Saturday, January 23, 2021

Fantasy Thinking On A Saturday Night -- Nothing About the Bakken -- January 23, 2021


January 25, 2021: ahead of earnings, Wedbush analyst raises AAPL's price target to $175 from $160. 

Original Post 

The following is all fantasy / conjecture on my part. I'm doing this for the fun of it. It's not meant to be taken seriously.  [Less than 24 hours after posting this long note, this popped up over at Reuters.]

Four things on my mind: the Bakken, the economy, the semiconductors, Apple. But tonight, semiconductors. 

The Cloud

See this post, this post, this post, and this post

It was that last link that sent me down this rabbit hole, as they say. 

Years ago, it was obvious that Tesla was not a car company. It was a battery company. 

Likewise, years ago it was obvious that Apple was not a computer company. It was a fashion company, like Burberry or Gucci. Perhaps better said, it was a "fashion design" company. Over the years Apple has won some prestigious design awards.

Up until this past month I still considered Apple a "fashion design" company. And then I stumbled upon the 10-nm-, 7-nm-, 3-nm-chip story. 

Stumblin' In, Chris Norman and Suzi Quatro

If you go back to the Steve Jobs Apple story one can argue that the Apple story began when Steve Jobs stumbled upon the iPhone. At the time, the company was working on something else, when some of his guys came to Steve Jobs with the iPhone prototype. Jobs stopped everything else and pivoted to the iPhone, and the rest is history.

We're now seeing Apple pivot again. To some degree Tim Cook may have simply stumbled in but I think there is more to the story. 

First, Apple's culture. Get rid of moving parts. Get rid of needless components (simplify, simplify, simplify). Rely less and less on outside suppliers. Above all, security, security, security, security. That culture led Apple to the M1 chip, perhaps the first true Apple revolution since the iPhone. 

So, think about it. You are Tim Cook and you have the M1 chip project. But you also have the EV - autonomous vehicle project which has to be a lot farther down the road (no pun intended) than anyone thought to sign a deal with Hyundai to start producing smart cars as early as 2024. 

Connecting the dots. What have "we" learned in the past two months regarding autonomous vehicles and computer chips? Well, actually we've learned three things, all previously posted:

  • autonomous automobiles use a lot of computer chips, way more than anyone realized (except those in the business);
  • Apple has bought so many chips this past year, Toyota had to shut down production in China because of a lack of computer chips;
  • there's really only a couple of companies making computer chips.

Wow, wow, wow!

I could stop here. I think the rest of the pieces fall together pretty nicely. In fact, I am going to stop here. It's obvious where we've ended up.

But we're going to switch gears. 

Let's go back to computer chips. It was this rambling post on November 22, 2020, that was the aha! moment. 

Then it was this post the next day when I realized I needed to know who was making computer chips. 

I knew nothing about computer chips when I wrote those two posts. After those two posts, I knew a little bit more about computer chips, but not much more. 

10-nm. 7-nm. 3-nm. 

Intel. Amazon. TSMC. Samsung. Apple. 

Okay that brings me up to where I want to be. Now, back to an article I linked the other day but didn't spend a lot of time on. 

From Bloomberg, "Samsung considers $10 billion Texas chipmaking plant." Austin, to be specific. Where else would it be?  LOL. Let's go through some data points in that article, see whether a few more dots connect.

  • Samsung: a $10 billion investment: a major investment; goal: to catch up with industry leader Taiwan Semiconductor Manufacturing Co. (TMSC, for short);
  • Samsung: the world's largest memory chip and smartphone maker (but not computer chips)
  • construction could begin this year; operations could begin as early as 2023
  • [with China-friendly CEO/CIC sworn in, in Washington, DC, timing could not be more fortuitous]
  • the envisioned plant will be the first in the US to use extreme ultraviolet lithography, the standard for next-generation silicon;
  • "if Samsung really wants to realize its goal to become the top chipmaker by 2040, it needs massive investment in the US to catch up with TSMC"
  • "TSMC is likely to keep making progress in process nodes to 3 nm at its Arizona plant and Samsung may do the same"
  • "One challenging task is to secure EUV equipment now, when Hynix and Micron are also seeking to purchase the machines"
  • "if Samsung goes ahead, it would effectively go head-to-head on American soil with TSMC which is on track to build its own $12 billion chip plant in Arizona by 2024;
  • Samsung is trying to catch TSMC in the so-called foundry business of making chips for the world's corporations -- a particularly pivotal capability given a deepening shortage of semiconductors in recent weeks;
  • Samsung has said it wants to be the biggest player in the $400 billion chip industry; think about that;
  • Samsung plans to invest $116 billion into its foundry and chip design businesses over the next decade, aiming to catch TSMC by offering chips made using 3-nanometer technology in 2022:

