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Wednesday, October 25, 2023

Will Raising The Fed Rate Another Half-Percent Bring Down The Price Of Beef? October 25, 2023

Locator: 45838BEEF.

This should be fun. 

The WSJ.

Beef prices: record prices.

Why are beef prices so high?

How bad is the shrinking cattle supply and why is the cattle supply shrinking?

 We can't do much about drought, but how does that affect high feed costs?



Besides drought, which we can't do much about, what is causing feed cost to become so expensive?

Nothing new here. From 2015:


So, will raising the Fed rate help bring down the price of beef? LOL.

Someday, we need to have a serious discussion on this performance. But not tonight.

The Magnitude Of The Decline Was Head-Turning -- Barron's -- October 25, 2023

Locator: 45837HOUSING.

In all the "stuff" that was reported today, I completely missed this until I was going through some of Liz's charts again. I assume everyone else saw this but me -- most remarkable / most remarkably, I didn't see this reported by anyone else and I certainly didn't see the headline -- again, it was probably only me ..

Someone else must have Aldo noted it … Warren Buffett!!! He was right again!

From Liz, link here

Did you all see that .... median home price dropped 12.3% year / year. We all saw the headline story -- September sales surged ... but some of us missed the drop in price -- including me. Wow, wow, wow. Goes along with exactly what I have been saying for years. Amazing.

I was so stunned -- needed to fact-check this ..

Yes, it's true:

But let's look at this: the magnitude of the decline was head-turning ..

... the magnitude of the decline was head-turning ...

Wow.

I wonder if anyone can explain this? There's an easy explanation and it's a universal maxim among realtors -- they know it -- it holds true regardless of interest rates, property taxes, etc., etc. 

By the way, we're seeing the same thing with regard to the price of used cars -- prices coming down quickly and the decline has been head-turning. 

Time for some bad boys ...


And that brought me to this:

Who knew? Del Shannon wrote this song? Wow!

The older I get, the more my heart ...

Ford And UAW Reach Tentative Deal -- October 25, 2023

Locator: 45836UAW.

Fain blinked. He could have held out for much more.

Top line: 26% over four years. He told his rank-and-file they deserved 40%. And a 4-day work-week.

This tentative deal may not be ratified on the first, second, or third vote. 

Where have we seen this before? Oh, that’s right — in the US House.

Apple Increasing Its Services Fees -- October 25, 2023

Locator: 45833APPLE.

With all the other news in the past few days, the tea leaves suggest AAPL could report some horrendous quarterly numbers when they report in November, 2023.  

Link 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. 

All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them.  

Again, all my posts are done quickly. There will be typographical and content errors in all my posts. If any of my posts are important to you, go to the source.

Covid Is Still Out There -- October 25, 2023

Locator: 45832COVID.

UPDATES

October 25, 2023: Covid is still out there. Liz Sonders says she has Covid.

October 23, 2023: premiums surge for employers.

In round numbers: trending toward $20,000 per employee per year. Needs to be fact-checked. Will vary but this is a good start at which to begin the discussion.

ORIGINAL POST


Paxlovid:

********************************
Health Insurance

As good a site as any for health insurance data.

I don't believe this site shows the percent of the premium paid by the individual vs the percent paid by the employer, but I've drawn the line which was a composite from other sites that do post this data.


Tricare For Life (military retirees) and Medicare premiums

  • Medicare: $0 for Part A; about $175 / month for most families for Part B (needs to be fact checked).
  • Tricare For Life, military retirees:  

Disclaimer:

All information above needs to be fact-checked. If it doesn't appear correct, it probably isn't.

This site is not associated with any other site: it is not a medical insurance site. It is not connected with government health programs or with private health programs.

I don't understand billing at all. Not entirely true but it can be confusing.

I often make typographical and content errors. If this information is important to you, go to the source.  But wow, "sponsored" sites certainly don't make it easy to find information.

Wow, Wow, Wow -- EOG With A New Permit In The Bakken -- October 25, 2023

Locator: 45831B.

WTI: $85.16.

Active rigs: 37.

