Not-Ready-For-Prime-Time Thoughts On Hillary And Her Anti-Fracking Comments During The Campaign -- October 19, 2016

A reader asked me about my thoughts with regard to Hillary and her campaign promise to kill fracking. This was my "not-ready-for-prime-time" reply with minimal editing:

I honestly don't know about Hillary. This is the problem: she is no longer (or never was) her own woman. She will be defined by whom she puts around her. (The White House Iranian Committee will grow larger, much larger.)

She had to be against fracking during the campaign to "keep" her base, and to fight off Bernie.

But deep down, she is a lot more reasonable: she was in support of the Keystone; she was in support of fracking before the primaries. I don't think she would spend three minutes with the Standing Rock Reservation; she certainly would not visit: they have no money to give her.

Hillary can be bought and persuaded; she is not ideological like Obama. She can be pragmatic. The unfortunate thing is that if she is ill, she will not have the stamina to be pragmatic and those around her will run the show.

If she wins by a landslide, the EPA is hers; and the fossil fuel industry is in for a shock.

If it's a close vote, and she has no mandate, it might not be quite as bad.

The good news: the Dems are no different than the GOP (in the House and the Senate) when it comes to watching their personal pocketbooks. They are all white males with silver/balding heads. Their only difference is their rhetoric, it seems. For all their talk, their sentiments are about the same.

At the end of the day, I think global events, Russia, and Saudi Arabia will account for 90% of where oil goes; what oil does. I think, at best, Washington politics will account for 10% of where oil goes; what oil does.

More likely, this is how it breaks down, what influences/accounts for where oil goes / what oil does / how it prices out:

• global, non-US, geo-politics (Saudi, Russia, Iran): 90% 
• integrated oil companies (CVX, XOM, COP): 9% 
• Washington politics: 1%

Saudi Arabia is truly in a fight for its life. It can't last two more years with $50-oil.

Russia can last a long time with $50-oil -- they held out in Stalingrad for a long, long time some decades ago -- but Putin won't like $50-oil. So, regardless of what the US wants, it's hard for me to imagine oil staying in a trading range of $50 to $60 for the next two years.

If the price of oil remains at $50, Saudi Arabia is toast: the Mideast will blow up as Iran, Iraq, and Russia all try to seize Saudi's oilfields.

I truly doubt Hillary will want to confront Putin in the Mideast over oil and the risk of initiating WWIII.

If Russia-US do end up in a shooting war because of Saudi Arabia, it will be do to a misstep, a mis-calculation, a la Bay of Pigs, or the Gulf of Tonkin, or the assassination of a Prince-Duke.

By the way, if Hillary wants to hold off Putin, she better be "Thatcherite-steel" in her first head-to-head with him; if she waffles, Putin "has her." Against Putin, I have no doubt Hillary can hold her own but I wouldn't bet the farm on her. If her health goes, which I suspect it will, the US may, in fact, be governed by a part-time president, which wouldn't be all bad. Except that Putin would pounce.

Having said all that, it has been said that historically two-term presidents focus on domestic issues the first term, and then when they fail at that, they turn to global issues.

My hunch is that with her SecState resume and her globe-trotting resume, she will focus on global issues sooner than her predecessor. He withdrew; she will get back into the global fray. The international stage is her comfort zone, although her health will preclude her from doing much traveling.

When it comes to international trade she is truly the antithesis of Trump, though that doesn't mean Trump's policies might be worse; he's a much better negotiator and that could make up for bad policy.

As long as gasoline is $2.00 / gallon, Hillary can do anything to and say anything about fracking; she can even kill it. But if she does, the price of natural gas sky-rockets in Philadelphia -- in fact, I think that's the problem for folks in North Dakota. They equate fracking with oil. Without fracking, the entire East Coast implodes -- they destroyed nuclear and coal, and shutting down fracking in Marcellus and Utica ... well, that's a show-stopper right there.