More at the linked article.

I'm going to stop here. We're going to digress a bit and look at another Samsung story. It looks like the Bloomberg folks got part of the story but not all of it

California Dreamin', The Mamas and the Papas

End Of The Line -- It Was Nice Knowing You -- January 23, 2021

Can't even imagine the number of times I crossed this bridge. 

From Geoff Simon's top ND energy stories this past week:

Bighorn Sheep On The Reservation

Star Wars -- January 23, 2021

Star Wars: Wow, wow, wow -- TNT is on a Star Wars binge. I don't know how many episodes TNT plans to air in this 24-hour period, but so far we've seen episode IV and V (#1, #2) and now, beginning at 7:53 p.m. CT, is episode VI, "The Empire Strikes Back" (#3). I recall seeing the first episode when it first came out, episode IV (the first in the series) but then I don't recall seeing any more from start to finish. It's kind of fun to watch these movies back-to-back. And it appears these movies are being shown with limited commercial interruption. And I can see the ur-models for all the Star Wars-themed Lego kits.

[Sunday morning, January 24, 2021: I see the Star Wars binge continues -- now playing: Rogue 1: A Star Wars Story (2016). Surprisingly well received. From wiki: Rogue 1 was the first installment of the Star Wars anthology series and an immediate prequel to Star Wars: Episode IV – A New Hope (1977). 
[Sunday afternoon, later, January 24, 2021: episode VII, The Force Awakens 2015). This was the first installment in the Star Wars sequel trilogy, following the story of Return of the Jedi (1983), and is the seventh episode of the nine-part Skywalker saga. 

Jack Reacher: forgot which network I was watching this on last night; most likely Paramount. First time I saw this movie. I lost interest in Tom Cruise once he started the Mission Impossible franchise. I never wanted to see Jack Reacher. Turns out, for this genre, a very, very entertaining film. Loved seeing Duvall. Wiki on Jack Reacher.

Ads: compared to YouTube, commercials are hardly a nuisance on cable television. Most notable: no masks being worn by anyone on any commercials. 

Mr Blandings Builds Hi Dream House (1948) on TCM: opening scene -- Cary Grant and wife (Myrna Loy) sleeping in twin beds. LOL. In full-body pajamas. Myrna Loy: "Nora Charles" in The Thin Man (1934), and then five more times in same role. Born in Helena, MT, and raised in Radersburg, MT, before moving to Los Angeles in early adolescence. Born, 1905, early adolescence, let's say 12 years of age, would have moved to California about 1917 -- looks like they moved during WWI. 

Today: two big football games. Hard to say which will be most compelling. By a hair: Buccaneers vs the Green Bay Packers. I think the Packers will prevail but if Tom Brady pulls it off and advances to the Super Bowl we can all say that it was Coach Belichick was the "emperor with no clothes." I've never followed the Buffalo Bills so by default I'm going with the Chiefs. Looks like Mahomes will play. With Mahomes handicapped, the Bills could pull it out. First game, Fox; second game, CBS.

For The Grandchildren / For The Archives

A reader sent a link about the dismal state of affairs in Portland, OR.

My not-ready-for-prime-time reply:

I was last in downtown Portland maybe two years ago, well before Covid. That summer and each of the several summers prior to that I noticed the streets were almost empty and this would have been the height of the tourist season.

Downtown was dead.

I went downtown to visit the library (huge disappointment) and the Apple store at the downtown mall (the Apple store was not a disappointment).

I'll be surprised if libraries survive in the long run.

