Auto Mechanics Need To Weigh In On This -- April 11, 2024

Locator: 46982FORD.

Link here.

 43,000 SUV owners aren't going to be happy.

This Is So Cool -- I've Thought About This For Quite Some Time -- April 11, 2024

Locator: 46981ETFS.

Link here.

CLR With Five New Permits; Ten Permits Renewed -- April 11, 2024

Locator: 46980B.

WTI: $85.47.

Active rigs: 36.

Five new permits, #40661 - #40665, inclusive:

• Operator: CLR
• Field: East Fork (Williams)
• Comments:
• CLR has permits for five Sandhill wells, SEW 13-156-99, 
• to be sited 315 FSL and between 2071 FWL and 2391 FWL

Ten permits renewed:

• SOGC (Sinclair) (6): six Yauch permits, Lone Butte field, McKenzie County;
• Enerplus (4): four permits in McGregory Buttes -- Hatch, Paprika, Chimayo, and Diablo -- the Pepper pad.
  

The Market -- The Day After -- April 11, 2024

Locator: 46979INV.

Updates

April 13, 2024:

Original Post 

I didn't watch any of CNBC -- except maybe 20 minutes the entire day -- so I really don't know what the theme was for the day. 

I have no clue what's driving PARA and I have no interest in looking.

But today was one of the most critical days so far this year: the market fell significantly yesterday when inflation came in "hotter" than forecast. That was the meme yesterday and to some extent today: "hotter than forecast." 

In fact, the number yesterday came in almost in line with the forecast. Which suggests to me, traders were hoping for a number "better" than the forecast. We would have seen the same outcome had the number come in exactly as forecast.

So, today, it would have been a disaster for some traders/investors had today's inflation number come in "hotter" then forecast. In fact, it did not and that gave traders and investors breathing room to take advantage of a buying opportunity following yesterday's market reaction. And, wow, they certainly did.

Exhibit A: Amazon. Hits an all-time high.

This is a trader's market. 

And, an investor's market.

With a 30-year rolling horizon, what the market does on a daily basis doesn't really matter EXCEPT to confirm my thoughts on what the economy is doing and how the "market" -- investors and traders -- "see" the economy. 

So, today's market action supports my thoughts regarding investing:

• there will be no rate cuts this calendar year,
• not all investors/traders accept that, but they are all trading as if they are willing to accept that;
• if there is rate cut, it will have no effect on the economy; it will simply be a signal
• how the signal will be interpreted depends upon what circumstances exist when the cut is announced
• "higher for longer" is an awful meme, because the current Fed rate is pretty much in line with historical norms; it's about as good as it can get;  it's really not "higher for longer"
• higher and the housing market is slammed and a recession becomes a bigger risk; 
• lower and traders / investors become even more exuberant
• tech remains the story; pullbacks offer investors (and traders) great opportunities

With regard to tech (chips, semiconductor, AI, whatever that all means):

• for investors like me there is a finite and relatively small number of tech companies to consider;
• let's say there are ten such companies; I think it's closer to seven; others might suggest closer to twenty
• this is what mom-and-popl / amateur investors don't realize:
• these seven to twenty companies are not all in the same business;
• they are not all in direct competition with each other;
• a rising tide (in this case, AI) raises all boats -- all seven to twenty; 
• but some will do much better than others but that's a discussion for another day
• each one of these seven to twenty chip companies is a monopoly, or part of a duopoly, or at worse, part of a triopoly

In broad outline:

1) only one company makes the high-end etcher needed for ever-small chips and that company is located in the Netherlands:
2) one company is perceived to be in a class by itself, producing high-end, high-margin chips optimized for AI, but there is a second such company that has no interest in being #2
    3) in that arena of high-end, high-margin chips, one is the "Hertz," the other is the "Avis"
4) there may be two foundries, but only one matters to most of us
5) there is only one DRAM -- breadandbutter -- memory chip company that matters
6) there are only two smartphone chips in their own world, and I can't tell the difference between the two; one is now practically joined at Apple's hip; the other replaced Intel in the WINTEL monopoly/duopoly;
7) the designers -- they design chips but don't get their hands dirty manufacturing them

Of those seven, I missed two early on (last year), but quickly pivoted, and started building a huge position in one of the two; the second one, the second one I missed, was a huge mistake and I finally started building a position yesterday when the market "collapsed."

8) there's one company that doesn't know what business it's in; it will likely do well, because a rising tide (AI) will raise all boats (all chip companies) but I wouldn't touch it with a 10-foot pole. It may do very, very, very well, but it if does so will the others. There are at least seven companies with which to build one's own personal ETF.

Most interesting: what is AI? Who is AI? Think about that for a minute. I think I know but I will hold thoughts until later. 

**************************
Updates

Link here.

More here.

From the linked article;

Copper's bull run should continue for at least the next three years, fueled by global supply challenges and hot demand for the metal to power energy transition and artificial intelligence technologies, industry analysts say.

The outlook is an optimistic harbinger for Freeport-McMoRan and other producers as decarbonization and technological shifts fuel copper's latest demand wave after China's rise powered a similar one two decades ago.

See the  $97 below and that was after a 11% gain in one day. Today, when the entire market was down, now trading at $115:

*******************************
Deep Dives

I'm really proud of the "deep dives" I've done for the blog over the past ten years. I'm working on a new "deep dive" but I don't think I'm going to be very successful in answering this question: how does one invest in the energy that will be needed to power the AI revolution?

The only thing I know for sure: copper.

I've been building a position in SCCO for decades. Always bought additional shares; never sold. For the longest time, DRIP'd.

But energy source?

