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Friday, May 15, 2015

TGIF -- May 15, 2015; Industrial Output -- Projected To Be Flat -- Declined For The Second Consecutive Month; Reces.....

It will be interesting to see whether this affects GDPNow's forecast. Bloomberg Business is reporting:
Factory production stalled in April, as American manufacturers were dealt blows by a strong dollar and cheap oil.
The unchanged reading in manufacturing followed a 0.3 percent March gain that was larger than previously estimated, a Federal Reserve report showed Friday in Washington. The median forecast in a Bloomberg survey of 21 economists called for a 0.2 percent increase. Total industrial production declined for a fifth consecutive month amid mining and utilities cutbacks.
This is the big concern, buried deep in the article:
Total industrial production declined 0.3 percent for a second month. It was projected to be unchanged. Estimates ranged from a drop of 0.7 percent to a 0.8 percent gain. Output in March was revised from a previously reported 0.6 percent drop.
The article does not mention that President Obama killed Keystone XL; that Putin has sandbagged the Sandpiper; and, ObamaCare doesn't do much for the US manufacturing sector (whereas the other two would).

Nice story also on Bloomberg Business on two Texas oil towns just 38 miles apart; one booming; one not.

Active rigs:


5/15/201505/15/201405/15/201305/15/201205/15/2011
Active Rigs84191194210173

RBN Energy: update on US gas exports to Mexico.
At a time when market prices have been weakened by a surplus of new natural gas production waiting for demand to develop, Mexico has been stepping up to the plate by increasing imports.  Gas demand for Mexican power generation, industrial use, and commercial and residential space heating continues to increase at a torrid pace south of the Rio Grande, much to the relief of gas producers in the Eagle Ford, the Permian Basin and other U.S. plays within reach of the international border.
Today we provide an update on Mexico’s growing dependence on U.S.-sourced gas, and the implications for producers and midstream companies.
There’s said to be more than 500 Tcf of technically recoverable shale gas in Mexico, much of it in the Burgos and Sabinas basins just south and west of the Eagle Ford. But the shale plays south of the border are said to be geologically complex, and cracking their gas-extraction code is akin to cracking a very sophisticated safe.
Besides, Mexico’s gassiest areas lack the road and water infrastructure that development would require, and (yet another negative) they are rife with drug-cartel gangs and violence.
For now, Mexico, (whose 2014 gas demand averaged 7.2 Bcf/d) is focused on maintaining its sagging domestic gas production (4.4 Bcf/d last year), and on developing the gas pipelines it needs to import increasing volumes of U.S.-sourced gas and move it south to population and industrial centers, where Mexico’s state-owned ComisiĆ³n Federal de Electricidad (CFE) and independent power companies are developing thousands of megawatts (MW) of gas-fired generating capacity to support a growing economy. 
It’s been quite a ride for U.S. gas exports to Mexico that have more than doubled from 2010 to 2014 (900 MMcf/d to 2 Bcf/d) and averaged 2.5 Bcf/d in the first two months of 2015 (up more than 40% from the previous January/February); by 2016, gas deliveries from the U.S. to Mexico are expected to average more than 2.7 Bcf/d (or 1 Tcf/year, according to the U.S. Department of Energy’s Quadrennial Energy Review released in April 2015), and by 2030 DOE sees U.S. gas exports to Mexico doubling again, to 2 Tcf/year or nearly 5.5 Bcf/d.
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Quickies

I saw this yesterday; probably linked it earlier, but I don't remember. Business Insider headline: The Saudis just went nuclear on their Obama snub. The link is here. I'm reading the Jane Hawking biography -- the Stephen-Hawking-of-black-hole-fame-Jane. She devotes a fair amount of the book to the two of them growing up under the specter of the Cold War and being completely frightened by the real risk of a nuclear war between two superpowers. Both she and he became peace activists trying to dial back the nuclear build-up. It would be interesting to see how these 60's peace activists feel about the nuclear arms race in the Mideast that President Obama has given us which the Hawking grandchildren and great-grandchildren will get to face. Nobel Peace Prize for this president. Truly amazing. In the 60's we had two relatively sane superpowers with a MAD strategy; Obama has given two relatively MAD mideast countries a reason to go nuclear.

This is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you may have read here.

So, what's the market doing? DOW down 30 points; oil down 2% but I doubt the WTI average price for May will drop below the "tax-break threshold." 

Was Krugman the only person to ever win a Nobel Prize in economics? To the best of my knowledge, the Prize must have been given only once, and that one time to Krugman. Or maybe CNBC simply can't find any other Nobel Prize-winning economists.

Not much news today. We will see the White House news dump after the news cycle ends promptly at 5:00 p.m. eastern time tonight.

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Note for the Granddaughters
Rushmore

I have been on the fence for twenty years, its seems, whether to buy/watch Wes Anderson's Rushmore. Yesterday, I finally broke down and bought a copy at the local Barnes and Noble. I started watching it about 11:45 p.m. last evening; I enjoyed it so much, I stopped watching after 15 minutes so I could enjoy the movie when I was really ready to watch a movie. My wife had been napping or doing something when she came out to check her e-mail. I asked her if she wanted to see Rushmore? She cannot stand Bill Murray but reluctantly agreed.

We watched the same 15 minutes I had already seen, and then I stopped, suggesting we should watch it over the weekend, and not so late at night. She loved it and wanted to see the whole thing. So we were up till 2:00 a.m. or so watching the movie.

Very, very quirky, the movie. One of the "extras" on the DVD is a very, very good Charlie Rose interview with Bill Murray after this film came out.

Coincidentally, I also picked up a copy of F. Scott Fitzgerald's This Side of Paradise while I was at B&N. It turns out there is a "connection" of sorts between Rushmore and This Side of Paradise but it is so obscure, I am sure a) no one else has seen the connection; and, b) when I point it out, they will think I'm nuts.

It's not worth going into that connection now.

I'm a sucker for softcover classics printed on really nice paper in a really nice font with a new foreword or introduction or critical analysis. This particular copy of TSOP had it all, and interestingly enough was a Barnes and Noble imprint, as they say. All for $8.95 and then a 10% members discount.

I can't say I would recommend any of the three (Rushmore,  a new copy of This Side of Paradise, or a B&N membership) to anyone; but, for me they are perfect. Sort of like Omaha Steaks.

Speaking of which. Regular readers know my fascination with Omaha Steaks. I understand the price points quite well. About two weeks ago, there was an Omaha Steak advertisement in the Sunday Parade magazine. They were offering a selection at a price so low I was truly shocked. Even my wife was amazed and she doesn't follow Omaha Steak pricing at all. So, I phoned Omaha Steaks and ordered this particular choice to be sent to my brother-in-law.

End of story.

Last night, I was still tempted by that low-cost selection. There was a limit of two and since I had ordered just one I was "entitled" to one more. I went on-line; to my surprise the selection is not available on-line. It is such a great deal Omaha Steaks was apparently using it as an introductory offer for readers of Parade magazine.

When I spoke to them the first time (when I bought for my brother-in-law), I asked if the offer was "real" and if it was available to regular customers and what the "catch" was. No "catch." I said they must be losing a lot of money on this item; she replied she did not know about that but it had been extremely well received.

Just be forewarned: if you have never ordered from Omaha Steaks be prepared for an endless barrage of additional offers from the individual taking your order.  I think a lot of folks will be turned off by the continued "selling" but I find it somewhat humorous. The Omaha folks have a nice way of bantering with you as they gradually increase your $49 order to $999.

I sometimes wonder if the "oracle of Omaha" hasn't taught them all he knows about marketing.

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