I'm not sure what to say. NYC -- Manhattan, downtown -- always invigorated me but I never wanted to live there.  
We live in the "Golden Triangle" in north Texas -- an inverted triangle -- Denton to the north; Dallas to the southeast; Ft Worth to the southwest: for me it is the city of the future and no one sees it. 
Incredible highways; huge shopping centers where one drives up to the front door and walks in -- not the huge enclosed malls of the 1970s. Nightly entertainment that rivals what NYC has (no theater but Texans not interested in Broadway plays). Parks everywhere; sports facilities (indoor and outdoor) everywhere. Huge lake with few restrictions. Sophia goes rock-climbing every weekend.

It's very possible we may see some solution to the homeless problem in Portland. There must be a huge amount of office space that is being unused, and each of those office buildings have more than adequate bathroom facilities --- over time, showers could be added.

Kitchens would not be needed due to GrubHub and DoorDash.
Maybe Bezos could step up to provide funding for those shower stalls.

Week 3: January 17, 2021 -- January 23, 2021

Photo of the week: latest Keystone pipeline oil spill almost 10x worse than initially thought

Graphic of the week: record cold; Greenpeace responds;

Top story of the week:

  • Biden says US closed for business;
  • Says deplorables are expendables;
  • Stops new leasing on federal land, water; revokes Biden XL pipeline permits;
  • Is DAPL next?

Top international non-energy story:

Top international energy story:

Top national non-energy story:

Top national energy story:

Top North Dakota non-energy story:

Top North Dakota energy story:

  • Is the DAPL next?
  • One-third of the Bakken closed to new leasing;

Geoff Simon's top ND energy stories:

  • Is the DAPL next?
  • ND legislature approves new seat bell law
  • Legacy Fund is "worth" $7.9 billion. What will lawmakers do with it?
  • ND Senate kills bill targeting irresponsible oil company leaders
  • Biden XL shutdown may signal the end of major US oil infrastructure (America: closed for business)
  • TC Energy to cut 1,000 construction jobs; halt Biden XL work





Halo effect:


  • Is the DAPL next to be shutdown?


The Road To New Mexico -- January 23, 2021

From NBC News:

The New Mexico governor's office made sure to alert The New York Times before the big announcement last year that a public college education would soon be free for all residents.

Gov. Michelle Lujan Grisham said New Mexico, notoriously poor and almost last in state education rankings, would be the first state to take the step, thanks to a blue wave that swept the state in 2018, when Democrats elected Lujan Grisham after eight years of a Republican governor, flipped the state's sole Republican seat in Congress from red to blue and strengthened majorities in the state Legislature.

"This program is an absolute game changer for New Mexico," Lujan Grisham said at the time. "In the long run, we'll see improved economic growth, improved outcomes for New Mexican workers and families and parents."

In New Mexico, the median household income is around $12,000 less than the national average, and the poverty rate hovers near 18 percent. Lujan Grisham, who is known to have national political ambitions, went on a National Public Radio show to talk about the idea, which she said would boost not only the state's economy but also its reputation and students' futures.

But the plan, to be funded by revenue earned from fracking in the Permian Basin, never materialized. Grisham faced opposition in the Legislature, even from members of her own party, and from some college presidents skeptical about how much it would help low-income students.

Instead, the state implemented a massively scaled-down version of the idea during the 2020 legislative session that provides tuition assistance for residents enrolled in two-year colleges.

That story was published November 29, 2020.

Governor Michell Lujan Grisham actively campaigned for the new CEO/CIC.

The new CEO/CIC promptly halted all new leasing activity on federal land in New Mexico. Let's see if NBC News updates this story. 

Not sorry. 

Saturday Night -- January 23, 2021

NBC Universal Axing NBC Sports Network -- Simply Rearranging The Chairs On The Titanic -- January 23, 2012

This gets huge headlines but in the big scheme of things it is simply moving chairs around on the Titantic.

I have no idea how many networks NBC Universal has but it now has one less. 

NBC Universal will shut down its "sports network," NBCSN, by the end of the year (2021).

NBCSN will move its sports broadcasts to other NBC-owned networks. 

For example, the NHL will move its NBCSN broadcasts to NBC-owned USA Network. 