Four new permits, #40294 - #40297, inclusive:

  • Operators: BR (3); EOG
  • Fields: Elidah (McKenzie); Parshall (Mountrail)
  • Comments;
    • BR has permits for three wells, lot 1, section 5-151-97: a Nordeng well, and two Kellogg Ranch wells; 
      • to be sited 410 FNL and between 1157 FEL and 1292 FEL
    • EOG has a permit for a Liberty LR well, SENW 26-151-91; 
      • to be sited 1850 FNL and 2290 FWL

One producing well (a DUC) reported as completed:

  • 37878, 0, BR, Rink 1-1-5MBH, 

**************************
That New EOG Permit

Parshall oil field, section :

  • 20255, 892, EOG, Liberty LR 15-26H, TD = 22166 feet, 3 sections, Parshall, t4/12; cum 421K 8/23; a relatively poor well by current standards;
  • 20254, 980, EOG, Liberty LR 20-26H, TD = 22864 feet, 3 sections, Parshall, t4/12; cum 392K 8/23; a relatively poor well by current standards;
  • 38331, EXP, EOG, Liberty LR 125-2629H, Parshall
  • 40297, LOC, EOG, Liberty LR 75-2629H, Parshall

Gasoline Demand Continues To Reflect The Surging Economy — October 25, 2023

Locator: 45830GASOLINEDEMAND.

Link here.

GDP estimate for 3Q23 comes in at 5.4% — highest in the western world. New estimate released today. Next release this Friday.

Bidenomics?

Politics -- They Say This Is A Loss For One Of The Cheneys-- I Don't Know -- Not Following This Story Any More Except Superficially -- October 25, 2023

Locator: 45828GOP.

Link here.

I honestly don't even know what the Cheneys are doing any more. I assume they still call Wyoming home. 

I just checked: there's a Lynn (82 years old) and Liz (somewhat younger).

Oh, here it is, from wiki:

On August 16, 2022, Cheney lost renomination in Wyoming's Republican primary to Trump-endorsed Harriet Hageman in a landslide, garnering just 28.9% of the vote.
Cheney has said that she intends to be "the leader, one of the leaders, in a fight to help to restore" the Republican Party, and that she may be interested in a presidential run.

Okay, now I'm caught up. 

I’ll update the poll later.

Well, That Was Fast -- Apple -- October 25, 2023

Locator: 45827AAPL.

Chips, semiconductor: link here.

Apple, a $3-trillion-market cap company. Right, wrong, indifferent, I break it down this way:

  • $1 trillion: hardware with integrated software, e.g., iPhones, laptops, desktops
  • $1 trillion: services, e.g., cloud services; TV+; music; Siri;
  • $1 trillion: Apple Silicon, the chip division

*****************************
Today's Note

Link here.

One week ago, the two most credible Apple leakers / analysts, Mark Gurman and Ming-Chi Kuo forecast that Apple would not introduce any new products in the last three months of 2023.

Barely a week later, Tim Cook announced a "Scary Fast" Apple event for Monday, October 30, 2023, to stream at 5:00 p.m. Pacific time, USA.

"Scary Fast" is how folks are describing Apple's new M3 chip. 

The M1 chip was huge, transformational, but the M2 was simply a placeholder until Apple could release the M3 chip. Everything suggested the M3 would be released in 2024.

My hunch: the numbers for Apple are not going to be good for the most recent quarter, July - September, 2023, when they are announced in November, 2023. The iPhone 15 may not be selling as well as they had hoped. And the headwinds in China have never been stronger.

Tim needs something good to report and the thinking is that he moved up with the 2024 release / announcement to October 30, 2023.

It should also be noted that it's easy to find the M2 laptops on sale right now.

From the link above:


New House Sales Surge -- Okay -- October 25, 2023

Locator: 45825HOUSING.

From Liz, link here

New home sales, reported today, these are NEW home sales:


Home sales, reported last week:

*********************************
Previously Posted -- Housing

Locator: 45802MORTGAGES.

***********************
Flashback

Back on November 23, 2022 -- almost exactly one year ago I wrote, as a "thought experiment from a naive capitalist." Not one person challenged me on this this entire past year. Here's what I wrote:

On buying a house, these are my observations for folks in my socioeconomic demographic:

  • the price of the house is of little importance (don't take that out of context):
  • the house bought is based on the monthly outlay (principal, interest, insurance, property taxes, etc)

With "free money" or interest rates at zero percent:

  • folks will buy a $400,000 house for $600,000;

With "expensive money" or interest rates at twelve percent:

  • folks will buy a $600,000 house for $400,000.

