Thursday, July 23, 2020

Notes From All Over, Late Night Edition, Part 2 -- July 23, 2020

Trump cancels GOP convention. Will Dems do the same?

On another note, a sports writer questions whether there will even be an NFL season this year. Having said that, the tea leaves continue to swirl and things could change quickly.

Too much money involved. There will be an NFL season this year, come hell or high water. NFL owners are like oil wildcatters. Both are going to do what they do: play football, drill for oil, regardless of the odds.

Even if it means playing games with second- and third-string quarterbacks, the games will be played. In fact, they might even be more interesting.

All the owners want to do is get sixteen games played, and into the real season, the playoffs. It's very possible, the virus will finally burn itself out (or we will have a vaccine) by the time of the playoffs.

The link takes you to a CBS story with 32 vignettes: the one game for all 32 teams that could make or break their seasons.

It's worth reading.

The lede:
With less than eight weeks to go until the start of the NFL season, there's still no guarantee that we're even going to have an NFL season, and if we do, there's no guarantee that every game is going to get played.
Due to the coronavirus, there's always a chance that the NFL could be forced to cancel a week or two this year, which would definitely make things interesting, because it's the one league where every game really counts.

The thing about the NFL is that teams only get 16 games to prove how good they are, which means every time they lose, they're basically flushing 6.25 percent of their season down the toilet. Although every regular season game is important, some of them are more important than others, and those are the games we're going to take a look at right now.
Three examples:

One. Kansas City Chiefs: week 4 vs. Patriots.
It's tough to find a game on the Chiefs schedule that could "make or break" their season, but there is definitely a short stretch where things could get interesting. After traveling to Baltimore for a game in Week 3, the Chiefs have to turn around and play the Patriots at home in Week 4. A loss to the Patriots would potentially be devastating and that's because it could kill Kansas City's chances of earning a first-round bye in the playoffs (only one team in the AFC will be getting a first-round bye).
Two. The Cowboys figure in two games. First, against the Philadelphia Eagles at Dallas:
Philadelphia Eagles: Week 16 at Cowboys. Over the past three years, the NFC East has basically been a two-team race as the Cowboys and Eagles are the only two that have won a division title in that period, and it's starting to feel like this season is going to be more of the same.
Although the Eagles have some huge games on their schedule (San Francisco, Seattle, New Orleans), it feels like this game in Dallas will be their biggest, and that's because there's a good chance the winner will end up winning the division.
Three. Finally, and this is a no-brainer. The most important game for the Cowboys this year will be their opening game, week 1 at Rams.
There aren't many teams in the NFL that are going to be under more pressure in Week 1 than the Dallas Cowboys, and Dak Prescott is likely going to be feeling a lot of that, especially since he'll be playing out the season on his one-year franchise tag deal.
Another person who will be feeling the pressure is Coach Mike McCarthy.
In his first game as Cowboys coach, he gets to face a team that Dallas throttled 44-21 last year. That's notable because if McCarthy starts off his Cowboys tenure by losing to a team that Jason Garrett beat by 23 points, then McCarthy's popularity will quickly take a nosedive in Dallas. Basically, if the Cowboys lose this game, everyone in Dallas is going to be feeling some serious pressure after just one week of the season, and most of that pressure will be felt by Prescott and McCarthy.
Does anyone even remember Jason Garrett? 

NASCAR Tonight At Kansas -- July 23, 2020

Holy mackerel -- tonight's NASCAR race is incredible. Long track, 1.5-mile-tri-oval.

Another caution with 26 laps to go. I've lost track of the number of cautions, number of major wrecks.

#24 (Byron) was in great position to win, but then fell back in restart with 29 laps to go. Now with 24 to go, still in caution. #88 (Bowman) takes lead. It looks like at the re-start, with about 20 laps to go, it will be #24 and #88 in the front row.

Bowman chooses the inside lane, front row.

Re-start with 22 to go.

Harvick (4) and Hamlin (11) move to first/second.

Keselowski (2) in third.

It looks like the race is between 2nd and 3rd.

Hamlin in first with ten to go.

Harvick about a second behind. But with nine to go, Keselowski moves to 2nd.