But back to gasoline (or natural gas, for that matter; it's just that I understand gasoline better): once gasoline starts heading to $3.00 in Oklahoma (least expensive in the US) it will head to $5.00 in California and that's when Hillary gets the memo, "maybe fracking is good for the US."

For investors this seems to be an open-book test: I can't see oil trending below $50. I have trouble seeing oil remaining in a trading range between $50 and $60.

For very, very conservative investors who fear anti-fracking forces in Hillary's administration, focus on legacy oil giants (XOM, CVX, COP).

For investors willing to take more risk, look at the survivors in Texas/Permian: EOG, Pioneer, etc.

For speculators, start accumulating shares in Bakken companies.

For me, I'm in the very, very conservative group.

China's Crude Oil Production -- Second Greatest Monthly Decline On Record -- October 19, 2016

Some time ago, I had a post with this heading: China's peak oil problem. That was September 13, 2016. Now look at this, over at Rigzone. You cannot spin this story: China's September crude oil output was its second-biggest decline on record. Read that again: China's September crude oil output was the second-biggest decline on record.

Yes, there is such a thing as "Peak Oil." Just ask China. 

China's crude oil production fell 9.8 percent in September from a year earlier, marking the second-biggest year-on-year decline on record, government data showed, as major producers shut high-cost wells to rein in spending.

Domestic crude output fell to 15.98 million tons, or 3.89 million barrels per day (bpd), near the lowest in six years on daily basis, the National Bureau of Statistics data showed, reflecting both spending cuts at oil fields and the closure of old wells.

After that, lots of jaw-jaw at the linked article. It is what it is. Yes, I know, China says they dropped domestic production because of large imports the previous month. But if that's the case, that also speaks volumes about China's domestic oil industry.

 
**********************

The Apple Page

Apple has officially announced an October 27th Mac-Centric Event. The excitement seems to focus on the MacBook Pro.

I have both: the MacBook Pro and the MacBook Air.

The MacBook Pro has one moving part: the hard drive.

The MacBook has no moving parts.

Without question, I will never go back to a machine with moving parts (excluding keyboard, track pad; I'm talking about hard drives).

**********************

A Note For The Granddaughters, Especially Arianna

Alexander Hamilton has gotten a lot of attention recently.

From Valiant Ambition: George Washington, Benedict Arnold, and the Fate of the American Revolution, by Nathaniel Philbrick, c. 2016, page 201, is quite interesting. This is a description of the Caribbean during the US revolutionary war:

There was nowhere in the world where money could be made at such a staggering clip as the Caribbean. In 1776 the British West Indies generated 4.25 million pounds of trade, almost three times what had been made by great Britain's East India Company.

France was just as dependent on her Caribbean possessions, which accounted for more than a third of all her overseas trade. If Britain could scoop up a few more of these precious islands from the French, it might provide a way to pay for what had so far been a financially ruinous war Britain was even considering giving up entirely on its American possession so that it could concentrate what resources it still had left to fighting the French.

For Philadelphia's loyalists it was almost beyond comprehension: after a mere eight-month British occupation, they were about to suffer the same reversal of fortune that their counterparts in New Jersey and Boston had already experienced and get handed back to the patriots.

Putting that paragraph into perspective, and reading the history of Alexander Hamilton's first 18 years of life (wiki) puts much of the Revolutionary War and the financial history of the US into perspective.

Perhaps the one article you should read today if you have time for only one article (and this article is very, very long): "Adding a Zero." The profile of Sam Altman in The New Yorker, October 10, 2016, issue -- the story of Y Combinator and "accelerators."

 

In the same issue, a huge miss by The New Yorker, a four-page review of "The Birth of a Nation," Nat Turner's movie on a slave rebellion, arriving amid a resurgence in movies about slavery. The movie bombed. No links. Probably not hard to find if interested. I'm not.

