Wednesday, January 22, 2020

Notes From All Over, Part 3 -- January 22, 2020

Market: UNP and Comcast report Thursday morning, before the market opens. Comcast, forecast, 76 cents; actual, 79 cents; will increase dividend 10%. UNP, forecast, $2.07. A lot of banks are reporting. Later: wow, UNP down yesterday and overnight was down, and now this morning up $7.00. Great earnings report? Wanna bet? Maybe not. Actual: missed EPS estimates. Profits fell 10% from a year ago, EPS of $2.02. But still UNP up almost $7.00. If UNP opens as currently suggested, UNP will surge through a 52-week high. [Later: UNP got ahead of itself, dropping back.]

Later, more on CMCSA (Comcast):
CMCSA (Comcast): huge pre-market but then plunged almost 4% during / after earnings call; link here.
  • cord-cutting will get worse
  • less-then-stellar numbers (mostly due to "Cats")
  • good news: 
    • adding broadband customers at record rates;
    • young wireless service on way to being profitable
    • NBCU is getting ready to debut new theme parks and attractions
  • will focus on those that don't mind paying more for a "premium experience" with its next-generation, set-top box X1
  • Comcast added enough new broadband subscribers to more than offset its video subscriber losses, bringing on 1.1 million new customers in 2019, a record high;
  • Peacock: free; but not quite
  • Comcast's Xfinity Mobile: cell phone service launched two and a half years ago
    • 2 million customer lines
    • added 816,000 in 2019
    • added 854,000 in 2018
  • big addition at theme park in Japan: Super Nintendo World
  • comments: mixed bag; what I particularly don't like: a set-top box; what I also don't like: multi-tier pricing
Disclaimer: this is not an investment site.  Do not make any investment, financial, career, travel, job, or relationship decisions based on what you read here or think you may have read here.

AAPL: climbing the wall of worry.

Legacy fund should be reporting any day now. Link here.

Notes From All Over, Part 2 -- January 22, 2020

Top story: I don't watch the network news; in fact, I avoid all network/cable news as much as I possibly can.
When I want to "veg out" it's TCM --Turner Classic Movies. On the other hand, my wife watches all the network news and all the cable news. As soon as she switches to ABC News in the evening, I immediately move somewhere else in the apartment. Tonight, I was a bit slow, but was surprised to see that the impeachment hearings were not the top story. The Chinese virus was the top story. Chinese stock market in a shambles. Oil tumbling. This, too, will pass.
Egg sandwich: a huge Japanese treat for my wife and two of the granddaughters is tamagoyaki. I had not seen it called tamagoyaki before; it's always been "tamago" to me. So, I was surprised to see a feature story in The Wall Street Journal, "a most excellent egg sandwich: where to find it, how to make it." From the article:
I love the way that in Japan, there always seems to be a sandwich close at hand, neatly wrapped and ready to go.
At train stations, bakeries and the ubiquitous konbini, or convenience stores, “sandos” come filled with everything from fried pork cutlets to whipped cream and fruit, almost always on white bread with the crust cut off.
Last year, egg-salad sandos had a stateside brush with celebrity thanks to the success of Konbi, a Los Angeles sandwich shop whose konbini-inspired version became an Instagram darling. With a whole hard-boiled egg at the center, revealing a sunny circle of yolk when the sando is sliced, Konbi’s iteration is indeed photogenic. But for me the ideal sando filling is the layered and rolled style of omlelet known as tamagoyaki.
The tamagoyaki has such a supple, silky texture, and a gentle balance of savory and sweet flavors. Between two slices of sandwich bread, it’s a beautifully self-contained little package. Clearly I’m not the only one who thinks so: The tamagoyaki sando is gaining a following of its own at coffee shops and sandwich counters around the U.S.

Global warming: down to four years. According to Michael Moore we have only four years "to fix things."

Which reminds me, did you all see this headline?

Speaks volumes. The bankers aren't falling for this scam.

Impeachment: Fox News on line -- the US Senators are already getting tired, and it's only day two. LOL. McConnell knows exactly what he's doing.

Notes From All Over, Part 1 -- January 22, 2020

Wow, I'm in a good mood. Just dropped off Olivia at evening soccer practice. Pitch black outside, Texas starting to shut down for the night, but still see hard-working Americans working hard. Perhaps the best thing that ever happened to me ... the years I spent overseas, especially in Turkey and Africa to get a better perspective on America. America simply gets things done. No, one step forward, two steps back. Can-do attitude. On the way home, two new hotels have just opened up about a mile from where we live. So much construction, hard to believe. On the north side of DFW airport.

