Banks Reporting Robust Credit-Card Spending -- Belies Consumers Glum View Of The Economy -- WSJ -- April 16, 2022

Link here.

U.S. consumers say they aren’t feeling great about the economy. But they have a curious way of showing it.

Pessimism about the economy has been on the rise due to surging inflation and falling household income since pandemic-related stimulus programs expired. But the latest round of bank earnings shows that apprehension hasn’t kept Americans from reaching for their credit cards.

The numbers.

First quarter spending, on credit cards, compared to a year ago:

• Citigroup: up 23%
• JPMorgan Chase: up 29%
• Wells Fargo: up 33%
• Bank of America: reports Monday, next week, April 18, 2022
  

I already know what a lot of folks will say about these numbers, but this is what caught my attention:

Bank executives pointed to higher spending on categories like travel, entertainment and dining as evidence of consumer strength. On Chase cards, travel and dining spending on rose 64% in the first quarter. 

“People like getting dressed up to go to dinner again in a restaurant,” Citigroup CEO Jane Fraser said Thursday.

And look at this. Compare 1Q22 with 1Q19, well before the lock downs:

At JPMorgan, spending totaled $236.4 billion, 37% higher than in the first quarter of 2019 and up 59% from its 2020 nadir.

And most interesting:

Inflation doesn’t seem to be straining household balance sheets just yet, JPMorgan Chief Financial Officer Jeremy Barnum said on a call with analysts Wednesday. Delinquencies remain below prepandemic levels. Even lower- and middle-income households aren’t giving the bank cause for concern, Mr. Barnum said.

Jamie Dimon, the bank’s CEO, said he wouldn’t normally expect net charge-offs, the amount the bank doesn’t expect to collect, to fall below 2.5%. It has now been below 1.5% for three straight quarters

Much more at the link.

Sad News: Texas State Girls Soccer Championship -- April 16, 2022

Olivia's team lost. 

Wakeland High School, Frisco, TX, is a perennial favorite and champion.

Olivia's school Grapevine also has a very, very good reputation.

In today's championship game, Grapevine scored first but the score was tied 2 - 2 at the end of regulation time. 

Overtime: two ten-minute periods, no sudden death.

No goals made by either team in the first overtime period.

Second overtime period: Wakeland scored a goal off a header from a corner kick. Time: the five-minute mark. Grapevine continued with strong offense but couldn't answer.

So, that was it. 

But, wow, I doubt there's been a more exciting game. Two-two at the end of regulation time. And going down to the last few minutes of the last period in overtime. 

Medals:

• Olivia is a sophomore on the varsity team
• first place in regionals
• runner-up in state championship
• her words after the game: next year.
  

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From North Dakota Yesterday

What Happens When Wind Fails In New England -- April 16, 2022

On a quiet Saturday afternoon in New England, with an electricity demand at a paltry 12,000 MW, electricity is running at $100 / MW. Link here.

What gives? No wind. 

First graphic: overview.

Second graphic:

• at the right, note the percent of total energy provided by renewable energy: a paltry 7%
• I don't recall this ever being so low; it's hard to believe it could even get any lower
• so, why so low?

Check the third graphic:

• of the renewable sources, wind is providing only 17%
• 17% of 7% = 1.19%
• of all energy being provided New England, one percent is being provided by wind
• wood chips are providing twice the energy provided by wind

So, with wind failing, how does New England make up the "deficit"? 

Hydro power. Expensive hydroelectricity from Canada. Hydroelectricity is the "marginal fuel" making up the "deficit" caused by lack of wind.

I really don't care any more. I just find it fascinating. 

Solar? Zero percent.

Jeep Paying Forward For EVs Wiith Profits From SUV Gas-Guzzlers -- April 16, 2022

EVs: link here. Scorecard. 

• graphite
• not for me
• EVs charging.  

One of the themes regarding EVs: margins will be narrow and as rare earths increase in price, the margins will get more narrow (narrower?). 

Two things:

• automobile manufacturers are "partnering" on their EV projects; why would they do that if margins were going through the proverbial roof?
• automobile manufacturers are relying on margins of their SUVs / large pickups to pay for their low-margin EVs -- most of which are yet to go into production.
  

So, today, from msn.com: Jeep funds EVs with a 16-mph gas-power behemonth.

It’s not exactly in sync with Jeep’s new “Zero Emission Freedom” tagline. But like much of the auto industry, Jeep owner Stellantis NV is betting profits from gas guzzlers will fund the electric future. While other global brands have set targets for phasing out the combustible engine, Jeep still hasn’t set a date for going fully electric, and 97% of all vehicles sold in the U.S. are gas burners. 