From the NY Post

"The move is in line with the current media trend of consolidating cable channels, while NBC appears to also be working on growing its Peacock streaming service and bolstering the programming schedule for other NBC properties like USA."

 NBCSN is owned and operated by NBC Universal which in turn is a subsidiary of Comcast

I doubt viewers will notice much difference, and I assume sports franchises will be seamlessly moved over to Peacock and other NBC Universal entities. 

For Comcast shareholders this should come as welcome news. 

Most affected will likely be Stamford, CT, where NBCSN  is headquartered at 1 Blachley Road. The company employs 900 folks most of whom, I assume, live in Stamford. Stamford is just across the state line northeast of NY / NYC, about an hour from Manhattan (depending on traffic) on I-95; population, 130,000.

One can get a feeling for how big this company was (900 employees) comparing it to:

  • MSNBC: 650 employees
  • NBC News: 741
  • CBS News: 574

From what little I know, video "news" is very, very inexpensive to obtain whereas sports is very, very expensive.

Right now, NBCSN is supported by ads / commercials.

Peacock, on the other hand, has three levels:

  • Peacock Free: limited library, full of ads; probably worse than legacy networks
  • Peacock Premium: subscription model; full library; ads "limited"
  • Peacock Premium Plus: subscription model; full library; no ads;

At the end of the day, my takeaways:

  • rearrangement of the chairs on the Titanic;
  • great news for Comcast shareholders;
  • how much it has to do with sports in general is hard to say, but obviously, it appears "sports" is not seen as lucrative as non-sports programming;
    • for example, it should be noted that Apple TV seems to favor big-name drama / original series programs; I'm not aware of any significant sports programming on Apple TV; 
    • could be wrong; I have a subscription to Apple TV but never watch it; by the way, the monthly fee I pay to Apple for Apple TV is reimbursed fully each month ever since I signed up

My not-ready-for-prime-time reply to the reader who alerted me to the story:

After looking at this NBC Sports Network story, I think it's mostly a rearrangement of chairs on the Titanic.

All things being equal, this should be good news for Comcast shareholders.

But if televised "sports" was growing in the US, there would be an announcement that NBC Sports Network was going or even divide into NBCSN1 and NBCSN2 just like ESPN1 and EPSN2.

At the end of the day, it looks like market share is going to Disney / ABC / ESPN and away from NBC.

The 2020ne Japan Olympics and emphasis on social justice in US professional sports were the final nails in the NBCSN coffin.

On another note, it will be interesting how well MSNBC will do with Trump out of the picture. I think we'll be seeing some cuts to MSNBC once the Trump story is finally dead six months from now.

Chinese Flu Watch -- January 23, 2021

North Dakota leads the nation in percent of its citizens who have received at least one vaccination. Today it is being reported that North Dakota is now moving to vaccinate folks in group Phase 1B. I believe North Dakota is the first state to have moved from Phase 1A to Phase 1B.

It's Now The Biden XL -- January 23, 2021

This argument is a good example of folks talking past each other. This argument falls on deaf ears (those of environmentalists).

The argument above (in the black box) is true in the short-term. But the environmentalists have a strategic plan.

They will give let atmospheric CO2 rise in the short term to get to less CO2 in the long run.

They are moving step-wise from A to Z.

A: 100% coal

Z: 100% solar / wind

Steps along the way: make oil so expensive that people are forced to switch from ICEs to EVs.

By eliminating pipelines, it makes oil very, very expensive to ship.

But this is the problem. As oil becomes more expensive, transportation costs become less of an issue.

There's probably an ECON-101 graph that shows two lines: price of oil and cost of producing/bringing that oil to the consumer.

There are many components that determine the price of oil Transportation is just one of them. As long as the price of oil stays above the total cost of production/delivery, oil will still reach the consumer.

The anti-pipeline folks are hoping the lines cross, with the price of oil dropping below the cost to produce / deliver oil.

Interestingly enough, my hunch is it's still much "nicer" to produce and deliver oil by CBR from North Dakota than from places like Libya. Saudi Arabia et al can't survive on $50 oil.

So, at the end of the day, I don't see stopping pipelines a a viable solution for the environmentalists in their attempt to get from A -- 100% coal to Z -- 100% solar/wind.

