GDP Now Forecast Unchanged; GM Sales Crush Expectations; Tuesday -- June 2, 2015

Looking at the auto sales numbers, my hunch is that the US will break all gasoline sales records this summer.

"Braking" news: this is why the market is down today -- tweeting now: US factory orders fall for 8th time in past 9 months - @MKTWeconomics

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NDIC posts the June 1, 2015 daily activity report. Link here.

One new permit (although I think there were two but maybe the other one was permitted on Friday). Whatever, Crescent Point adds three new permits since Friday. No other new permits.

Emerald Oil renewed one permit, canceled two others. Grizzly and Cameron Fry, both in McKenzie County, were canceled.

There were six (6) producing wells completed:

• 28268, 1,086, MRO, Dickey 11-30TFH, Reunion Bay, t3/15; cum 15K 4/15;
• 28270, 1,637, MRO, Zook 41-25TFH, Reunion Bay, t4/15; cum 16K 4/15;
• 28271, 1,252, MRO, Elwood 41-25TFH, Reunion Bay, t4/15; cum 12K 4/15;
• 29987, 542, Whiting, Brehm 12-27-2H, Sanish, t4/15; no production data,
• 29986, 616, Whiting, Brehm 12-27-3H, Sanish, t5/15; no production data,
• 29909, A, Whiting, Kaldahl 44-12TFH, Ray, no IP or test date; no production data,  

It looks like I forgot to capture the wells coming off the confidential list today; too late to catch them now. They will be reported when the daily activity report for June 2, 2015, is released. 

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Auto Sales

Announced June 3, 2015:

Honda Motor this morning booked a 32% surge in China sales in May. Its US car sales rose 1.3%. Shares of Honda rose 1.6% in Tokyo. Toyota Motor fell 0.3%.

Announced June 2, 2015:

Ford, link here. 

• all-new Ford Edge sets May sales record
• 2016 Ford Explorer sales strong in first month
• F-150 sets record average transaction prices in May
• Transit van posts best monthly sales results since launch last June
• Ford commercial van sales at highest levels since 1978
• Mustang has best May and year-to-date sales results since 2007
• Lincoln retail sails increase 10%; best May in eight (8) years
• overall sales: 1% decline versus last years
• will idle only select plants for one week instead of the usual two during the usual summer shutdown from June 29 to July 10 for factory mainenance
• expects to produce 40,000 "extra" vehicles

General Motors, link here. GM sales crush expectations.

• auto sales rolling in better than expected
• GM sales rose 3% against expectations of a 0.1% decrease
• Ford sales down 1.3% vs expectations of a 3.1% decline
• Fiat Chrysler: up 4% vs 2.6% expected
• Volkswagen: up an astounding 8%
• annualized rate of 17.2 million vehicles

Fiat Chyrsler, link here.  Buzz -- strong Jeep sales, best May sales figure since 2005

• Chrysler brand sales up 32%
• Jeep sales climbed 13%
• Ram pickup sales were up almost 8%

Market reaction:

• cuts losses from negative 90 at open to negative 50 after release of auto data
• oil up over 1%

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Natural Gas

A reader tells me that Cramer had this earlier this morning -- although natural gas is "priced at $2.60" in fact, some Marcellus producers are selling "natural gas as a 'take-it-all' price of $1.00." Don says no fuel can compete with natural gas at a buck.

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Everything Else

Wow, I don't think I've seen so many ObamaCare premium stories -- and all very, very bad news. Two new stories this morning. First, this one from the WSJ: more health-care insurers seek big premium increases. Second, this one from Fox News: health insurers seek big premium hikes for ObamaCare plans in 2016. These two stories follow on the heels of three similar stories posted over the weekend.

The WSJ headline: Greece's creditors reach consensus on deal proposal to Athens. If you read the story, let me know what it said. I read it, and came away not seeing what the "deal" was.

Oil. OilPrice has it correct; it's not the number of rigs that count, it's the quality of rigs AND the location of the rigs that count.

Bloomberg: OPEC is winning the oil war. If they like giving away their oil for $60, they are winning. A better headline: Saudi Arabia is the new OPEC. And perhaps it always was. Venezuela and Nigeria, I know, appreciate what Saudi is doing for them, and to them.

Bloomberg: Big Oil's plan to become big gas. Natural gas is the successor to coal. We've talked about that every week -- with the NG fill rate. The natural gas producers cannot keep up. Along that line, DOE has authorized Exxon to export more LNG from its Alaskan terminal.

RBN Energy: Houston, we have a problem. Low crude oil prices are no short-term phenomenon. For the life of me, I don't understand why everyone is upset about low crude oil prices; it's much, much better than the alternative. As it is, the US economy contracted 1Q15; if OPEC controlled price of oil and the price of oil was setting new highs, my hunch is that we would be looking at a second quarter of contraction.