Schwab. Another pleasant experience at our local Schwab broker today. Truly amazing how efficient they are. I had a check for $29.87 to deposit. LOL. The broker said $29.87 is better than zero. [Yes, deposits can be done online but I had other business and besides, they always have a huge chocolate candy dish.]

ENB. Oh, before I get started, the usual disclaimer:

Disclaimer: this is not an investment site.  Do not make any investment, financial, career, travel, job, or relationship decisions based on what you read here or think you may have read here.

Back to ENB. I completely missed this, or at least I don't recall blogging about it. This was back in early December. Will increase its dividend by 9.8%; will lead to a dividend yield of 6.3%. Is scheduled to report earnings February 21, 2020. I believe ENB, in after-hours trading hit a 52-week high.

KMI: Reuters headline today -- Kinder Morgan profit, cash flow rise on Gulf Coast Express pipeline strength. From the article:
... a 26% rise in quarterly profit on Wednesday, benefiting from higher gas takeaway from the Permian Basin through its Gulf Coast Express pipeline.
The pipeline, which can transport 2 billion cubic feet per day (bcfd) [about 350,000 boepd], came into service in September when drillers were burning off natural gas at record rates due to lack of transportation capacity from the shale-rich Permian Basin.
Earnings from natural gas transport volumes rose 14% and from NGL transport volumes jumped 23% from a year earlier.
The pipeline operator generated $1.35 billion, or 59 cents per share, in distributable cash flow (DCF) in the fourth quarter, higher than $1.14 billion, or 50 cents per share, in the prior quarter. On a year-over-year basis, DCF rose 6%.
Investors have been pushing U.S. oil and gas pipeline operators to deliver positive free cash flow as low energy prices and idle shale rigs pressure earnings.
KMI: flirting with a 52-week high; pays 4.78%. I assume it will increase its dividend in the April, 2020, time period. I honestly don't know if I hold KMI. I bought a position maybe two or three years ago, can't recall if I sold it, kept it. I'll see when end-of-year statements start arriving.  

... the coming online of the Mentone cryogenic natural gas processing plant in the Permian Basin. The facility is located in the Loving County of Texas that marks the seventh natural gas processing unit of the partnership in the Delaware Basin, a part of the famous Permian.

The plant — supported by a long-term acreage dedication agreement — has a natural gas processing capacity of 300 million cubic feet per day (Cf/d) and natural gas liquids  extraction capability of more than 40,000 barrels per day.
Comment:  I've been blogging on the Bakken since 2007. This blog began in 2009. That's ten-plus years of blogging. 
The first few years of blogging was all about getting the initial wells drilled to hold leases by production. Then, it was several years of infrastructure build-out to service the new wells that would be coming in. For the past ten years, it has been spend, spend, spend. Now, there seems to be a new verse to this song: as infrastructure projects come on line, cash flow starts to increase. Will be interesting to follow. Some big-name pipes were stymied by faux environmentalists but a lot of connecting pipeline was put in place. And lots of CBR if necessary. And then all the processing plants, export terminals along the coast. We could really see a golden age of energy here in the states over the next few years. Lots of talk about production cutbacks in the Permian, the Bakken, etc., we'll see.
Coke: wasn't it just a few years ago that Coca-Cola was the global brand leader? Coke held that position for decades? Not any more. Now it's Amazon. Brand value:
  • Amazon, #1, $220 billion; the first brand ever to top $200 billion;
  • Google, #2
  • Apple, #3
  • Microsoft, #4, 
  • Samsung, #5
  • three Chinese brands;
  • Facebook
  • Walmart
  • a google search brand value coca-cola unrewarding. Wow. Also, McDonald's not listed.
MLB and signs: looks like they may have to re-look at a couple of World Series championships.

Blackened scallops. Perhaps one of my favorite entrees. At our favorite restaurant today, blackened scallops were a not-on-the-menu special. Four huge scallops on a bed of vegetables, rice. Each about the size of a small filet. So rich, I can only eat one such scallop at a sitting. So, I had three to take home. One for dinner this evening. Two more for tomorrow, lunch and dinner. Which reminds me. Crawfish season must be just around the corner. Yes, here it is: generally, the crawfish season in Louisiana runs from mid-January through early-July for crawfish caught in the wild, with the peak months being March, April and May.