Somewhere along the line, the environmentalists need to stop CBR. That's the next step. Stop the pipelines, then stop the trains. That I think is impossible. Oil is so much less hazardous than many other products shipped by rail, including radioactive waste.

Meanwhile, on the policy side, the environmentalists will mandate transition to EVs where they can -- at the federal level (military) and at the state level (California).

The Canadian Perspective

The Globe and Mail is considered by many Canadians to be their "newspaper of record.

The Globe and Mail is reporting that "the Biden XL decision hurts, but it's not a surprise and it's not fatal to the oil patch.

U.S. President Joe Biden’s rejection of the Keystone XL pipeline is a blow to the psyche of Canada’s oil patch as it seeks to recover from last year’s oil-price crisis, but it is not a knockout punch.

The biggest surprise is how surprising this was to many Canadians given Mr. Biden’s long-stated opposition to the project. It is symbolic of his new administration’s emphasis on pulling the United States back into the global climate-change fight – regardless of the actual impact on emissions Keystone XL might have had.

The quest to build it is worthy of a Russian novel. It has been in the works for 13 years, facing regulatory reviews, federal and state legal challenges, demonstrations, rejection, approval and now rejection again. The company has for years touted its job-creating ability and relative safety in comparison with moving oil by rail.

But in that time the market evolved. The Canadian oil industry has gained other options for moving crude to its biggest customer and is also dealing with the growing realization that a transition from fossil fuels – gradual though it may be – is under way.

For me, the Biden XL has become a non-story. It encouraged US refiners to maintain legacy refineries optimized for heavier oils rather than move to new refineries optimized for lighter shale oils (the Permian and the Bakken). For me, the real issue has always been jobs. But as we've noted, joblessness is not a real issue for the political elite in Washington. Nor apparently is it for many voters. 

For the rails, it's a godsend. 

If I Recall Correctly, The New Mexico Vote For Biden Was Huge

Meanwhile in New Mexico, Reuters is reporting that New Mexico Amerindians are seeking an exemption from Biden drilling pause. 

By the way, that's an incorrect headline: there is no drilling pause. There is a leasing pause. Quit with the "fake news" already.

Link to Reuters here

Houston Pipeline Futures Soon To Launch?

Bloomberg is reporting that "pipeline Giants' Houston oil futures seen launching in months.

A new futures contract for the physical delivery of crude in the Houston area may only be a few months away from launching.

Enterprise Products Partners LP and Magellan Midstream Partners, the pipeline companies responsible for delivery of Houston’s two active futures contracts, said, they are joining forces to create a broader benchmark. That may happen in a few months, said Bruce Heine, a Magellan spokesman.

The Houston contracts reflect a shift in the oil industry’s focus from the storage hub in Cushing, Oklahoma, the delivery point for New York-traded futures, to the Gulf Coast. A global appetite for U.S. crudes resulted in a new web of pipelines and terminals to connect the Permian Basin of West Texas and New Mexico to the world.

Not All That Big! LOL

Meanwhile it turns out that the one-billion-dollar-lottery winner this past week did not set a record. It's only the third largest in US history.

Notes From All Over -- Nothing About The Bakken -- Part 1 -- January 23, 2021

Wow, Saturday morning. Beautiful day in north Texas. Two big football games tomorrow. One day closer to crawdad season.

I will delay putting up the top stories of the week. That's one of the most boring things I do. I'm most excited about the four things I mentioned late last night. And this morning, I'm even more excited. 

It turns out that the CDC does track and does post the statistics that I had been looking for. This will make things so much easier to track. I track the vaccine rollout here. Again, like almost everything else on the blog, this is meant for my own personal use and would not recommend that anyone actually accept what I post as accurate. I often make content and typographical errors. I post this data simply as a quick way for me to get an idea of what is going on. It's sort of like horseshoes. I don't mind if I don't get ringers. I just want to be close so I can get a gut feeling of what's going on. If anything on the blog is important to you, go to the source.

It turns out the CDC does track the number of folks that have been immunized and posts that data. I knew they tracked that data; I did not know they posted it in real-time. By the way, there is a reason why the CDC is now posting this data in real-time, something that often does not happen in bureaucracies.

