. He was lower class who became rich beyond all his dreams (pharmacy school, medical school, married into money, etc, etc) and his favorite store remains Trader Joe's.
When he took me there, I had just arrived from North Dakota -- literally -- I drove straight through from Williston to South Pasadena -- and walking into that Trader Joe's in South Pasadena (upper class neighborhood), where the Rose Bowl parade starts, I thought I had walked into Nirvana.
I guess one does not "walk into Nirvana"; one experiences Nirvana. If so, walking into that Trader Joe's I experienced Nirvana.

Four-Week Average First Time Claims For Unemployment Nudged Up


February 7, 2014: Reuters posts a more nuanced analysis of the unemployment report. I think analysts are missing the big story here, however. Analysts are trying to use the numbers to predict where the economy is going in 2014 and what the fed might do in February, March, and April. I think the big story follows from the first sentence at the linked article:
U.S. job creation slowed sharply over the past two months, turning in the weakest performance in three years and raising the prospect that the economy may be losing momentum.
Parsing that one sentence:
  • US job creation slowed sharply
  • data over two past months (a trend?)
  • weakest performance in a very long time -- three years 
I don't know how far folks want to go back in time; some will want to go back to Bush II to blame him for everything. I doubt most rational folks will go back more than five or six years in any economic cycle. So, forget politics, and just think back five or six years. If after five or six years, job creation in the US has turned in the weakest performance in three years one has to ask the question: are "we" riding the right horse?

Someone defined insanity as doing the same thing over and over and expecting a different result. If one does not change horses after five or six years after seeing no improvement in job creation, there are only a few possibilities:
  • the movers and shakers don't want things to improve; they are happy with the status quo
  • the movers and shakers feel they are on the right horse; more time is needed; the ideology is correct
  • the movers and shakers are simply stubborn; they won't change course simply out of stubbornness
  • the movers and shakers have run out of ideas / solutions for the tectonic changes taking place
  • the movers and shakers have not identified the tectonic changes taking place
Rush Limbaugh would likely suggest it all has to do with the first point. The president's press secretary would suggest the second point. I think the third point affects everyone; it's hard to admit one is wrong.

When I first started investing in 1980, I thought the world ran on energy and on information and that's where I focused my investments. Somewhere around 1998 - 2002, we went through an information revolution; maybe it began with Apple's ad in 1984; maybe it ended with the dot-com implosion on March 10, 2000. The information revolution is now evolutionary, i.e., evolving steadily and somewhat predictably. On the other hand, we have just entered the energy revolution. I suggest that the current energy revolution began in 2013 when Saudi Arabia publicly stated that the shale revolution will affect them and OPEC adversely. Saudi backtracked on that to some extent, but the genie was out of the bag. Boone Pickens and Harold Hamm are riding the wave but can't get the President or Congress to join.

I don't think a single data point helps a whole lot in trying to predict the future, but when one gets the worse number in three years, one has to ask why? I think that's the big story, the big question that economists are failing to answer or even explore.

If Janet Yellen and the Fed simply react to the jobless reports on a month-by-month basis and fail to provide some opinionated guidance to the administration and Congress, I think she and the Fed will have let us down. Perhaps that's not their mandate, to offer advice, but certainly common sense suggests their input might be helpful.

Original Post

Yahoo!Finance is reporting that the first time claims for jobless benefits dropped 20,000 in the last week of January. The number: 331,000, seasonally adjusted, whatever that means. I used to seasonally adjust the results of my biology experiments in Biology 101 when they didn't come out as expected. Dr Froiland frowned on that. That would have been Augustana College, Sioux Falls, South Dakota, many years ago.

In the earlier report, Reuters had reported that the four-week average, a more reliable indicator, had actually nudged up. But that little fact was conveniently removed in the updated story. I'll have to look for it. If I recall it nudged up about 325 to 330,325.

The previous week number was also revised upward by 3,000 but that was also removed from the earlier story. And so it goes.

I'm always impressed that they can get the number that precise ... 325.

Just out of curiosity, thinking about "seasonally adjusted" again, what was the number one year ago?  
  • February 7, 2013: 366,000
After another trillion dollars in stimulus, one year ago, 366,000; this year 331,000. At this rate, ...