In the same issue James Surowieki whines about racial economic inequality, which for him, revolves around one issue: home ownership. He does manage to slip in his own suggestion to solve things, by spending other people's money, which is in the concluding paragraph of this really, really awful op-ed:

Closing the racial wealth gap would require radical measures, like reparations, which few politicians will discuss. But what's really dismal is that even reforms that could keep the gap from getting wider -- ending the mortgage-interest deduction, challenging residential segregation -- are politically toxic.

Wow, I'm glad I canceled my subscription to The New Yorker.

But then this, in this week's issue (I'm catching up on The New Yorker after being gone for several weeks), there is a profile on Leonard Cohen. The title in the print edition: "How the Light Gets In." On-line, the same essay, "Leonard Cohen makes it darker." Leonard Cohen, no doubt, was on the short list of those who nominated Bob Dylan for the Nobel Prize for Literature. I prefer a profile on Leonard Cohen rather than on Bob Dylan: Cohen, I think, is a much, much deeper thinker. Dylan tapped into an American conscience that wasn't particularly deep (think Joan Baez) whereas Cohen went to the depths of the human condition.

The big loser in all this was the legacy of that artist who was formerly called Prince. He left no will. He never sat for an interview (of which I am aware). He was incredibly secretive even by the standards of musicians. He seldom toured and when he did, they were incredibly limited in venues. Cohen continues to tour; and Bob Dylan really continues to tour, even at age 75. Cohen has written books. So has Bob Dylan, including his acclaimed memoir, volume one. If the artist formerly known as Prince wrote a book, I am unaware.

Speaking of books, this might be very, very interesting. I'm serious. Future Sex, Emily Witt, c. 2016. More on this later. Maybe.

Eight New Permits; Seventeen (17) Permits Renewed -- October 19, 2016

Active rigs:

	10/19/2016	10/19/2015	10/19/2014	10/19/2013	10/19/2012
Active Rigs	33	66	190	184	186

One well coming off the confidential list Thursday:

• 27416, 1,672, HRC, Fort Berthold 148-95-25B-36-4H, Eagle Nest, 33 stages, 5 million lbs, t4/16; cum 3K after 5 days;

Eight new permits:

• Operators: EOG (4), Whiting (4)
• Fields: Stanley (Mountrail); Springbrook (Williams)
• Comments: for EOG, four permits on 8-155-90; for Whiting, four permits on 30-155-100

Seventeen (17) permits renewed:

• MRO (5): a Becky permit; a Hans USA permit; a Post USA permit; a Ballmeyer USA permit; and a Chameleon State permit; all except the Chameleon in Mountrail County; the Chameleon State in McKenzie County
• Slawson (4): two Rebel Federal permits; one Voyager permit; and one Lunker Federal permit, all in Mountrail County
• Enerplus (3): a Beaver Creek permit, a Brugh Bear permit, and a Zion permit, all in McKenzie County 
• Newfield ((2): two Bernice permits in McKenzie County
• Whiting: one Skunk Creek permit, Dunn County
• Cornerstone: one Tafelmeyer permit, Burke County
• QEP: one MHA permit in Dunn County

Two permits canceled:

• QEP: an MHA permit in Dunn County (#26731)
• Fram Operating: a Schlak permit in Renville County (#19782)

No DUCs reported as being completed.

Bakken 2.0 -- October 19, 2016

Note: Bakken 2.0 is important enough that the original post will remain at the top. Updates will be provided at the bottom. 

I think we've just entered Bakken 2.0 with the announced Oasis-SM Energy deal.

SM Energy presentations here.

The Montana Bakken mini-boom began in 2000. At that time, the spot price of WTI at Cushing: around $30 / bbl. There was no infrastructure and the land rush had not begun.

The North Dakota Bakken boom began in 2007. At that time, the spot price of WTI at Cushing: around $80 / bbl but quite a range. There was no infrastructure. The land rush would begin soon. Leasing rates were astronomical. Most wells were short laterals, costing upwards of $6 million/short laterals with EURs less than 300,000 bbls. The Bakken hit its stride about three to five years later. Between 2010 and 2012, the spot price of WTI at Cushing ranged from $70 to $105 / bbl with much volatility.