“We’re in a transitional period and there are customers that have some needs,” Meunier said in an interview Tuesday. “The vision is zero emission freedom, period -- that’s where we’re going for Jeep. The problem is you can’t do that overnight.”

Most Economists Now Agree Stagflation Is Likely -- April 16, 2022

I think I've been hearing this for the past two years -- stagflation this year, or next year, or maybe the year after that. 

Unlike defined metrics for a recession, there are no defined metrics for a stagflation. Apparently it's like pornography: economists know it when they see it.  

I was curious. How far back -- in modern history -- have economists been warming about stagflation? 

From The Los Angeles Times June 16, 2011, over a decade ago:

Reporting from Washington — 

Higher prices seeped from the gas pump into the broader U.S. economy in May, adding new hurdles for the sluggish recovery and the government’s options for boosting it.

The combination of a stagnant economy and rising inflation led some economists to worry that the country might be headed toward a repeat of the 1970s phenomenon of stagflation, which hobbled growth for years.

Wednesday’s Labor Department report rattled financial markets already spooked by the worsening debt situation in Greece and raised the specter that the Federal Reserve might have to raise interest rates sooner than expected to blunt inflation pressures.

The report helped accelerate the recent slide in the stock markets. The Dow Jones industrial average plummeted 178.84 points, or nearly 1.5%.

Economists cautioned that inflation is volatile and could sink in coming months if gasoline prices continue their recent downward trend.

Data points, first number in bold black, Juneteenth, 2011; bold red, April 15, 2022:

• market
• Dow: 12,217; 34,415
• S&P 500: 1,366; 4,293
• NASDAQ: 2,813; 13,351
• AAPL: 19 (no typo); 165
• CVX: 105, 172
• unemployment rate: 8.5%; 3.6%
• inflation rate: 3.0%; 8.5%

DoorDash: A Reader Predicted This Some Weeks Ago -- April 16, 2022

Link here.

DASH:

• last year, November, 2021: $227
• most recent: $110
  

Like Biden, Macron Vows To Exit Oil, Coal, And Gas -- That Pretty Much Leaves Nuclear -- April 16, 2022

Link to Reuters.

Another doofus. 

They -- all EU leaders -- have the opportunity this year to ban all oil, coal, and gas from Russia. 

Let's go, Brandon.  This would be the month to give a Reagan-esque speech to the French and the Germans: "ban Russian oil, natural gas, and coal now."

North Dakota Cold -- April 16, 2022

Link here.

North Dakota Politics -- April 16, 2022

Might he run against Joe Biden in 2024?

Roland Riemers: wiki entry.

Roland Clifford Riemers (born May 15, 1943) is an American perennial candidate best known for winning the 1996 North Dakota Democratic presidential primary. 

Riemers was born in 1943 in Lake City, Minnesota. He attended San Antonio College, received his AS in nursing from Anoka-Ramsey Community College (Minnesota) in 1973, his BS in industrial technology from the University of North Dakota in 1984, and attended but did not graduate from the University of North Dakota School of Law in 1998 and 1999. 

Riemers currently lives in Grand Forks, North Dakota, and has 8 children. 

Riemers was an early adopter of solar energy, and in the 1970s built and lived in the first completely solar-powered home in the northern United States. He currently works as a real estate investor and manager.

Roland Riemers: ballotpedia entry. 

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South Dakota Attorney General Update

Impeachment trial set for June 21 - 22, 2022.

Link here.

Germany Wind Power -- Random Update -- April 16, 2022

Germany wind turbine makers: in trouble; selling at a loss; link here.

• more evidence that low wind prices at auctions are not sustainable;

Germany wind power: down to 3%; link here.

• percent of total electricity contribution in Germany: wind provided 3%;
• wind farms running at 5% of their capacity;
• natural gas: 54%
• coal: 3.5%
• solar
• Germany does have more solar capacity, which contributed 16% of the total, but this is only really useful for about three hours a day, around noon, rather than early morning or evening when demand peaks.

Haynesville Natural Gas Production Hits Record High In Late 2021 -- Rigzone -- April 16, 2022

Link here.