Experts / realtors will tell folks to buy the "most" house they can afford

  • that they can afford = monthly cash outflow

Monthly cash outflow:

  • if folks think they can afford $3,000 / month, the realtor will convince the buyers they can come up with $4,000 / month
  • buyers will come up with $3,600 / month on their "back-of-the-envelope" budget
  • if they were able to budget $3,000 / month, they will do whatever it takes to come up with that extra $600 / month
  • buying a home becomes a way to force one to save

$600 / month =

  • $6 / day at Starbucks, five days a week, 20 days a month = $120
  • four nights / month out for dinner for a family of four, $100 x 4 = $400

The first two years will be incredibly tough, very painful for the family.

At the end of the first two years, the family will become used to meeting the monthly mortgage.

By the third year, the family may, in fact, have more disposable income than they did two years earlier

  • (pay raise; wife returns to work; second job; more overtime; bonuses; inheritance; family help; tax breaks with a big house)

Interest rates tend to cycle, fluctuate, change (not always, granted). 

If the family buys the $600,000-house for $400,000 with "expensive money" they will be in a very different place two years after they buy the house than if the family buys a $400,000-house for $600,000 with "free money.

Now, break, break. Where would you rather be two years from now: in a $400K house you bought for $600K with "free money" or in a $600K house you bought for $400K with "expensive money."

We're going to stop here and come back to this tomorrow. 

My thoughts may be very naive, but playing devil's advocate this is where I am right now in this thought experiment. 

I thought about this on November 5, 2022, just three weeks ago, and I posted a short note on the blog at the time.

Investing: best years of investing in front of us.

Consider the source, a goldbug, but I can't disagree. 

"Expect five years more of problematic inflation."

Two points:

  • the gap between investors and savers will widen immensely;
  • this year and next will be the best two years to buy a new house.

My thoughts have not changed. I think I'm right on this. It works in an interest rate environment between 0% and 6%. I'm not sure if it would work in a 14-percent environment like we had under the Carter administration.

This "thought experiment" came up again today with the release of the University of Michigan's monthly "Surveys of Consumers.

But for now, ask yourself where you would rather be in 2026:

  • owning a $400,000-house bought for $600,000 with "free money" in 2020 or,
  • owning a $600,000-house bought for $400,000 with "expensive money" in 2023 (or 2024)? 

If the "$400,000-house" and the "$600,000-house" analogy is confusing or doesn't make sense, substitute the phrase "the most house you can afford" for the dollar figure. 

And this whole thought experiment might not make any sense to anyone but me, but I'll come back to it tomorrow to see where my thinking is faulty. 

It should be fun. 

************************
Now, An Update

Link here.

Contrary to what many are saying, it might not be a bad time to buy a house.

That's because buyers waiting for rates to drop may be waiting a long time.

When mortgage rates do go down, competition and demand are set to come roaring back.

No Wells Coming Off Confidential List Today -- October 25, 2023

Locator: 45824B.

Housing sales: numbers are out; will post later. Link here

Weekly EIA petroleum report: posted. Spoiler alert: a big yawn.

***************************
Back to the Bakken

WTI: $83.69.

Thursday, October 26, 2023: 63 for the month; 63 for the quarter, 633 for the year
39494, conf, CLR, Thaxton 6-35H,
38923, conf, Oasis, Kestrel 54001 43-22 3B,
38093, conf, Enerplus, SEI 148-93-05D-06H,
31203, conf, BR, Abercrombie 44-8-12UTFH,

Wednesday, October 25, 2023: 59 for the month; 59 for the quarter, 629 for the year
None.

RBN Energy: clean energy booms in Texas, but oil and gas still critical.

Plans to greatly expand the production of low-carbon energy and reduce greenhouse gas (GHG) emissions can be found just about everywhere, from national and international policy discussions to debates at the state and local levels. Given the potential for dramatic economic, social, and geopolitical impacts over the coming decades, it’s no surprise that top-down mandates for a transition to a more renewables-centric energy mix and away from fossil fuels can stir up concern over the pace, scale, and ultimate effectiveness of such a massive undertaking. In some places, like California, critical voices are largely drowned out. In other spots, apprehension may fester just below the surface. But in a state like Texas that identifies so closely with the energy industry, the conversation is right out in the open. In today’s RBN blog, we look at how that debate is playing out in Texas, where renewable energy is booming in a state known for fossil fuels. 