I am not sure what will define Bakken 2.0 in  hindsight, but these are the indications suggesting we may be in the early stages of Bakken 2.0, whatever that means:

• we're finally seeing some realignment of ownership of mineral acres in the Bakken; the SM Energy - Oasis deal
• completions are leaning toward mega-frack/high-intensity fracks (50 stages; 10 million lbs of sand) -- see Mike Filloon, and others
• the norm for Bakken wells has been long laterals; now costing much less than in 2007 
• the infrastructure is in place (pad drilling, pipelines, roads)
• spot price of WTI at Cushing is around $50 / bbl and trending upward

If we are in the early stages of Bakken 2.0, then we should see Bakken 2.0 hit its stride in three to five years, 2019 to 2021.

Supporting Posts

March 5, 2017: aspects of Bakken 2.0 --

• we're starting to see the survivors: EOG, Whiting, Petro-Hunt, Newfield, CLR, XTO but not all particularly active; Whiting, Petro-Hunt, maybe Newfield, seem more active than others
• we're seeing new names in the Bakken, but generally "hedge fund"-like mineral owners, not operators
• some operators sticking with 4-million-lb fracks; others moving toward 10 million; some to 15 million; EOG with some incredible 20+ million-lb fracks
• halo effect easy, easy to find: bump in production is huge in some cases
• operators will be able to do with 50 rigs what used to take 200 rigs (currently 45 rigs, vs 35 rigs one year ago)
• pad fracking now the norm
• DAPL almost ready to come on-line; if not shut down, it could be defining moment in Bakken 2.0 (if WTI remains near $55)

October 25, 2016: CLR's 2nd 10-well pad in two days.

October 25, 2016: Oasis -- when planning meets opportunity. 

October 24, 2016: Comprehensive Plan for Williston and Williams County (draft) released in mid-October, 2016. 

October 23, 2016: Filloon's article, which appears today, on the status of the Bakken/Three Forks supports my contention that we are in the beginning stages of Bakken 2.0.  

Oasis - SM Energy Deal In The Bakken: $14,000 / Acre -- October 19, 2016

More clarity on the recent Oasis - SM Energy deal.

October 19, 2016: Oil & Gas Journal on this deal:

• Oasis: acquires 55,000 net acres; 226 gross operated locations; from SM Energy; $785 million
• acquisition: 50 million boe of proved reserves; 63% of which is consider proved developed producing and 77% of which is oil; will produce 12,400 boe/d 4Q16
• Oasis: 3Q16 production averaged 48,509 boe/d; 81% oil
• Oasis: increased its full-year standalone company guidance to 50,000 boe/d
• Oasis: current well costs: now down to $5.2 million on 4-million-lb-slickwater completions
• Oasis' natural gas processing plant in Wild basin now online; operating as planned; will allow October, 2016, production to average over 50,000 boe/d

$785 million / 55,000 acres = $14,000/acre

A Breakout? Oil Up Almost 3%; Solidly Above $51 -- October 19, 2016

WTI at $51.69. A year from now, we're all going to wish we had our own personal 1,000-bbl storage capacity for gasoline. Gasoline demand appears to have reached its seasonal low. 

No links now, but it's hard to believe that just a few months ago, GDPNow forecast a 3.3% growth rate for 3Q16; that rate is now projected to be under 2%, at 1.9%. And yet the market hangs in there.

************************

The Apple Page

The Surface Looked A Bit Deflated

It Just Doesn't Get Any Better Than This

From USA Today:

Bill Belichick is sticking to his old-fashioned ways on one technological front.

After the image of the New England Patriots coach slamming a Microsoft Surface tablet on the sideline in a Week 4 game against the Buffalo Bills went viral, Belichick explained Tuesday why he is fed up with the product.

“As you probably noticed, I’m done with the tablets," Belichick said. "They're just too undependable for me. I'm going to stick with pictures, which several of our other coaches do, as well, because there just isn't enough consistency in the performance of the tablets. I just can't take it anymore." 