WTI Barely Holding Above $56 Despite Global Tensions; Another "Surprise" Build -- January 22, 2020

Surprise, surprise! oilprice calls it another surprise build. 
The American Petroleum Institute estimated on Wednesday a surprise crude oil inventory build of 1.57 million barrels for the week ending January 17, 2020, compared to analyst expectations of a 1.009-million-barrel draw in inventory.
[Comment: a 1.6-million-bbl draw, in the big scheme of things, is "no change" from the previous week.]
Libya: irrelevant. 

Active rigs:

Active Rigs5465583847

No activity on the daily activity report today, except for a few corrections regarding yesterday's daily activity report.

Music Streaming: Spotify (Huge); Then Apple And Amazon -- January 22, 2020

Moments ago I posted a note about Apple (AAPL). Immediately after posting that note, this popped up, at multiple sites. This one from Reuters:
  • Amazon Music crosses 55-million subscribers globally, trails Apple Music;
  • but edges close to Apple Music 
  • far behind Swedish rival Spotify
  • world's largest music streaming service
  • Apple: 60 million subscribers, per Apple, June, 2019; 
  • Amazon Music Unlimited: $9.99/month for those without a Prime subscription
  • Apple: $9.99/month
  • Spotify: 140 million users on its free tier
  • elsewhere, Spotify, 248 million users globally; 113 million of them paying;
This is what wrote Barrons/Bhansale wrote in the link above about Apple and Spotify:
For its pivot to services, iPhone sales matter. And in the bulk of the services, they are competing against well-endowed companies—Spotify on music and Netflix,, and Disney on content. They neither have content nor a first-mover advantage. The fact that they are spending $6 billion to build a content library to keep [their] consumer tells me how difficult the core business is. Think about [Apple] as a blue chip of yesterday, as opposed to a blue chip of tomorrow—the worst kind of investment because all the good news is priced into the stock, while the bad news is not.
Disclaimer: this is not an investment site.  Do not make any investment, financial, career, travel, job, or relationship decisions based on what you read here or think you may have read here. 

Notes From All Over, Part 1 -- US Existing Home Sales Vault To Near Two-Year High -- January 22, 2020

From Reuters:  wow, what an incredible report. Ironically, this week's edition of The Economist has a special report on the "broken" housing sector in the US. From the linked Reuters article:
  • US home sales jumped to highest level in two years in December, 2019
  • Reuters attributes it to lower mortgage rates; in fact mortgage rates have been low for quite some time
  • perhaps it's the wealth effect; the equity market has surged in the past year
  • forecast: existing home sales would increase 1.3% to a rate of 5.43 million units in December
  • actual: existing home sales increased by a whopping 3.6% -- almost 3x forecast -- to a rate of 5.54 million
  • on a year-on-year basis, existing home sales surged 10%
  • existing home sales make up about 90% of US home sales
  • sales rose almost everywhere; fell in the Midwest;
Making America Great

This is really, really clever.
But first, the disclaimer:
Disclaimer: this is not an investment site.  Do not make any investment, financial, career, travel, job, or relationship decisions based on what you read here or think you may have read here.
AT&T Inc.’s obsession with paying down debt has led to some financial creativity.
Right before the end of 2019, AT&T took a collection of cell-tower rent payments that it will receive in the future, rolled them into a subsidiary, then sold shares of the unit to investors for $6 billion.
The new entity is called AT&T Investment & Tower Holdings LLC, and the preferred shares pay as much as 5% annually. The proceeds will go toward general purposes and paying down debt, AT&T said.
The move is the largest in an ongoing effort by AT&T to turn assorted assets into cash that it can use to whittle away at its borrowings. AT&T has set a goal to lower its leverage ratio to between 2 and 2.25, a target it promised shareholders, including activist investor Elliott Management Corp.
In this case, with the tower receivables, AT&T raised $6 billion up front, which requires an interest payment of 4.75% to 5%. While that’s a higher interest rate than nearly any loan AT&T could have received, the one significant advantage is that the $6 billion doesn’t add to its $165 billion debt pile.
So much more at the linked article, but I find the whole story so interesting. Very clever, very creative. 
I think Trump wishes he had thought of this. LOL. Having said that, $6 billion is a small part of $165 billion. Wow.

