Week 27: July 3, 2016 -- July 9, 2016

The US stock market surges to new highs or near-new highs despite Brexit.  It was "lifted" by a great jobs report, though the underlying data is not particularly supportive.

The US is coming very close to a new record: more than 10 million bbls/day of "gasoline delivered." Record storage at Cushing noted. There is further evidence that OPEC is severely pinched.

US propane exports: one of the top US energy stories of the decade. It just never quits: the shale boom's new winner -- propane.

And possibly the story of the century: US holds more oil reserves than either Russia or Saudi Arabia. 

Operations
Rystad Energy suggests that decline in Bakken production is due to "temporary" issues 
Decline rates "way down"

Bakken 101
Bakken OOIP; Saudi Arabia's OOIP; Proved, Probable, Possible Reserves

Eight New Permits; 29 Active Rigs -- July 8, 2016

Active rigs:

	7/8/2016	07/08/2014	07/08/2013	07/08/2012	07/08/2011
Active Rigs	29	191	186	213	170

Eight new permits:

• Operators: Hess (5), Enerplus (3)
• Fields: Blue Buttes (McKenzie), Antelope (McKenzie)
• Comments:

No reports of any DUCs completed.

On Recipes -- July 8, 2016

This is nothing about the Bakken. If you came here for the Bakken, scroll down or check out the sidebar at the right.

In the past several years I have really been enjoying cooking. My wife is probably among the best cooks in the western world. She has recipes on 3 x 5 cards, but seldom needs to look at them. She remembers the correct temperature to cook fish or bake chicken. I don't know how she does it.

I've always thought recipes seemed too complicated in all the recipe books one sees at Barnes and Noble. If not complicated, certainly too detailed. I'm talking about cooking here, not baking.

Baking: one must be "exact."

Cooking: lots of flexibility.

I was reminded of that while reading Leonard Mlodinow's Subliminal: How Your Unconscious Mind Rules Your Behavior. In the very first chapter he talks about recipes. He notes that even the font of the recipe in those cooking books affects one's feeling about a recipe. A recipe in fancy and hard-to-read italics is often perceived by the reader "as too difficult to try."

I would go a step further. When I see a list of ingredients, and a paragraph how to make a marinade, for example, my eyes glaze over. I don't need the details. Give me the big picture. I 'll figure out the rest. That's why I love the way I presented the bread recipe as seen on SortedFood the other day:

Bread

• 4 cups flour
• yeast
• salt, tsp
• 1.5 hour to rise
• punch down, in bread pan for another 1 hour
• in oven with tray of water on bottom of stove 
• 15 minutes at 425; 25 minutes at 350

That was it. For some folks even that much was too much. For some folks, the only thing they needed was the reminder for the tray of water at the bottom of the stove.

But for me, I had to add a few more things, like salt and yeast, to make sure I did not forget. Compare that to a standard recipe for bread on the internet. Lots of words; an intimidating list of ingredients.

It seems one could accomplish the same purpose with an introductory essay on "why" bread is bread and a basic generic recipe, followed by any number of recipes, containing only modifications with lists that highlight variety or differences from the basic generic recipe, if that makes sense. But every bread recipe seems to be about 90% like any other bread recipe. And all that information is repeated.

For the bread recipe above, for example, some folks would add some sugar, some folks would add some vegetable oil. I just don't want to forget the yeast, and unlike my wife, I can never remember cooking times or cooking temperatures.

One last example: corn-on-the-cob or spaghetti -- the only thing one has to remember: ten minutes.

The Market Is Back! Brexit? What Brexit? Recession? What Recession? "Katy, Bar The Door" And Get Out Of The Way -- This Thing Is Moving -- July 8, 2016

Updates

Later, 3:19 p.m. Central Time: I posted the original post at 11:24 a.m. Central Time earlier today. Hours later, the market hits all-time highs: On Friday, the S&P 500 surged past its all-time closing high, which was set at 2,130.82 on May 21, 2015. And the Yahoo!Finance headline: Wall Street is getting more skeptical. Wow, we've been seeing that headline -- or similar headlines -- for the past year. Whatever. So, what are they skeptical about? This morning, "everyone" was cheering the jobs report -- saying it signified everything was rose. The New York Times called it "a vigorous rebound" and then listed all the good news. 

At least for now, I guess all we can do is enjoy it. And remain skeptical.

(By the way, I always consider it a good omen when Wall Street professionals -- who are skeptical -- drive the market to new highs on a Friday afternoon when anything can happen over the next 72 hours.)