I've had similar thoughts about the Microsoft Surface tablet. 

********************************

And The Streets Are Made Of Gold Bricks
Except in Ferguson, Baltimore, and Cleveland

From Yahoo!Finance:

Dimon addressed a wide array of topics from the need for the Federal Reserve to raise rates, to the benefits of corporate tax reform.

It’s worth watching the full 45-minute exchange between the two titans of business (the other was Warren Buffett), especially ahead of the 2016 presidential election.

During the panel, Dimon said that Republicans and Democrats shouldn’t degrade on another over the problems being raised by both sides.

He went on to offer an upbeat assessment on America.

“America has the best hand ever dealt of any country on this planet today and ever. And Americans don’t fully appreciate what I’m about to say.”

He continued: “We have peaceful, wonderful neighbors in Canada and Mexico. We have the biggest military barriers ever built called the Atlantic and the Pacific. We have all the food, water, and energy we will ever need. We have the best military on the planet and we will for as long as we have the best economy.

And if you’re a liberal, listen closely to me in that one. OK, because the Chinese would love to have our economy. We have the best universities on the planet. They’re great ones elsewhere, but these are the best. We still educate most of the kids who start businesses around the world. We have the rule of law, which is exceptional. If you don’t believe me we can talk about Brazil, Russia…Venezuela, Argentina, China, India. Believe me, it’s not quite there.

We have a magnificent work ethic. We have innovation from the core of our bones. You can ask anyone in this room…It’s not just the Steve Jobs. We’re the widest, deepest financial markets the world has ever seen. I just made a list of these things. Maybe I missed something. It’s extraordinary. It’s extraordinary. And we have it today.”

****************************

A Note for the Granddaughters

At the Monet: The Early Years exhibit at the Kimball Fine Arts Museum in Ft Worth, Texas, there were several paintings of the famous Holland windmills when Monet returned to the continent after a short period in England (to evade the French draft when the Franco-Prussian war broke out).

He had set his sights on the scenic and touristy Zaandan. It was then that I had the epiphany.

I was coincidentally reading a book on the Frisians. The Frisians settled at the mouth of the Rhine where it enters the North Sea, near the present day border between Holland and Belgium. Only recently are archaeologists learning more about this ancient history. Apparently there was a temple for their goddess who watched over Frisian sailors at Domburg, on the left (?) side of the Rhine. The book mentioned islands in the area that had been fought over by the ocean and the Frisians. In the end, with all those beautiful windmills, mankind won and the little islands eventually came to be Zeeland.

From wiki:

Dutch explorer Abel Tasman sighted New Zealand in 1642 and called it Staten Landt, supposing it was connected to a landmass of the same name at the southern tip of South America.

In 1645, Dutch cartographers renamed the land Nova Zeelandia after the Dutch province of Zeeland. British explorer James Cook subsequently anglicised the name to New Zealand.

The epiphany was not that New Zealand, if discovered by the Dutch, would be named after a Dutch locality. The epiphany is this: with all the possible names for this landmass that the Dutch could have chosen, they named it after the tiny little area near the home of their temple to the goddess who had watched out for their safety.

Another two dots connected.

Oh. My. Goodness. I just noted that date, 1645, while formatting this post.

1645 sounded very familiar.

I went back to Michael Pye's The Edge of the World, c. 2015, page 4, in the introduction: the temple at Domburg was "uncovered" in January, 1647, after "high winds tore up the dunes and made the sea wild. The sand was forced out of the way to show something in the subsoil that should have never been there: stone. There is no stone at all on the coast near Domburg; there is only sand, peat, clay."

That turned out to be Domburg and the temple to Hehalennia.

Apocryphal or not, it will help me tie together a number of "events."