GDP Now, latest forecast, June 1, 2015:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2015 was 0.8 percent on June 1, unchanged from May 26. Following this morning's personal income and outlays release from the U.S. Bureau of Economic Analysis, the nowcast for real consumption growth in the second quarter was revised down from 2.6 to 2.1 percent. Offsetting this decline were sharp increases in the nowcasts for second-quarter real residential and nonresidential structures investment growth and real state and local government spending growth, after this morning's construction spending report from the U.S. Census Bureau.

Active rigs in North Dakota:

	6/2/2015	06/02/2014	06/02/2013	06/02/2012	06/02/2011
Active Rigs	80	188	187	215	173

The NDIC daily activity report for June 1, 2015, was not posted until 8:15 a.m., June 2, 2015.

There are six sides to the Rubic cube regarding the Apple Watch. You have analysts saying the Apple Watch will be a dud; others say orders exceed expectations. Others say no one will pay $15,000 for a watch, and then one sees the screenshot that it's actually happening. The early stories said luxury watch makers were not concerned; turned out that they were very, very concerned. And now a story to that effect over at Seeking Alpha: Apple Watch is making luxury watchmakers uncomfortable. Before it's all over, Apple is going to make auto manufacturers uncomfortable if they don't incorporate Apple into their vehicles.

With regard to the Apple Watch: this has nothing to do with Apple's bottom line -- at this point. That will come later. We've talked about this before. It's all about the moat and all about the company. Nothing about profit.

Lots of news from Bakken.com last night; just the headlines -- googling will find the stories if interested:

CLR:

Continental Resources Inc. has announced that its production in the Bakken region has increased by four percent with 66 net completed operated and non-operated wells in the Middle Bakken and Three Forks formations during the first quarter of 2015.
During this time, the company operated an average of 13 rigs in the region, down from the 19 operating at the end of 2014. The company’s production in the Bakken averaged 135,538 barrels of oil equivalent per day for the first quarter, an increase of 39 percent compared to the first quarter of 2014. Through the remainder of the year, based on current market conditions, Continental plans to average 10 operated rigs.

Bakken highways:

The 100-mile stretch of U.S. Highway 2 between Williston and Minot, the last to be converted to four lanes in the state, was completed in 2008 at a cost of $124 million, with the federal government footing 80 percent of the bill.

It was to last more than two decades, yet North Dakota will spend $40 million this year to fix rutted, broken and cracked portions. It’s one of many projects tied to a spending bill that was rushed through the House and Senate with overwhelming support and signed by Gov. Jack Dalrymple in February so infrastructure projects could begin by summer.

Engineers couldn’t have known that the highway would eventually be overrun by the state’s oil boom, which was only in its infancy when the project was completed. Planners had predicted only 2,000 vehicles daily along the route but at least 11,000 have been using the highway each day since 2012.

Wal-Mart begins next phase of wage increases. The AP is reporting:

Wal-Mart told The Associated Press late Monday that department managers of complex and service-oriented jobs in areas like produce, electronics and auto care, will start at $13 per hour and top out at $24.70 per hour, beginning next month. Starting next February, they will be paid at least $15 per hour. Previously, the pay range was from $10.30 to $20.09. Meanwhile, those managers of less-complicated departments like clothing, and consumer products like paper towels and luggage, will earn from $10.90 to $20.71 per hour. Previously, they earned from $9.90 to $19.31.

The hikes come as Wal-Mart is phasing out the position of zone managers, and reassigning those jobs at its stores to assistant managers or department managers in a bid to offer front-line workers more control over how their areas should be run. At the same time, it's adding up to 8,000 more department manager jobs, who will oversee one specific area.

Baltimore homicide rate worse in 40 years -- USA Today. 

With 43 homicides, May is deadlier than August 1990 when 42 people were killed, according to USA TODAY data.

There have been 116 homicides in Baltimore in 2015. By this time last year, homicides hadn't hit triple digits. As homicides rose in May, the number of arrests plummeted.

Detroit is not doing much better; homicides up 25% through April -- MetroTimes.

Through Wednesday, Detroit police recorded 62 homicides, according to data from the city — a 24.2 percent increase over the entire three-month period in 2014, when there were 47. Last year, the city didn't report 62 homicides until mid-April, city data shows.

The recent uptick in March attributed to almost half of this year's total, with 27 homicides. In March of last year, police reported 15 homicides.

There was also a roughly 16 percent increase since 2013, when there were 53 homicides from January through March, according to data maintained by The Detroit News. Data from previous years was not readily available.

Comparatively, in Chicago, with a population of 2.7 million, 78 homicides have been recorded since the beginning of the year, according to the Chicago Tribune. Detroit's population is estimated to be about 688,000.