The Saudi Arabia story is an interesting story. First, we've talked about this before. I said that if there is a shortage of oil with the Iranian sanctions it will be a shortage of the "right" kind of oil and because the story is too complicated to sort out for most traders, it seems, if the price of the "right oil" increases, it will pull the price of "all" oil higher.
The second reason the Saudi story is interesting: it gives the lie to Saudi's claims that it has inexhaustible spare capacity. Hardly. And look at the current production number: 10.4 million bopd -- that's basically where Saudi has been for years.10.4. And the US: easily at 11 million bopd, link here. I guess the all-time record was set last June at 10.7 million bopd. From Forbes, more recently:
We also know that weekly U.S. crude production has averaged an all-time record 11 million b/d for the past two weeks, a 16% boom since early-January. We've passed Russia to become the largest crude oil producer in the world, yet at over 13 million b/d, we have been the "largest oil producer" for years now. Although a very large one, "crude" is only a subset of "oil."
Indeed, the future shines even brighter for the U.S. oil industry: the International Energy Agency just reported: "the shale sector as a whole is on track to achieve, for the first time in its history, positive free cash flow in 2018." Investments were up 60% last year and are expected to be up another 20-25% in 2018.
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$30 Trillion
US household net worth: exceeds $100 trillion. Specifically, $107 trillion in 2Q18. But look at this, two quarters earlier, 4Q18: "only 98.7 trillion." I assume we are comparing apples to apples. If we are, that's incredible -- from less than $99 trillion to almost $107 trillion in six months. Inflation has been tame; inflation does not account for this increase. Home values do not account for this increase.
On another note, I guess it depends which movie you are watching, even if both movies are on the same (CNBC) network:
- From earlier this summer: $30 trillion is about to change hands in the US. There's a lot of money about to change hands in the U.S. — $30 trillion to be exact. Baby boomers are the wealthiest generation in American history — and they're about to pass down those riches over the next few decades. It's the so-called great wealth transfer. Link here to CNBC. That was in July, 2018.
- Earlier in the year, in May, 2018, "That $30 trillion great wealth transfer is a myth" -- link to CNBC.
The $30 trillion is accurate. But some argue that those with the $30 trillion are living longer and will spend it on themselves. Mostly for healthcare, I assume. And perhaps a trip around the moon. But does it matter whether $30 trillion is spent by the generation that "built it" or their heirs. It's still $30 trillion going into (mostly) the US economy.
Having said that, I attended a Schwab luncheon this past week and the financial advisors are all over this $30 trillion "wealth transfer."
It should be noted: under Trump, $22 million, per couple, is exempt from the death tax. Per person, $11 million. But note: this "sunsets" in 2025 and goes to zero.
My hunch: US congressmen and women are aware of the $30 trillion and anxious to get their hands on it. Under the next administration, regardless of party, things to watch:
- the death tax exemption will be scaled back significantly, perhaps back to as slow at $5 million
- if Congress dawdles, the stars could align in such a matter that the death tax exemption will go to zero for one full year
- Roth IRAs will be taxed; possibly eliminated
- increased SALT deductions will be restored for wealthy -- the New York -- Connecticut -- California coalition
- the standard deduction might be rolled back slightly, but exemptions will be restored
- tax brackets re-configured again, especially at the top level
- consideration of a universal basic income
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The Park
My expectations every time I visit the "north unit":
The largest buffalo herd I've seen at the park's "north unit" was about twenty head.
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The Book Page
Give People Money: How a Universal Basic Income Would End Poverty, yada, yada, yada ....., Annie Lowrey, c. 2018.
I paged through this book very, very quickly last night at Barnes and Noble. For some inexplicable reason it was shelved near the dinosaur books.
The author used examples from all over the world, and then settled on the idea that the ideal universal basic income (UBI) for the United States would be ..... drum roll ... $1,000 for each adult.
So, we have four 21-year-old milleninals living in a $1,000-rental unit with untaxed income of $48,000 / year. And legalized marijuana. What could possibly go wrong?
It appears that a household earning $60,000 has take home income of around $48,000 after federal and state income taxes, so in effect a UBI of $48,000 equates to about $56,000 or more for those earning that amount. Throw in free healthcare, and that $48,000 for four millennials quickly becomes $65,000 or more.
Of course, those on UBI would get free healthcare, so the UBI will be significantly "more valuable" than $1,000 / month.
Whether the writer addressed the issue of cost of living in NYC vs Jamestown, ND, I don't know, but I doubt it.
But the big question for me: how was $1,000 / month determined? Why not $500 / month? Or $10,000 / month? Of course we know how $1,000 was picked. It was the "Goldilocks" number that would play well on NPR, and it has a nice ring to it. $500 seems skimpy; $10,000 seems beyond the pale -- at least for some, I suppose.
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What Condition My Condition Is In
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