***************************

Valiant Ambition: George Washington, Benedict Arnold, and the Fate of the American Revolution

Nathaniel Philbrick

c. 2016

DDS: 973.4 PHI

Chapter 8

The Knight of the Burning Mountain

Chapter 7
Chapter 6
Chapter 5
Chapter 4
Chapter 3
Chapter 2
The origin of the submarine.
Chapter 1
First mention: nothing transcribed.

Chapter 8 follows.

The chapter begins on May 8, 1778:

• frigate Porcupine arrived at Philadelphia
• William (ARMY) Howe will be replaced by Sir Henry Clinton
• Brits will be redeployed against French St Lucia, taking 5,000 British troops
• Red Coats will become a skeleton of its former self; will be consolidated in New York
• his predecessor had spent six months trying to conquer

French recognition of the United States: what was once a colonial rebellion was now a world war
Britain now besiege on fronts as far away as India; and as close as the English Channel; the focus of the conflict changed from North America to the sugar-rich islands of the West Indies

• British islands in the Caribbean were considerably more economically important to Brits than North America
• short summary of how much money could be made in the Caribbean (remember, this is where Hamilton came from -- this would be a good time to review Hamilton's upbringing and coming of age in the Caribbean (wiki)

Passage of the Declaration of Independence had forced Americans to make a choice to which side they belonged

• Benedict Arnold, in 1778, still recovering from a leg injury; could not fight
• June, 1778: obvious that the Brits were preparing to leave Philadelphia
• By now, Benedict Arnold had lost both his health and his fortune to the cause; he wanted to get back as much as he could; he was not contemplating treason, simply getting back what was his; he was not alone
• Washington was in similar straits
• June 18, 1778: the Brits were gone (from Philadelphia)
• Arnold was on orders to leave Valley Forge and return to "take" control of Philadelphia (Washington gave the orders)

With the entry of France, Britain was desperate to end the war.

• Clinton was fleeing Philadelphia; may even have to flee NYC; give up America altogether for Nova Scotia
• June 19, 1778: Geo Washington and 13,000 troops march from Valley Forge

Battle of Monmouth, June 28, 1778

• Geo Washington did not know it then, but this would be his last battlefield encounter until the Siege of Yorktown.

Meanwhile, Arnold had his hands full running a chaotic Philadelphia

July 14, 1778: Geo Washington receives word that the French have arrived; overnight the Americans have naval superiority (although it was the French)

• Again, Sandy Hook: July 11 -- French arrive; ready to enter New  York Harbor where Clinton was; Howe still there and set up defensive blockade; stand-off for ten days; but French did poorly; lost two naval battles; limped back to Boston for repairs

Rest of the summer, 1778: Geo Washington spent in White Plains, where he could keep close eye on Clinton in NYC

• even though the French had lost two naval battles; the Brits were bottled up in NYC

Politics with the adoption of the new constitution in 1776; everything topsy-turvy

• Pennsylvania's farmers, artisans and mechanics (many of them Scotch-Irish Presbyterians) were in control but did not have financial wherewith of the wealthy Quakers and Anglican landowners
• those voted out of office called themselves Republicans: they tended to be well-to-do; enjoyed the finer things in life; their opponents, now in power, called themselves Constitutionalists
• Arnold: politically involved; the outrageous provocateur
• Arnold: passionate, excitable, intelligent; troubling behavior as governor of Philadelphia
• chapter ends with this: "Washington's former adjutant general, the Philadelphia lawyer Joseph Reed, pushed him [Benedict Arnold] over the edge 

Update On Natural Gas CAPEX For 2017 -- RBN Energy -- October 19, 2016

Pretty cool: The Dickinson Press reporting from Theodore Roosevelt National Park North Unit -- this would be the unit near Watford City -- 100 bison are being removed from the park and will go to Native American tribes in South Dakota, Oklahoma, and Washington. 

"Let them eat cake." -- The Federal Reserve? "Let's raise raise." From Bloomberg: US housing starts unexpectedly drop on multi-family-units.

New-home construction in the U.S. unexpectedly fell in September on a plunge in multifamily building while permits rose more than forecast, in signs of fitful progress in residential real estate.