The Dow finished up 250 points; the S&P up 32 points.

The Dow intraday high was 18,167, on April 20, 2016. The range of the Dow today was 17,971 - 18,166.77.  The S&P range today: 2,106.97 - 2,131.71. 

Original Post

 

The Dow up 203 points at midday.

Top story right now over at CNBC: "Big Oil is back! Chevron, BP, Exxon announce $45 billion in new drilling."

At the NYSE, there are 254 issues reporting new 52-week highs, including:

• Becton Dickinson
• Cliffs Natural Resources (been down so long, it looks like up to me(
• GE (a big whoop)

Only 9 issues hitting 52-week lows.

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Today's Job Report

I posted today's job report without much comment. The jobs report has become so "suspicious" over time that it, too, has lost any credibility.

I said I would withhold comment until analysts have more to say later today and over the weekend. The New York Times report was posted so quickly after the report was released, it's hard to believe it wasn't written ahead of time, and then a few data points added when the numbers were released.

A reader provides this update:

Regarding the post on jobs: If you look at both U2 and U6 unemployment numbers, the total number of people working in the U.S. tumbled again -- lost more people from the total U.S. workforce than were gained by today's U2 increase in jobs created number.

Further, the month to month variability of the U2 number is widely known, but rarely talked about, sadly. At a minimum a 3 month rolling average should be used to understand employment trends rather than relying on a single month "headline" number.

A reminder:

• U-6 unemployment rate: includes discouraged workers; many consider U-6 to be the "real unemployment rate." 
• BLS definitions and rates here. 

Today's "unemployment headline," I assume was U-3, and it was said to be 4.9. Yet, at the BLS link above, the U-3 unemployment rate for June 2016 is 4.9 seasonally adjusted, but 5.1 if not seasonally adjusted.

It is interesting to note that every unemployment data point (U-1 through U-6) was higher (bad) in June, 2016, compared to May, 2016, except for U-6 which decreased from 9.7% to 9.6%.

At the end of the day, the "vigorous rebound" reported by The New York Times seems to be a bit of hyperbole. The only data point that was "reassuring" was the "added jobs (and, of course, that certainly appears to be an "anomaly" or "catch-up" after two horrendous months). All other unemployment data points were trending in the wrong direction.

A "Do-Over"? -- July 8, 2016

After FBI Director Comey's explanation on why Hillary Clinton was not indicted, I strongly believe that (politically) anything can happen. In the eyes of some folks, the Constitution is a living document and it is evolving. For some, there may be opportunities for it to evolve even more quickly. Hold that thought.

It is agreed that "everyone" is "unhappy" with this year's presumptive presidential nominees: Donald Trump and Hillary Clinton. The vast majority of Democrats polled on the question would like to see President Obama serve a third term. Hold that thought.

Likewise, "everyone" in Britain seems to be upset with the Brexit vote (even some of those who voted for Brexit), and would like to hold another referendum on the exit.

This morning, Jamie Dimon says the "Brexit decision could be reversed." [It should be noted that US and UK banks will feel the brunt of the Brexit decision.]

It seems that not a lot of things make sense these days to those of us whose "coming of age" years were during the Vietnam War. The millennials appear to be coping with change quite well. 

Now, back to those thoughts that were put on hold.

One wonders if there might be a way to interpret the US Constitution to allow President Obama to serve another term. One way to do it would be to "argue" that his first four-year term was so bad that he deserves a "do-over." He was young and inexperienced when he entered office, and he pretty much spent the first four years "learning on the job." It really wasn't fair to him or the nation. President Obama's first term should really not count as one of his two terms.

He deserves another chance. Based on current popularity polls, one could make the case that at least 80% of the population would gladly give President Obama a "do-over" if that prevented either Hillary Clinton or Donald Trump from becoming the nation's 45th president.

Just don't "count" his first four years as his first term. Time to move on.

Another possibility would be to simply "put on hold" the end of this term, or "extend" President Obama's second term until two new candidates are selected.

The GOP "rules committee" is in the process of re-writing the rules to raise the number of delegates needed for a nomination, a number that would preclude Donald Trump from winning on the first ballot. And if he doesn't win on the first ballot, it's going to be a long, long, interesting night.

But if Jamie Dimon says there is a way to "do-over" the Brexit vote and if the FBI director was unable to see any "intent" on Hillary Clinton's part to violate any laws, I think there's a way for President Obama to set yet another milestone in American politics.