This is the third blog in our series on the ongoing efforts to decarbonize U.S. energy networks. While developments are playing out very differently from state to state, based on any number of factors, one thing that has become clear over the past couple of years, as energy transition initiatives have gained momentum, is that all sorts of practical economic and logistical realities that may have initially been glossed over by proponents have been laid bare. The truth is that Americans expect the industry to deliver fuel and power where they need it, when they need it, and for a price that everyday people can afford — what’s referred to as the trilemma of availability, reliability and affordability. But those goals not only clash with each other at times, they can also conflict with environmental priorities.

In our first blog, Can’t Help Falling in Love, we looked at the many ways that Hawaii exemplifies both the ambitions and pitfalls of today’s energy landscape. The state has a longstanding commitment to expanding energy production from renewable sources while also tamping down the use of fossil fuels (especially coal for power generation) — but doing all that while also keeping prices under control and reducing pollution is turning out to be no easy feat. Complicating matters, many renewable energy projects have faced significant delays due to conditions not unusual in the Lower 48: supply chain problems, rising costs, difficulties in permitting (see Don’t Pass Me By), and contracting issues.

EIA Weekly Petroleum Report -- A Big Yawn -- October 25, 2023

Locator: 45823WTI.

Link here.

The numbers:

  • inventories: increased by 1.4 million bbls; at 421.1 millions inventories are 5% below average
  • imports: 6.0 million bopd; increased by 71,000; 1.7% more than average
  • refineries: 85.6%
  • distillate inventories: decreased by 1.7 million bbls; 12% below five-year average
  • jet fuel supplied was up 5.0% compared to same period last year

Deep Pockets -- If OXY Can't Do It, Who Can? October 25, 2023

Locator: 45821CO2. 

Link here.


Link here.

 

It took a little sleuthing, but I believe this is "plant" we're talking about: Stratos, Ector County, Texas. From Energy Intelligence, May 3, 2023:

On a tract of wind-whipped scrubland in remote Ector County, Texas last week, Occidental Petroleum formally unveiled the project it now calls “Stratos,” a direct air capture (DAC) facility foundational to the company’s future ambitions. With numerous executives, partners, local officials and other interested parties in attendance, the formal groundbreaking didn’t offer much to look at beyond an early-stage construction site and some ceremonial shovels. But the event was imbued with a sense that something big was under way — the first glimpse of a plant that is one day expected to pull up to 1 million tons of CO2 from the air. Stratos, using technology from Canada-based Carbon Engineering, will be the first and largest project of its kind and a milestone in the battle to reduce CO2 emissions. Oxy CEO Vicki Hollub said the plant’s new name is meant “to convey a real sense of scale and possibility,” both in terms of the technology and the climate challenge itself. “It’s an ambitious challenge,” she told the crowd.

Stratos is the first of potentially dozens of DAC plants Oxy intends to build over the next decade-plus. It is initially designed to capture 500,000 tons/year of CO2, with start-up due in late 2024 and commercial operations set to commence in 2025. A second, identical plant would double the capture capacity of the site in the Permian Basin. Oxy has wagered a good part of its future on DAC; Hollub believes that within about 10 years the company’s low-carbon business will be about equal to the revenue, earnings and cash flow of its chemicals business, which is expected to generate income of $1.3 billion-$1.6 billion in 2023. Oxy is already the world’s largest handler of CO2, permanently storing up to 20 million tons per year, almost exclusively for enhanced oil recovery (EOR). The DAC business will support EOR as well, initially, but will also open up new revenue streams through the sale of carbon offsets, a business line that is already gaining momentum.

The strategy will not come cheap. Stratos is expected to cost at least $1 billion. Oxy’s hope is that each future plant will get successively less expensive as it incorporates best practices and moves more into “mass production.” Michael Avery, president of 1PointFive, the Oxy subsidiary leading the Stratos project, said “this first facility will not just be a milestone in size, but a cornerstone of learning, informing how we optimize direct air capture plants going forward.”