Residential starts declined 9 percent to a 1.05 million annualized rate, the lowest since March 2015, a Commerce Department report showed Wednesday in Washington. The median forecast of economists surveyed by Bloomberg called for a rise to 1.18 million. Permits, a proxy for future construction, jumped 6.3 percent to the fastest pace since November.

***************************

Back to the Bakken

Oil futures up slightly: 7:03 a.m. Central Time -- up 71 cents at $51.06.


Active rigs:

	10/19/2016	10/19/2015	10/19/2014	10/19/2013	10/19/2012
Active Rigs	32	66	190	184	186

RBN Energy: some US producers stomp on the gas.

The past production profiles of the ten companies in RBN’s Gas-Weighted E&P peer group are dramatically different from the Oil-Weighted and Diversified U.S. E&Ps, boosting production by over 18% from 2014 to 2015, while the output of the other two peer groups was virtually flat. The group as a whole finally put on the brakes in early 2016 because of mounting debt and persistent low gas prices, cutting capital investment by 49% to dampen production growth to 4%. However, a small group of producers with solid balance sheets and strong hedging protection continue to target double-digit output growth. And with gas prices over $3.00/MMbtu, more growth is on the way.  In today’s blog we discuss 2016 capital spending and production for our representative group of E&Ps whose operations are primarily focused on natural gas.

Today we are taking a deep dive into the ten companies that comprise our third peer group, Gas-Weighted E&Ps, eight of which are primarily Appalachian producers. Figure 1 shows that the Gas-Weighted E&Ps are planning to slash spending by 49% in 2016 (red oval); after a 28% decline in 2015; they have reduced capex by 64% since 2014. These spending cuts, however, have not diminished the group’s production outlook. The production response lagged, as output increased by nearly 18% to 5.5 Tcfe in 2015. Overall, that forecast fell to just a 3.1% production increase in the second quarter 2016, and is about 2% lower than original 2016 production guidance.  However, four producers, Rice Energy, EQT, Antero Resources, and CONSOL Energy, are forecasting double-digit production growth (green ovals), while the remaining six expect an average 5% reduction in output.

Saudi Arabia to offer international investors $17.5 billion in bonds: Gulf countries are increasingly raising funds through international markets -- The Wall Street Journal. 

Saudi Arabia plans to raise up to $17.5 billion by selling bonds for the first time to international investors this week, two people aware of the transaction said Wednesday.

The kingdom also tightened its pricing guidance for the potential multi-tranche issue, which along with the estimated issue size reflects a strong appetite for the potential issue, bankers say.

For the five-year tranche, Saudi Arabia said it would pay around 1.4 percentage points above U.S. Treasurys, compared with an initial guidance of around 1.6 percentage points above U.S. Treasurys.

How one Goldman Sachs trader made more than $100 million: the gains from big trades on junk bonds are a throwback to an earlier era on Wall Street -- The Wall Street Journal.

The gains were the work of Tom Malafronte, a managing director on the bank’s high-yield-bond desk in New York. The 34-year-old trader bought billions of dollars in junk corporate debt on the cheap starting in January, then locked in profits as prices recovered.

From 24/7 Wall Street: How does this happen? Ford suffers badly as management misjudges sales.

Ford Motor Co. is temporarily halting one of two plants that builds the top-selling F-150 pickup as it idles four factories this month amid slowing U.S. auto sales.

This week, Ford is shutting its Louisville, Kentucky, factory building the Escape and Lincoln MKC sport utility vehicles, as well as two plants in Mexico that make the Fusion sedan and Fiesta subcompact, according to an e-mailed statement. Next week, the second-largest U.S. automaker said, it will close the F-150 factory near Kansas City for seven days. And starting Oct. 31, the Louisville plant will be idled for another week, Ford said.

Put another way, Ford's optimism about its business was misplaced.

