Thursday, July 30, 2015 -- Part I

Updates

July 31, 2015: from Reuters --

Next Friday's jobs data is expected to show the U.S. economy created 225,000 new jobs in July, just a tad more than in June, what was deemed a fairly disappointing report, according to economists polled by Reuters. The unemployment rate is expected to hold steady at 5.3 percent.

Later, 12:47 p.m. Central time: remember, the US changed the formula for calculating the GDP because of persistently "low numbers." I can't make this stuff up. 

The way some parts of U.S. gross domestic product are calculated are about to change in the wake of the debate over persistently depressed first-quarter growth.

In a blog post published Friday, the Bureau of Economic Analysis listed a series of alterations it will make in seasonally adjusting data used to calculate economic growth. The changes will be implemented with the release of the initial second-quarter GDP estimate on July 30, the BEA said.

Although the agency adjusts its figures for seasonal variations, growth in any given first quarter still tends to be weaker than in the remaining three, economists have found, a sign there may be some bias in the data. It’s a phenomenon economists call “residual seasonality.”

The Obama administration will give the mainstream media any number they want. Apparently it didn't work as planned: the 1Q15 GDP when revised revealed a slight contraction in the economy. Maybe the revision of the revision hasn't been completed.
 

Original Post

Yesterday, I wrote: Second, the rush to EVs seems to have peaked, another passing fad. Today, The Los Angeles Times confirms: EVs seem to have peaked, another passing fad. Tesla offering $2.000 credit. Hope to lure luxury car buyers. Really? With a $2,000 credit for a $160,000 car? Okay. The Times notes that Tesla "deliveries" have decreased this past year while overall car sales have increased. Tesla sold 8,950 cars in the US during the first six months of this year -- holy hot car, Batman -- the goal was to deliver 55,000 cars this year, wasn't it? -- down 1.6% from the same period a year earlier.

24/7 Wall Street headline: SolarCity posts big loss, forecasts bigger loss next quarter. Wow.

GDP: 2.4%. The Fed can now increase "the interest rate" to keep the economy from overheating.

But now the AP is reporting that the US economy grew more slowly over the past three years than the Obama administration had previously reported. Anyone surprised? Coming from the Obama administration? LOL.The economy expanded at just a 2 percent annual rate from 2012 through 2014, down from a previous estimate of 2.3 percent. Nearly all the weaker-than-expected growth occurred in 2013, when the government now says the economy expanded just 1.5 percent, much less than its previous 2.2 percent estimate. I guess now that the Obama administration is coming to an end, it's safe to start reporting "the truth." But only some of the truth, I suppose. The worse expansion since WWII was even worse than originally reported.

Reuters reports that jobless claims increase, but "still near" cycle lows. Actually, the number surges, up 12,000. The four-week average fell 3,750 (due to last week's anomalous report) to 274,750. 

Active rigs in North Dakota:

	7/30/2015	07/30/2014	07/30/2013	07/30/2012	07/30/2011
Active Rigs	73	191	181	206	183

The number of active rigs in North Dakota has remained at 73 for quite some time now; one wonders if the person in charge of updating active rigs is on vacation.

RBN Energy: the physical-financial relationship behind the US natural gas benchmark.

The set up of the physical delivery mechanism at Henry Hub has successfully met all of these criteria. With its many interconnects, ample receipt and delivery capacity, proximity to gas production, access to long-haul takeaway pipes that reach demand markets and trading structures, Henry has stood the test of time over the past 25 years.

Given the importance of the link between the physical and futures market, the challenge for Henry Hub today and going forward is the drastic changes now underway in the physical market. Offshore gas production volumes coming into Henry from the Gulf of Mexico have declined, in turn reducing physical flows at the Hub.

And, Henry is fast turning from a supply point to a demand-driven hub that will redistribute Marcellus/Utica supply to Gulf Coast LNG export terminals and other new demand facilities in the region. To understand these changes and how they could impact the futures contract, we need to understand what truly goes on in the physical market at Henry Hub and how it maintains its liquidity. Next time, we’ll dive into interconnect capacities and pipeline flows through Henry.