Wow, amazing how fast things change.

With a long track, 1.5 miles -- a bit more time ...

Wow, still 5 to go and Keselowski is making this interesting ....

Under normal conditions, it would be Hamlin's race, but one gets the feeling, something could change...

Nope, unless there's a caution, it's going to be Hamlin.

White flag.

Kansas winner: Denny Hamlin. 

Notes From All Over -- Late Night Edition -- July 23, 2020

Home prices surge in the Hamptons. Link here.

M2 money supply has ballooned to $88 trillion. Link here. M2 is basically cash.

M2 is a calculation of the money supply that includes all elements of M1 as well as "near money."
M1 includes cash and checking deposits, while near money refers to savings deposits, money market securities, mutual funds, and other time deposits. These assets are less liquid than M1 and not as suitable as exchange mediums, but they can be quickly converted into cash or checking deposits.

Re-posting: earlier today I posted --
Investing: I've been actively investing since 1984 and consider myself an extremely conservative investor, and not particularly knowledgeable. But there are two tectonic changes:
  • huge, huge shift from "legacy" holdings to "millennial" holdings;
  • the sky is the limit; huge amounts of money out there; maybe more on this later; record $15.6 trillion in US savings accounts:

Aluminum can shortage. Google hard seltzer, hard cider, Truly, White Claw. The drink of choice in our apartment complex pool is ... Truly. I've not seen White Claw. When I was in England for many months on end between 2002 and 2004, hard cider was a "thing."

Trump cancels GOP convention. Will Dems do the same? On another note, a sports writer questions whether there will even be an NFL season this year. Having said that, the tea leaves continue to swirl and things could change quickly. Will re-post as a stand-alone post.

Masks and social distancing: there was none yesterday at the PGA Nationwide Challenge charity tournament. I watched for a short time but I saw lots of golfs standing in groups, no masks, no social distancing.

Natural Gas Fill Rate -- July 23, 2020

Link here.

Eight New Permits -- July 23, 2020

Active rigs:

Active Rigs1257665832

Eight new permits, #37731 - #37738:
  • Operators: MRO (7); SHD 
  • Fields: Antelope (McKenzie); Deep Water Creek Bay (McLean)
  • Comments:
    • SHD has a permit for a single Moose well in McLean County, Deep Water Creek Bay, SENW 6-150-90;
    • MRO has permits for a 7-well Antelope/Monson pad in NWSW/SWNW 26-152-94, 237' FWL and about 2500' FNL, Antelope oil field;
      • the six Antelope wells will be sited in SWNW 26-152-94, while the one Monson USA well will be sited on the same pad, but in NWSW 26-152-94; see graphic below;
One permit renewed:
  • Petroshale: a Jorgenson Federal permit in McKenzie County;
The MRO Antelope/Monson USA pad:

Producing wells in the diagram above:
  • 19838, 1,069, MRO, Debbie Baklenko USA 12-26H, Antelope-Sanish, t6/11; cum 298K 5/20; huge jump in production 12/18; see this note; see production profile for #33636 below;
  • 33636, 4,405, MRO, Irish USA 41-25TFH, Antelope-Sanish, t1/19; cum 268K 5/20; a 66K month; see below;
  • 33637, 4,181, MRO, Snowman USA 41-25H, Antelope-Sanish, t12/18; cum 225K 3/20; off line 4/20; remains off line 5/20;
  • 33638, 4,402, MRO, Four Dances USA 41-25TFH, Antelope-Sanish, t12/18; cum 266K 5/20;
33636, first months of production:

Just For Fun -- July 23, 2020

Wow, what a great gift for the piano teacher in your life: link here.

iPhone SE:
  • too big; should have been the same size as the original SE
  • I'm trilled Apple removed the headphone jack; I'm incredibly slow moving to new technology but I haven't used a 3.5 headphone jack in years

Jobless Claims Increase -- July 23, 2020


July 27, 2020: there was a bit of a correction in the market last week, but today, all major indices are green, albeit not by much. However, in general, "everyone" is doing well; tech companies are doing particularly well. There's one exception. On a day that AAPL gains $8/share, BRK-B is down over 1.3%; down almost $3/share. Considering that AAPL represents about 40% of his entire equity stake, to be down almost $3/share when AAPL is up over $8/share suggests how badly the rest of  his portfolio must be doing. It has to be fairly concerning to anyone paying attention.