Remember, for many, the Constitution is a living document. For them, nothing is outside the realm of possibility. Certainly, the Supreme Court would not object. The court probably wouldn't even take the case.

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The Gay 20s

More from The New York Times story this morning on the June (2016) jobs report:

More important, economists said that if the longer-term employment picture were significantly darkening, the stress would show up in other crucial areas. It is not.

New claims for unemployment benefits have stayed at rock-bottom levels, consumer spending is strong, the manufacturing and service industry indexes have jumped, and the number of unfilled jobs, 5.8 million in April, is at record levels.

“During an economic downturn, the first place employers look to cut are unfilled jobs,” said Andrew Chamberlain, chief economist at Glassdoor Economic Research, adding that he had seen little evidence that hiring was being scaled back.

“When I look through all the data, there is no smoking gun that the U.S. economy is pulling into a recession now.” Given that the jobless rate has consistently been at 5 percent or less since last fall, Mr. Chamberlain and other analysts argue it is time to lower the benchmarks for what is labeled a good or bad report.

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Shakespeare And Dalloway

Updates

July 10, 2016: from The Los Angeles Times, another individual who re-types novels, but as "performance art":

I’d also read somewhere that Hunter S. Thompson, when he decided to be a writer, he typed [F. Scott Fitzgerald’s] “The Great Gatsby” and [Hemingway’s] “The Sun Also Rises” out on a typewriter. And so I went and bought an IBM Selectric and I did Hunter S. Thompson’s “Fear and Loathing in Las Vegas.” I proceeded to put all of the words on one page, with a second page behind it. 

I did one and I thought, “This is interesting. I’m going to explore it a bit more.” As it evolved, I realized that I wanted to do more than just a few — it could be an idiosyncratic literary pilgrimage, in places that relate to the writer and the novel’s life. For me, it was about how I can become a better reader as I walk through this thing.

Original Post

 

This helps put me in a good mood on a dark day (Dallas shooting of twelve police officers).

First, a review of Measure for Measure being produced at the Hudson Valley Shakespeare Festival; the review by Terry Teachout. Review at this link.

Second, this interview with Mark Haddon on Virginia Woolf, also in the WSJ. Interview at this link. Haddon "considers Virginia Woolf 'a genius at sentence-making.'" I agree. I wonder if he uses the word "poetic" or "prose-poem" in his interview. Let's check. Some data points from his interview:

• Haddon considers Virginia Woolf's To The Lighthouse his favorite novel
• read it slowly, if that's possible
• strangely, she seems to understand exactly what it means to be a mother -- and an aging man, as well. If you didn't know, I think it would be a shock to understand that she'd never had children
• she's interested, I think to a great extent than any other writer, in what it means to be a human being from minute to minute. The way the mind really works -- not ideas, but the experience of being a human being in real time
• sometimes in a sentence she can more from the interior of one character to another, which is also something I'm not sure any other writers have done or at least done with the same adroitness

Read it slowly, if that's possible.

I was so fascinated by Virginia Woolf that I typed the entirety of two of her novels: The Waves (1931) and Mrs Dalloway (1925). It is quite amazing. In addition to typing it out, I have read Mrs Dalloway several times. It is amazing how timeless, how relevant it remains. 

We Start The Day With 30 Active Rigs -- July 8, 2016

Active rigs:

	7/8/2016	07/08/2014	07/08/2013	07/08/2012	07/08/2011
Active Rigs	30	191	186	213	170

RBN Energy: can a new set of buyers reinvigorate the LNG market?

With liquefaction capacity and supply of liquefied natural gas on the rise and LNG demand flat, prices for super-cooled, liquefied gas are low and may well stay low into the early 2020s. That’s a concern for LNG suppliers, who (like all suppliers) would prefer it if demand was soaring and supply was a little tight. There are some rays of hope, though, in what many have seen as a gloomy time for the LNG sector. After all, with spot LNG prices below $5/MMBtu (far lower than they were 30 months ago) and ample supplies of LNG available, a growing list of nations are looking either to become LNG importers or to significantly expand their LNG imports. Today, we continue our review of the LNG market with a look at the new demand that may be spurred by supply surpluses and low prices.

So far in this blog series, we’ve kept our focus on the three “toos” in our song-related title, namely the facts that there’s too much new liquefaction capacity coming online worldwide, that there’s been too little growth in LNG demand, and that it’s probably too late to prevent a multiyear period of LNG supply glut and low LNG prices.