Here is the first set of data:






Total Doses Administered

Number of People Receiving 1 Or More Doses

Number of People Receiving 2 Doses

Number of People Considered Fully Immunized

Percent (B+C)/A

Jan 22, 2021





It's important to note that the data provided by the CDC is only as good as the numbers the county health officials, and then the states, report to the CDC. 

Early indications: the vaccine will be annual requirement, like the "seasonal flu" vaccine. My hunch: the two vaccines will be combined into one concoction, just like the DPT vaccine, the MMR vaccine, and the dT vaccine which have been around for decades.

Larry King Died Today

Covid-19. Age 87. Larry King.

Hank Aaron, age 86, died yesterday.

Notes To The Family

Flat space: I'm also in a great mood because I've just re-organized the kitchen and have increased counter space by 37%. I love empty flat surfaces upon which to work and I now have that much more work area in the kitchen. It's awesome.

Soccer: our middle granddaughter plays club soccer (FC Dallas) and plays for her high school girls soccer team. She is one of only two freshmen that made the varsity team; both play club soccer. Her high school soccer team is having an incredible year. I seldom hear from the family how her team is doing unless I ask. But earlier this week, her team beat an intra-state rival, 9 - 0. She made one "beautiful" goal as her mom describes it and one assist. More importantly, they also defeated their cross-town rival. Whoo-hoo! Last night they won again (I was not told the score). This weekend they have a UIL (Texas high school) tournament. Perfect weather for the tournament it appears. Wow, I love the internet: it turns out this information is available on the internet also. I'm learning a lot: PF, PA, taxi players.

Reunion: the family is preparing for this summer's family reunion out at Flathead Lake. It appears we may actually come close to 100% participation.

Gasoline Demand -- January 23, 2021

Link here

Idle Rambling On A Late Friday Night -- January 23, 2021

Friday night. Feeling great. 

I'm fascinated by several stories right now. I track them over at "Investors" and "Themes - 2021" so I won't go through them again.

But this is what I'm thinking about tonight.

The US economy: ominous. I think the UAL 4Q20 earnings report was the tipping point, followed by the Dr Fauci press briefing.

The second story that that fascinates me is the semiconductor / chip story

Third, Apple. Wednesday.

Fourth, senility on the Big Stage. The video that went viral today (well, I guess it was "yesterday," now)  has to be scaring the bejesus out of his handlers today. He can't even follow simple three-word  instructions.

US Economy

The weekly jobless report, it turns out, never mattered. 

Exhibit A: the election. 

After March, 2020, after Covid-19, the weekly jobless report became even more meaningless. I've talked about this before. I didn't think it was possible, but now, after January 20, 2021, the weekly jobless report is even more meaningless. No one cares. Not even the new CEO/CIC. The deplorables have become the expendables.

Chinese Flu

There were three phases of Operation Warp Speed: development, manufacturing, and distribution of the vaccine. 

It looks like somebody forgot the fourth stage:  the last mile. Or should se say the last six feet, getting the vaccine from the refrigerator into the arm. That just doesn't seem to be working out. There were several reasons why. The biggest reason of course can be traced back to Cuomo/Newsom-thinking. 

Exhibit A: percent of doses available that have been actually used since distribution began:

  • California 38.2%
  • New York: 56.2%
  • North Dakota: 85.4% 

But that shouldn't bother anyone. Japan has bought and stockpiled enough vaccine to vaccinate every Japanese citizen, and .... hasn't started vaccinating anyone yet. 

The good news: we now have metrics to follow. Not that it will make any difference but it gives me something to do. 


Two companies: Apple and TMSC.


If I had to name one company that best encapsulates what is going on in the US right now, it's Apple. 

Senility on the Big Stage

After four years of the Donald, folks have something new to watch. It will be interesting to see who blinks first: the mainstream media or the handlers. I include the spousal unit and the heir-in-waiting among the handlers. 

Time For A Musical Interlude

I just can't decide what to post. There's just too much going on including 2 Guns with Denzel Washington and Mark Wahlberg, on the "Paramount HD Network."