Later, 3:35 p.m. CDT: wow, wow, wow, just hours after posting my note(s) below regarding Warren Buffett and investing, Investor's Business Daily posts this: Warren Buffett's latest stock buy adds to bet on Main Street economic recovery. I hate to say this but it appears Warren Buffett has committed a cardinal sin with regard to investing: it appears he has fallen in love with his holdings; in this case, Bank of America. Not only is BAC one of his biggest holdings, this purchase is one of Buffett's major sectors: banking. From the article, with comments:
  • apparently Warren Buffett likes dividends; BAC pays 3%
  • paid an average price of $24/share for BAC
  • bought 34 million shares this past week ($800 million -- or rounding, close to a billion dollars)
  • the trade comes one week after top banks set aside billions more to cover Main Street lending exposure (bearish sign) and a prolonged economic slump (bearish sign)
  • BAC was already a huge holding (see below)
    • largest holding terms of number of shares
    • 2nd largest holding by dollar value after APPL
    • BRK now holds 982 million shares or about 11% of the company
  • BAC is among the worst-performing stocks in BRK so far this year
    • one year target: $28 (17% appreciation, in one year)
  • other bank holdings:
    • Wells Fargo: BRK's second biggest bank holding, 323 million shares owned
    • JPMorgan Chase
    • US Bancorp
    • Bank of New York Mellon
Later, 3:35 p.m. CDT: is this one of the weirdest investing metrics. I've seen this metric used before and it makes absolutely no sense to me. From Investor's Business Daily:
Bank of America was already the No. 1 stock in Berkshire's stock investment portfolio by number of shares at the end of March, and second largest by dollar value after Apple (AAPL). This week's purchases boosted Berkshire's stake in the banking titan to nearly 982 million shares, or about 11% of the company.
[The only way I see this as relevant, the number of shares one holds, is comparing snapshot-to-snapshot, how many shares in one company an investor holds, but with splits and reverse splits, even then, using this metric makes little sense. I must be missing something.]
Jobless claims:
  • forecast: 1.3 million
  • actual: 1.416 million
  • Dow: trending down after the jobless number released; was up 64 points before the jobless claims announcement, but is now down to 25 points in the green. Very likely that the Dow will open in the red based on the trend right now. Two minutes later: yup, the Dow just went red. 
Investing: I've been actively investing since 1984 and consider myself an extremely conservative investor, and not particularly knowledgeable. But there are two tectonic changes:
  • huge, huge shift from "legacy" holdings to "millennial" holdings;
  • the sky is the limit; huge amounts of money out there; maybe more on this later; record $15.6 trillion in US savings accounts:

Back to Tesla: a lot of folks are concerned that Tesla's profits are from "regulatory credit sales" and not from auto sales. So, who cares? Who cares where their profits are coming from? One thing I have learned: "buy and hold" works until it doesn't, to coin a phrase. In January of this year (2020) TSLA shares were selling for $500/share; now $1,666/share. [Later: why I might be wrong regarding Tesla.]
I was a huge believer in "buy and hold," but my "buy and hold" time frame has gone from Buffett's time frame of one hundred years (think Coca-Cola, Wells Fargo) to a more sensible five years with "quickness" to sell when better opportunities pop up.
Disclaimer: this is not an investment site.  Do not make any investment, financial, job, travel, career, or relationship decisions based on what you read here or think you may have read here.

Buffett: the investing world has passed him by. That will change overnight when he hands the reins over to two younger folks. They are chomping at the bit to take over.

Buy and hold, investing:
  • Buffett: one hundred years
  • mainstream: five years
  • millennials: five months
Prime movers:
  • commission-free trades
  • brokers required to calculate taxable gains/losses for the IRS
  • mobile trading on the iPhone
These three prime movers make it so incredibly easy for millennials to be involved in the stock market. 

Schwab: I assume all on-line trading is as easy as Schwab, but having said that, Schwab is incredible on so many levels.