We discussed the 140 million tonnes per annum (MTPA; 7.82 MTPA equals 1 Bcf/d) of new liquefaction capacity coming online in 2016-20 (boosting worldwide capacity by 45%, to 448 MTPA), and the growing roles that Australia (which is adding 50 MTPA, or 6.4 Bcf/d) and the U.S. (adding 62 MTPA, or 7.9 Bcf/d) will play.

We also noted that, for a variety of reasons (mild weather, weak economies, etc.), LNG demand grew by only 1% in 2014 and 2.5% in 2015 –– far less than the anticipated 5 to 7% annual growth rate on which many of the decisions to build new, multibillion-dollar liquefaction plants and LNG export facilities were based.

As a result, the gap between available liquefaction capacity and LNG demand will likely continue growing through the rest of this decade, even if demand growth were to move up toward those original expectations.

Excess capacity and weak demand growth have weighed down LNG prices. As recently as early 2014 they were well above $15/MMBtu range, but now they are well below $10/MMBtu for oil-indexed contracts (thanks to the collapse in oil prices since mid-2014) languish below $5/MMBtu on the spot market.

June Jobs Report -- "A Vigorous Rebound" -- The New York Times -- July 8, 2016

Updates

July 9, 2106: unemployment for African-American males, 16 - 19 years of age jumped from 28% in May (2016) to June (21016). Some attribute the jump to a burst of $15/hour minimum wage laws going on the books as of July 1, 2016. 

July 9, 2016: to get past the paywall, google "what the seesaw jobs numbers are really telling us nyt." I found the op-ed on the jobs report quite ingenuous.

1. The writer crows about the great jobs report after two months of shocking and stunning numbers; one month (May) was so low as to be laughable. Had this been reversed (two great months followed by a very low number) the analysts would have called it an anomaly, an exception, a one-off, something to ignore since all previous months were doing so well. But not this time: this huge number, the analysts say, tells us the jobs market is great. So, some numbers the writer believes, some numbers the writer does not believe, I guess.

2. The writer says "let's not just look at this one number. Let's average it with the previous two months." What do we get? 149,000. Which he tells us is great. See "magic numbers" below. No, 149,000 is not great.

3. Wow, did anyone catch this? I just saw it. I don't think I'm misreading it. The May number was shockingly/stunningly low. It was originally reported to be 38,000 jobs added. But apparently it was revised and no one has reported it. If I'm reading this correctly, it was revised to an almost unbelievable 11,000 jobs added in May. The writer glosses over this.

4. The writer then tries to tell us that the lousy jobs numbers was "forseeable." With so many jobs having been added during Obama's recovery, the number of jobs added late in the recovery would drop. LOL.

5. Time to stop; it never quits. One more thing. The writer crows about an official unemployment rate lower than 5% but neglecting to tell us that a record number of Americans have dropped out of the labor force.

Original Post

 

I had to go back and remind myself what the "magic numbers" with regard to jobs were:

The Magic Numbers

First time claims, unemployment benefits: 400,000 (> 400,000: economic stagnation) 

New jobs: 200,000 (< 200,000 new jobs: economic stagnation)

Economists estimate the labor market needs to create about 125,000 jobs a month to keep the unemployment rate steady, though estimates vary -- Reuters. 

I will stick with 200,000 (the "magic number" prior to the Obama administration) -- it's a nicer, "rounder" number to remember.

Previously:

• June 2, 2016: horrendous job report for the month of May; US added only 34,000 jobs; unemployment rate plunges to 4.7% from 5.0% as more Americans drop out of workforce. 
• May 6, 2016: April jobs report. One word: Awful. Actually, worse than awful. Atrocious. 

I had to remind myself of those numbers and the reports from the past two months because today the "world was watching" to see the US June jobs data. The results are out and The New York Times calls the June data "a vigorous rebound":

The government reported on Friday that employers added 287,000 workers in June, a vigorous rebound that helps sets the stage for the economic themes advanced by the presidential nominees.

That is an impressive number. Jumping from 165,000 in April, and a quite stunning number of only 34,000 in May.

I think I will leave it at that for now. It will be up to analysts later to tell us what they thing of the new number, 287,000 jobs added this past month.

The unemployment rose from 4.7% to 4.9%.

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Sad, Sad Day

Following #BlackLivesMatter "protest", two or more snipers shot at least eleven Dallas policemen/women and one DART police officer.

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Smith & Wesson Poised To Open At All-Time High

Link here.