Wednesday, July 6, 2022

Too Scary To Check; But Other Than That, Have A Great Day -- July 6, 2022

US recession: unfortunately for most, this article is behind a paywall.

  • it's a very, very long article
  • written by one of the better WSJ analysts; generally doesn't write but rather edits
  • "If the US is in a recession, it's a very strange one."

The U.S. economy has experienced 12 recessions since World War II, and each one included two features: Economic output contracted and unemployment rose.

Today, something highly unusual is happening. Economic output fell in the first quarter and signs suggest it did so again in the second. Yet the job market showed little sign of faltering during the first half of the year. The jobless rate fell from 4% last December to 3.6% in May.

It is the latest strange twist in the odd trajectory of the pandemic economy, and a riddle for those contemplating a recession. If the U.S. is in or near one, it doesn’t yet look like any other on record.

Analysts sometimes talked about “jobless recoveries” after past recessions, in which economic output rose but employers kept shedding workers. The first half of 2022 was the mirror image—a “jobful” downturn, in which output fell and companies kept hiring. Whether it will spiral into a fuller and deeper recession isn’t known, though a growing number of economists believe it will.

Krugman: Paul -- also doesn't see definition of stagflation holding up which requires a high unemployment rate, and the 10-year Treasury yield is falling. Fast. Today: the yield is below 2.8% -- at 2.794% -- recall: 3% yield for the TYT is the threshold for disaster -- CNBC talking heads.

Krugman posted a FRED graph to support his case. I won't post the link; not worth the time. But six months to a year from now economists will declare a recession or not.

EU: declares natural gas a "green energy." Greta goes ballistic. 

EVs: inexplicably, the EVs (except for Ford and GM) had a great day yesterday, but it looks like Tesla will give up some of those gains today. 

Looking at the EVs, we know that ELMS recently filed for bankruptcy protection. I was unaware that Canoo (GOEV) has a similar problem -- a liquidity problem. I guess they call it a liquidity problem: not even cash to cover expenses. This is from a month ago, which I had missed. I was also unaware that Canoo was considering moving its headquarters to Bentonville and create an R&D center in Fayetteville, but there you go. [Canoo is now headquartered in Bentonville, AK.]

But there's more, from caranddrive.com, December 20, 2021:

The EV startup Canoo has shown off three podlike vehicles—a pickup truck, a delivery van, and a minivan—and said it will now build them in the United States starting next year. 
Canoo has canceled its original plan for contracting production to VDL Nedcar in the Netherlands, in part to avoid supply-chain issues
The electric pods will instead be built at a factory in Arkansas in 2022 before an Oklahoma facility begins production in 2023
American electric-vehicle startup Canoo has shown off three radically styled vehicles over the past few years and is now solidifying plans to put its podlike designs into production. 
Although Canoo had originally planned to outsource production of its vehicles to VDL Nedcar, a Dutch contract manufacturer, those plans have been scrapped. 
Instead, Canoo aims to build its first vehicles next year at a new plant in Arkansas—where it recently moved its headquarters—before a factory in Pryor, Oklahoma, goes online in late 2023. 

Canoo: bringing "construction" back to the US. Bloomberg says the same thing: the construction of new manufacturing facilities in the US has soared 116% over the past year, dwarfing the 10% gain on all building projects combined. Most of this is occurring in the southwest (not California) but particularly in Texas and Arizona. I was surprised to see Canoo build a factory in Oklahoma. Oklahoma?

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Back to the Bakken

Far Side: link here.

WTI: too afraid to look.

Active rigs: 43 or thereabouts.

Wednesday, July 6, 2022: 6 for the month, 6 for the quarter, 345 for the year  

  • 38245, conf, Ovintiv, Kramer 150-97-18-19-4H, 

RBN Energy: is IMO 2020's relevance for crude oil markets making a comeback?

Way back in 2019, just about everyone in the refining world was talking about IMO 2020, the International Maritime Organization’s soon-to-be-implemented rule requiring much lower sulfur emissions from most ocean-going ships. A lot of forecasters were anticipating that major market dislocations would result — things like $50/bbl-plus diesel crack spreads, oversupply of high-sulfur fuel oil, and ultra-wide differentials between light and heavy crude oils. They did, but only briefly, in the last few months of 2019. The implementation of IMO 2020 turned out to be pretty much a non-event, and for much of 2020 and 2021, people didn’t think much about the new bunker fuel rule. Lately, things have been changing, as we discuss in today’s RBN blog.

Beginning January 1, 2020, the International Maritime Organization (IMO) mandated that most ships powered by fuel oil (the most common bunker fuel) use products containing less than 0.5% sulfur (S) by weight, a significant reduction from the previous specification of 3.5% S by weight. (An alternative for shipping companies is sticking with high-sulfur fuel oil and installing an onboard “scrubber” to remove most of the sulfur from the ship’s exhaust stack.) This new rule is colloquially referred to as “IMO 2020.”

4 comments:

  1. People/media can talk themselves into, and less commonly, out of a recession. Forget the old rules of dual "quarters" of declining GDP, and in this specific era we have an induced slowdown with ongoing rubber-banding from a combo of no spending (COVID) to dumping $ into the market begetting supply issues begetting inflation (naturally) which would have otherwise never occurred and will be over faster than most predict b/c we have talked ourselves into a recession and demand will drop fast. Connectivity speeds all of this up and on to the next rubber banding cycle by Jan perhaps. 10 monkeys + 10 typewriters and i'm just one.

    ReplyDelete
    Replies
    1. The ten smartest economists using the ten most powerful modeling apps on the ten most powerful computers can't figure it out either. LOL.

      Delete
  2. Have come to the conclusion that those in charge have no interest in "figuring it out"
    Crisis management has become the govt cash cow.

    ReplyDelete
    Replies
    1. Actually, it could be worse. They have figured it out and they are afraid to tell the American public. But yes, for many in government, it has become a "cash cow."

      Delete

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