Taxing unrealized gains: gaining momentum in the US House. Interestingly enough, I think there are some positive things to say about that. I am as anti-tax as anyone -- more than most, I assume -- but if there are going to be taxes, it's interesting to look at some alternatives.

New iPhone SE: incredibly tempting. Have to look at the camera compared to the iPhone 11 Pro and/or newer models in the pipeline.
The Book Page

I'll probably move on to something else this week or next week but the past few weeks reading and re-reading about classical Greece has been very, very rewarding.

Without question, I have really, really enjoyed Brittany Hughes Helen of Troy. This review(er) over at pretty much sums it up:
I loved this book. It is so well written, scholarly, entertaining, insightful and erudite. I have spent most of my life as a student and have earned two PhDs. Yet I still found myself frequently reaching for my dictionary due to her careful choice of obscure English words, a truly impressive vocabulary. I found this fun and challenging. I was entertained and challenged on almost every page.
This is a book to be studied more than just read. It has comprehensive endnotes and citations. I've chased several of her citations down and found them all correct and cogent.
As a student of ancient Greek I wish she had used the polytonic Greek for her many referenced Greek words rather than English transliterations. But then I'm glad she did not shift to the Linear B script for her many citations on early Bronze Age inscriptions.
I have enjoyed her many documentary programs and hoped that the same joy of discovery would translate to her written works. I was not disappointed!
This is a great book.
The two things this reviewer did not mention:
  • the family trees / genealogy diagrams in the book were excellent;
  • maps were excellent, and this is a great book for learning the geography of Greece and the eastern Mediterranean. 
In addition, I learned a bit about pharmacology, beauty, precious stones.

Perhaps my favorite new word from the book: décolletée. And I love the pronunciation of that word. Based on Bettany's description of Helen, it may not have been her face that launched a thousand ships. LOL. 

Yes, unfortunately, it may be a bit too racy to recommend to Arianna who loves Greece and mythology. 

If you are all interested in classical Greece and have not read this book, run to your nearest Half-Price Bookstore and/or order it from Amazon, if you can find an inexpensive copy.

Tesla's Reglatory Credits Sales -- July 23, 2020

As we've been saying for the past few years, Tesla is not a car company. From ZeroHedge via Twitter. This is Tesla's income after sales for regulatory credits are taken out:

In other words, GM, Ford, Chrysler, et al are making Elon Musk really, really, really rich.

The Solution Has Already Been Found -- July 23, 2020

The solution has already been found. Headline story yesterday -- "Walmart, Target, CVS seek plastic bag alternative." -- Rigzone.
The world’s biggest retailers are trying to replace the plastic shopping bag.
Target Corp., Walmart Inc. and CVS Health Corp. unveiled a $15 million joint initiative on Tuesday to replace plastic bags with something else over the next three years. The companies, which each contributed $5 million, aim to create a global competition to find a way to change plastic bags or make them unneeded. Walgreens Boots Alliance Inc. and Kroger Co. also plan to be involved.
Called “Beyond the Bag,” the companies want to spark research about new materials for bags or technology and delivery systems that can render them obsolete. The challenge also will study consumers’ use of bags and the infrastructure that makes and distributes them.
The project will be overseen by Closed Loop Partners, a New York-based investment firm that’s working to reduce waste and greenhouse gas emissions.
Folks must not be paying attention.
The consumer has already found an alternative to the paper, plastic, and/or reusable bag: the Amazon cardboard box.

While We're Waiting 
For Uber-Granddaughter Driving Day To Begin

  • gold: $1,873; up $8; could we hit $1,900 by the end of the summer?
  • silver: $22.90; down 25 cents, but well above historic highs; I've always lived in a $14-silver world so this is quite impressive. The grandchildren will inherit a lot of silver dollars. A lot. 
  • IMUX: up another 2%
  • AAPL: flat
  • TSLA: up $24 yesterday (up 1.5%); up $55 today, or 3.5%)
  • AMZN: down yesterday by a percent; and flat today;
  • T: still up 1.32% in pre-market trading
  • OXY: pre-market, trading at $17.11, up about a percent. Of all the oil companies to follow right now, OXY might simply be the most interesting
  • how are CVX and COP doing after their recent deals?
    • CVX: pretty much flat over the past two days; pays 5.67%
    • COP: down yesterday; no pre-market trading -- we'll check back later; pays 4.11%;

Five Wells Coming Off Confidential List -- July 23, 2020

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

I don't know if folks recall but we were bombarded with news stories a month ago telling us how badly earnings were going to be. In fact, earnings are beating expectations, it seems, almost across the board. Of course, earnings forecasts were set incredibly low so it wasn't hard to beat estimates.