• record in 2H22; remained relatively strong in early 2022;
• third-largest shale gas-producing play in the US
• Marcellus: #1
• Haynesville: accounts for about 13% of all US dry natural gas production, February, 2022
• production, 2021, average:
• Marcellus: 32 billion cfpd
• Permian: 12.4 billion cfpd
• Haynesville; 12 billioni cfpd
• was 10 Bcfpd at start of 2021 (link here)
• pipeline takeaway capacity in Haynesville:

Pipeline takeaway capacity out of Haynesville has also increased in recent years. The additional capacity allows producers to reach industrial demand centers and liquefied natural gas terminals on the U.S. Gulf Coast.

The Enterprise Products Partners’ Gillis Lateral pipeline and the associated expansion of the Acadian Haynesville Extension entered into service in December 2021.

Before that project, Enbridge Midcoast Energy’s CJ Express pipeline entered service in April 2021. These projects added 1.3 Bcf/d of takeaway capacity in the Haynesville area, which is currently estimated to total 15.9 Bcf/d.

The three (Marcellus, Permian, Haynesville) account for 52% of all dry natural gas produced in the United States. 

**************************
US Natural Gas in Storage

The US ended the winter with the least natural gas in storage in three years. Link here.

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Inflation Watch

April 15, 2022, Target / Albertson's run:

• eggs: no change. Prices unchanged; Target still beats Albertson's, $2.79  vs $2.29 for a dozen
• plenty of eggs available at both places, but clearly inventories are way down
• soy sauce: 
• not on Kikkoman bottle of soy sauce available at Target; out of curiosity need to check Albertson's
• store brand soy sauce available in very, very limited supplies -- down to about four bottles;

• Kikkoman: $3.49
• store brand: $1.69
• no brainer, even if Kikkoman had been available.

• salad dressing, Honey Mustard
• brand name: $3.89
• store brand: $1.59
• no-brainer which one to get
  

Re-Posting: Drilling On Federal Land -- April 16, 2022

Link here to The WSJ.

ZeroHedge. A political disaster. Announcement made at 5:00 p.m. on Good Friday. 

Royalties:

• from 12.5% to 18.75%
• very, very reasonable; that's what mom-and-pop mineral owners in the Bakken expect (18.75%)

Area to be "freed up" for permits:

• 144,000 acres 
• an 80% reduction from the footprint of land that had been under evaluation for leasing
  

Comments:

• the three most recent Biden announcements in an attempt to lower gasoline prices at the pump:
• historic, unprecedented, record-breaking release of the SPR: to date, no effect on crude oil prices;
• E15 mandate for refiners; 2% of all retail outlets offer E15; most are in the midwest (fly-over country); and where available, most consumers do not want;
• backtracking: allowing drilling on federal land:
• of the three, the third, politically, is perhaps the most remarkable of all his announcements
• the area involved is so small it will make no difference, none whatsoever
• however, this was a huge blow to his ever-decreasing constituency;
• this was his campaign promise: no drilling on federal land
• this suggests his team is really, really in a panic over price of gasoline determining outcome of the midterm elections later this year
• the administration has run out of arrows in the quiver to affect gasoline prices
  

Foxconn Back Under Lock Down? April 16, 2022

Link here. 

Zhengzhou city in China today (Friday, April 15, 2022, implemented lockdowns near Foxconn's main iPhone manufacturing facilities, which could ultimately impact Apple's supply chain. 

Some areas in the Zhengzhou Airport Economy Zone have been placed under quarantine effective immediately, and people in the area must stay in their homes and are not permitted to leave. The Airport Economy Zone is where Foxconn's largest ‌iPhone‌ assembly plant is located, and the lockdown comes after employees have been undergoing mandatory Covid testing.

Zheng Zhou (various spellings) is the capital and largest city of Henan Province in the central part of China. Wiki entry here. 

T -- WBD -- April 16, 2022

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.

The aftermath, link here. From Steven Fiorillo:

• WarnerMedia has finally been spun off and a new chapter starts for shareholders as we now have legacy shares of T and newly minted shares of WBD.
• Legacy T still presents an attractive income play, yielding over 5.5% with only 40% of its FCF allocated to the dividend.
• WBD represents a growth play with several analysts seeing more than 50% upside in shares.

Netflix Earning Scheduled For Early This Next Week -- April 16, 2022

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.  

Link here.

Netflix earnings preview: Netflix (NFLX) will report earnings on April 19 to expectations for revenue of $7.9B and EPS of $2.87. 

As usual, the bigger focus will be on global paid subscriber additions. The streaming giant guided for 2.5M net adds and the consensus forecast from analysts is for 2.6M. 

One of the key metrics from the report will be average revenue per user, which is seen rising 8% year-over-year to $11.75 for the quarter. 