CEO Mark Fields took over as the head of Ford on July 1, 2014. Since then, Ford's shares are down 30%. GM's are down 16% over the same period, and the S&P 500 is up 8%.

Ford has problems in each of the two huge markets outside the United States. Its sales in the European Union are a small fraction of the manufacturing leaders. In China, it trails market share leaders GM and Volkswagen.

********************************

The Market

Late-day trading: Dow 30 up about 70 points. NYSE:

• new highs: 80 -- CNOOC; Encana; HAL (again); ONEOK Partners (OKS); SLB (a big whoop); US Silica Holdings (seems like an open book test);
• new lows: 9 (wow)

Open: Dow 30 up 30 points. Oil up 71 cents at $51.

HAL swings to profit. HAL eked out a surprise profit in the third quarter: reported a net income of $6 million (1 cent/share) vs a loss of $54 million (6 cents/share) one year ago. Profit was higher than the 6-cent average loss forecast.

UnitedHeatlh raises 2016 forecast, again. This is a pretty big story. UnitedHealth raised forecasts earlier this year (back in April, 2016) and now they are raising forecasts again, and not be a trivial amount.

UnitedHealth Group has hiked its 2016 earnings forecast again after its profit swelled 23 percent to nearly $2 billion in the third quarter, helped by gains both in and outside its core insurance business.

The nation's largest health insurer also voiced optimism about next year, when UnitedHealth will have a much smaller presence on the Affordable Care Act's public exchanges.

Shares of the insurer soared close to an all-time high Tuesday. UnitedHealth raised its earnings forecast for 2016 well above Wall Street expectations. It did the same in April. The company now expects adjusted earnings of about $8 per share, 7 cents better than Wall Street is expecting.

********************************

A Note for the Granddaughters

May and I visited the Monet art exhibit currently showing at the Kimball Art Museum in Ft Worth, Texas. It was incredible.

I thought I was "monet'd-out' some years ago having seen Monet books, cards, stationery, prints, calendars, etc., everywhere. Most of these focus on Monet's "impression" works.

The Monet exhibit now at the Kimball is the first of its kind: it shows 60 works from museums and private collections from around the world of his early years, from age 17 to about age 31, before he started painting those now-ubiquitous works that made him so famous.

I was truly blown away. I thought I had seen all the Money I wanted to see some years ago, after touring museums throughout Europe, Boston, and Los Angeles. But yesterday I was really surprised.

This exhibit is a collaboration between the Ft Worth museum and the Museums of Fine Arts in San Francisco. Because the idea of launched here the exhibit is shown here first and then early next spring will move on to San Francisco.

My first impression (no pun intended): "Wow, oh my goodness, so many pieces." I could not believe it. Sixty paintings -- and most I had only seen in books. But I almost had tears in my eyes seeing a few that we saw when we visited "his" museums in Paris decades ago.

My second thought: "I wonder if Richard Dawkins ever goes to art museums?"

And my third thought was about Michelle Obama's comments when she attended the opening of the Whitney Museum in NYC (April 30, 2015).

During lunch -- the Kimball provides one of the best dining experiences in all of the DFW area with total luncheon costs ranging from $9.50 to $12.50 -- I asked May which painting she enjoyed the most. This was quite remarkable: of the sixty paintings, both of us favored a winter scene titled "Magpie."

Monet's very first work that was ever publicly shown was hung in Paris when he was 17 years old. That very first painting was on display at the exhibit yesterday. Fittingly, it's permanent home is a museum in Japan, and obviously a museum I would never have the chance to visit, so this was probably the "high point" of the exhibit from one standpoint. The painting, about 18 inches by 24 inches was hung opposite one of Monet's more famous paintings -- a picnic scene on the Seine -- that is bigger than life-size, vertically from the floorboards to the ceiling in a high-vaulted gallery.

My plans are to return at least three more times. I will go again next week, and then a visit in November/December to take Arianna and Olivia (the artist in the family). And finally a third visit when I take Sophia. The high point for her, no doubt, will be lunch.