T is up 1.57% today but still trading below $40. Pays 5.4%.

Elsewhere, analysts forecast Comcast (CMCSA) to announce a 10% hike in its quarterly dividend, from 21 cents to 23 cents.

Barrons Round Table


Interview with Rupal J. Bhansali, CIO, International & Global Equities portfolio manager.

Some highlights:
  • Over the next decade, equity returns will be challenged. Dividends will play a far bigger role, so my picks are high dividend yielders, with the potential for dividend growth. All are international stocks, which speaks to the U.S. market being very rich. And with market returns hard to come by, investors will have to look for absolute return.
  • I started my career at the hedge fund Soros and have always thought about the long and short side of a thesis, so I thought I might talk about some stocks that I would personally short. 
  • Picks/longs: Subaru (she owns it); Baidu; China Mobile, a repeat from last year, down 12% over the past year; GlaxoSmithKline, an oligopolistic franchise in vaccines.
    • China Mobile down 12% this past year when it was hard not to make 25% in equities in the US this past year
  • Shorts: Softbank; AAPL; Netflix; GlobalPayments;
  • Comments at the site by other readers: 
    • Was she short on Apple and Netflix for the last 3 years? If she was, why she has not lost her job?
    • LOL Who is person? Short Apple and long Subaru LMAOOO. What a terrible investor!
    • I'm sorry, calling Apple a "consumer electronics company" simply misses the essence of Apple's business, which is building on and extending a product and services platform. Ten years ago, many said Apple could become the first trillion-dollar company, or even $2 - 3 trillion, but it wasn't because of the clever "gadgets" they make: it was (and is) because by then they had established the platform, which is infinitely extensible, and continues to grow into areas like medical/fitness, automotive, entertainment and a dozen other areas of which we are not yet aware. Really, I suggest you spend some time in the Bay Area and you'll soon be disabused of these outdated perceptions; there is much going on here that isn't making it into the headlines.
More Snow Than Fargo Has Ever Seen?

Mt Fargo.

Link to The Dickinson Press
As of Monday, January 20, 2020, it stands at 75 feet.
It's only January, and the pile holds about 14,000 truckloads of snow.

Six Wells Coming Off The Confidential List Today; WTI Under $58 -- January 22, 2020

Active rigs:

Active Rigs5365583847

Six wells coming off the confidential list today -- Wednesday, January 22, 2020: 80 for the month; 80 for the quarter, 80 for the year:
  • 36558, 301, Peregrine Petroleum Partners, LTD, Larson 15-10 1H, Covered Bridge, t9/19; cum 59K 11/19; 
  • 36463, drl, WPX, Mandaree Warrior 14-11HUL, Mandaree,
  • 36290, drl, Rimrock, Two Shields Butte 3-24-12-2H, Mandaree,
  • 35881, 637, Whiting, Meiers 12-17-2H, Sanish, t9/19; cum 71K 11/19;
  • 35775, 1,996, CLR, Boulder 11-4H1, Banks, t9/19; cum 86K 11/19; 41K month;
  • 35460, 938, CLR, Weisz 3-11-H1, Pleasant Valley, t11/19; cum 13K 11/19;
RBN Energy: oil market shows concern, not panic, over US-Iran face-off. Archived; lots of great export data in this particular blog.
Fear about supply interruption isn’t the frantic force it used to be in the crude oil market.
A deadly confrontation that might have pushed the U.S. and Iran to the verge of war raised the spot Brent crude oil price to above $70/bbl early in the week of January 6, 2020.
Despite continuing regional concerns, the price quickly subsided. By January 13, 2020, Brent spot had fallen to $64.14/bbl, its lowest point since December 3, 2019. Before the Shale Era, a U.S.-Iranian face-off may well have launched Brent crude to well over $100/bbl as oil traders blew fuses over the heightened possibility of disruption to Persian Gulf oil production and transportation. There’s nothing like adequacy of supply, globally dispersed, to keep things calm —  or at least calmer than they would have been if the U.S. and Iran had drawn so much sword a dozen years ago.
In this blog, we’ll discuss where U.S. crude exports have been heading, how close the oil gets to strategically touchy areas, and whether the market still has reason to worry about disruption to oil supply.