The content slate is stronger for Netflix in Q32 (sic -- probably meant Q3), with notable releases including Ozark finale); Stranger Things Season 4 Part 1, Elite Season 5; Our Great National Parks; Russian Doll; and, a new season of Peaky Blinders.

Feature Story -- Part 2 -- April 16, 2022

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. 

Part 1 this morning, here.

For investors:

• Chips: link here. Chips, semiconductor: link here.

Featured story over at The WSJ today.

Now, Part 2. Link here. 

The lede: 

Apple chipmaking partner TSMC says it will be ready to move its 3nm chip process to volume production in the second half of this year, putting it on track to supply Apple with the next-generation technology in 2023.

Reminder: INTC is still struggling with its 10 nm chip and recently turned to TSMC to make chips. 

More from the linked article:

TSMC is expected to initially process 30,000-35,000 wafers manufactured using 3nm process technology monthly, according to industry sources cited by DigiTimes.

A July 2021 report from Nikkei Asia claimed Apple will launch an iPad this year featuring a processor based on TSMC's 3nm process. The report from DigiTimes today also claims the process will first be used by Apple in iPads, although it doesn't say which model or when it would launch.

If true, it would be the second time in recent years that Apple has debuted new chip technology in an ‌iPad‌ before using it in its flagship smartphones. Apple first debuted the A14 Bionic chip, based on 5nm technology, in 2020's fourth-generation iPad Air.

Whether or not it goes down the same adoption route, Apple is expected to release the majority of its devices with 3nm chips fabricated by TSMC in 2023, including Macs with M3 chips and iPhone 15 models with A17 chips.

The move to a more advanced process typically results in improved performance and power efficiency, enabling faster speeds and longer battery life on future Macs and iPhones. According to TSMC, 3nm technology can increase processing performance by 10% to 15% compared to 5nm tech, while reducing power consumption by 25% to 30%.

So many story lines. 

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.

Feature Story -- Part 1 -- April 16, 2022

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. 

For investors:

• Chips: link here. Chips, semiconductor: link here.

Featured story over at The WSJ today. 

Over the twelve years or so of blogging, the few non-Bakken posts or non-Bakken themes of which I am most proud;

• the first, unquestionably was my call on Netflix;
• Devon, tied with Netflix;
  
• T (the jury is still out)
• the death of energy transition (the jury is still out)
• Apple chips, of which I am most proud to have called

I'm sure there are a few others; just don't remember them right now.

Last night I was blown away when I sent to The WSJ and saw this article, top and center of the on-line edition (linked above).

Apple Inc. had a problem. While its iPhones were flying off shelves, sales of Mac computers were stagnating. Customers weren’t thrilled with their design or performance.

Five years later, Mac sales are soaring. The turnaround is due to an unusual, yearslong effort to build one of the world’s most advanced chip-design operations inside the world’s best-known gadget maker.

Led by a onetime Intel Corp.engineer and IBM executive named Johny Srouji, Apple Corp. semiconductor division launched a risky project to replace the Intel processors that powered Apple laptops and desktops for 15 years with chips designed in-house. Those M1 chips, which are far more energy-efficient than Intel’s, enabled Macs to run much faster and generate less heat, laying the groundwork for a resurgence in Apple’s computer line. The company has now gained control over an essential component just as supply-chain disruptions cause disorder in the rest of the chip market.

Mr. Srouji’s chip operation, which already designed chips that power iPhones, has helped Apple improve the profitability of its smartphones and computers. It also has positioned Apple to move into potential future products such as a car or extended-reality headsets.

The fourth and final version of the M1 family—the M1 Ultra—debuted last month and is made for high-end Macs aimed at video and graphics professionals.

Other tech juggernauts are now trying to emulate Apple’s approach. Tesla Inc., Amazon.com Inc. and Meta Platforms Inc. are working on their own silicon as they chase more powerful computing needs for specialized applications like driverless cars, data centers and virtual reality. Meanwhile, suppliers of chips like Intel are scrambling to alter their strategy in response, investing heavily so they can fabricate chips designed by others.

Deciding to fire a crucial supplier and bring its production in-house can be a wrenching crossroads for any company. Mr. Srouji’s success building the M1 chips was far from a certainty—especially as the coronavirus pandemic threatened the rollout in 2020.

So much more at the link.

This is Part 1. Part 2 is here.

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. 

Arctic Sea Ice Extent -- April 16, 2022

Link here. 

North Dakota Cold Easter -- April 16, 2022