Fast and furious:
  • T: it's hard to read this one but if I'm reading it correctly, consensus for T's EPS was 79 cents; in fact, it hit 83 cents. Others says the consensus was EPS of 70 cents. Analysts say the dividend is safe. Revenue estimate: just under $41 billion; actual: $41 billion. The fact that T is in the green in pre-market trading suggests traders were satisfied with results. According to Variety via Yahoo!Finance,  Wall Street analyst consensus estimates for AT&T’s second quarter were for in $41.1 billion in revenue and adjusted EPS of 70 cents.
  • TSLA: regardless of what one thinks about the company or the actual numbers, the investment world is "going gaga" after Tesla reported earnings last night. One of a gazillion stories on Tesla here. All I can say is moving to Texas was huge. By the way, for those wondering, the other city in the running for the new Tesla factor: Tulsa, OK.
  • Dividends: it's hard to believe but Motley Fool highlights these three companies as providing safe, high dividends: Walgreens Boots Alliance, paying 4.6%;  XOM, paying 7.8%, has raised its dividend for 37 consecutive years; and, finally, T, paying 7%. "With AT&T halting its share buyback program earlier this year, it's a virtual certainty that its dividend, as well as its 36-year streak of increasing that base payout, are safe. That means AT&T's 7% yield can singlehandedly double your money, with reinvestment, about once a decade."
  • Dividends: let's see what Bloomberg has to say: not much, same old story. 
  • Memo to self: follow up in ten years.  Walmart, Target, and CVS team up to find alternate to paper, plastic, and reusable bags. Good luck with that. Unless it's Amazon cardboard boxes.
  • From twitter:
  • China map: for those who have forgotten where "east China's Zhejian province" is located. If one overlaid a US map over China, Zhejian (or Zhe Jiang) would be : south of Charleston, SC, and east of Atlanta, GA:

OPEC basket, link here: down slightly at $44.24.

From above: US savings have surged -- $15.6 trillion --

Back to the Bakken

Active rigs:

Active Rigs1157665832

Five wells coming off the confidential list -- Thursday, July 23, 2020: 60 for the month; 60 for the quarter, 506 for the year:
  • 37269, loc/NC, CLR, Kate 14-19H1, Big Gulch, no production data,
  • 37071, loc/NC, WPX, Wolverine 21-22HC, South Fork, no production data,
  • 37070, loc/NC, WPX, Wolverine 21-22HZ, South Fork, no production data,
  • 36790, loc/NC, Sinclair Oil, Harris Federal 5-32H, Lone Butte, no production data,
  • 36489, drl/A, Hess, TI-Stenbak-158-95-2526H-3, Tioga, t--; cum 38K over 3 months;
RBN Energy: Chevron's $13 billion Noble Energy deal signals return of upstream M&A.  
On July 20, 2020, Chevron struck the first major energy sector deal since the onset of the pandemic, announcing a $13 billion agreement to acquire U.S. E&P Noble Energy. The transaction comes 15 months after the oil major bowed out of a bidding war with Occidental Petroleum to acquire Anadarko Petroleum, a landmark, $56 billion deal in which the winner may eventually end up as the loser after taking on massive debt. Oxy is just one example of how the sharp decline in oil demand and prices has ravaged producer cash flows and earnings, virtually freezing the M&A market.
Despite widespread speculation that a resumption in deal activity would target the most distressed E&Ps, Chevron has broken the market wide open with a blockbuster deal for a premier E&P. The target this time, Noble Energy, has a portfolio very similar to that of Anadarko, and is being acquired at a small fraction of the cost. Today, we examine the strategies that drove this transaction, the impacts on buyer and seller, and the implications for the upstream M&A market going forward.