• nuclear: wouldn't touch it with a ten-foot pole as an investor; it may be the "final" solution but it will be a real slog and there will be plenty of other options that will provide better returns with much less risk for investors and traders;
  
• coal: no way as an investment. Coal in 2030 will be the natural gas of 2024 -- coal companies will be giving it away if anyone is still using it (yes, I know, China will be still using it, as well as India but the margins will be so low compared to other investing options)
  
• renewables: nope. I think we are already near "peak" renewable energy
  
• that leaves natural gas

I'm already overweight in oil / natural gas, so I have that covered. 

So, I'm still looking -- how to play / invest in energy solutions for AI.

Other AI issues and investment opportunities.

This is a sleeper and plenty of time; but watch this sector closely: transformers. In the old days it was GE, Siemens, I suppose; these days I have no idea, but plenty of time to sort this out.

This is not a sleeper, but not a lot of folks are paying attention: it's batteries and battery technology, both for the grid and for the data centers.

• the grid needs batteries to back-up solar and wind;
• the data centers need batteries to back up the grid
• so, I'll have to a deep dive on companies involved in batteries for the grid and for data centers
• right now, the only name that comes to mind: Tesla

So, that's:

• natural gas
• copper
• transformers
• batteries / battery technology

What else?

• Of course: the cloud -- these are the software companies for the data center hardware: Apple, Microsoft, Google, Amazon, 

How about someone that puts the wiring together?

I'm surprised no one has thought of this. Who's doing the wiring, who has the expertise to put the hardware, in the cloud and the data centers, together? This is why I need to do a "deep dive," but this is where I would start: Oracle and Cisco.

What about electric utilities? Not in a million years. Way too regulated; no YOLO, FOMO, or MOJO. Too many liabilities (forest fires; wild fires). High capital costs with poor margins. Investors demand generous dividends (i.e., capital).

So, I need to do a "deep dive" but at least I have a start:

• seven chip companies -- each a monopoly, part of a duopoly or triopoly
• natural gas
• copper
• transformers
• batteries and battery technology
• the cloud, several companies
• two networking companies

What I won't invest in:

• any energy source other than natural gas
• utilities

AAPL -- Note To An Extended Family Member -- April 11, 2024

Locator: 46978AAPL.

A few weeks ago I posted my thoughts on AAPL per his / her request. My recommendations were to her / him specifically and no one else.

If you were to take my advice, today would be a great day to sell 10% of your AAPL holdings and buy BRK-B if you were to take that option. If I recall, I suggested two options.

Reminder: I am inappropriately exuberant about the US economy and the US market, I am also inappropriately exuberant about all things Apple.

See disclaimer. This is not an investment site.

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.

Reminder: I am inappropriately exuberant about the US economy and the US market, I am also inappropriately exuberant about all things Apple. 

Meanwhile, I'm still a buyer of AAPL (Apple, Inc) but can't buy any more AAPL this week due to my investing rules.

INFLATION WATCH -- Solar Energy = Waste -- Electricity -- April 11, 2024

Locator: 46977ELECTRICITY.

This post begins a deep dive into the electricity grid.

Before we get started, three previous posts that were quite remarkable:

• the Obama legacy;
• why folks like renewable energy;
• electric rates surge in New Hampshire.

This post, today, below, is not ready for prime time. But I think folks can connect the dots.

For some reason, the issue of "US solar energy" is trending over at twitter.

It may have begun with this, which is being reported everywhere. Easy to find links, this is one:

Look at those percents in growth: 4.7%; 21%; 25%.

But wow, talk about misinformation. The solar crowd is crowing about the huge increase in US solar-generated electricity capacity / generation, as seen here -- one of the few sites that posts this information.

Here's the reality, from the EIA itself. Consumption is important, not production. US solar-energy-generated electricity consumption: 14% x 13% = 0.0182 = 1.8%.

Bottom line:

• solar crowd is crowing about capacity / generation; what's important is consumption.

And what makes that so important is TwainsMoustach observation. Link here.

Ben makes this observation:

INFLATION WATCH: Electricity Rates -- By State -- Residential --EAI -- January 2024 Data

Locator: 46976ELECTRICITY.

I'll explain the various columns later, but I assume most folks can figure it out without additional notes.

First observation: why is Pennsylvania's rate so high? About 76% higher than Nebraska's residential rate.

Source: link here. 

Electricity price: KWh -- residential -- by state -- ranked by rate, January, 2024 (4th column).

State	Change since October 2022	Change y/y January	January 2024	January 2023	December 2023	October 2023	October 2022	Change y/y/ October
HI	45.42%	-1.51%	44.28	44.96	41.60	39.76	30.45	36.62%
RI	87.51%	7.80%	31.22	28.96	30.88	18.64	16.65	85.47%
CA	52.09%	11.37%	29.49	26.48	29.11	19.90	19.39	50.13%
MA	52.69%	-10.96%	28.34	31.83	28.85	21.11	18.56	55.44%
CT	33.85%	-9.48%	27.40	30.27	26.86	21.62	20.47	31.22%
ME	60.11%	7.43%	25.89	24.10	28.04	16.16	16.17	73.41%
NH	29.90%	-21.01%	25.07	31.74	24.98	19.63	19.30	29.43%
NY	24.95%	-0.68%	23.44	23.60	22.52	18.30	18.76	20.04%
VT	16.43%	5.16%	20.98	19.95	21.09	18.50	18.02	17.04%
MI	15.64%	1.95%	18.34	17.99	18.55	16.07	15.86	16.96%
NJ	12.16%	5.85%	17.90	16.91	17.59	15.64	15.96	10.21%
MD	22.93%	9.46%	17.48	15.97	17.46	13.92	14.22	22.78%
PA	19.77%	-3.44%	17.39	18.01	17.53	14.38	14.52	20.73%
DC	25.60%	13.72%	16.83	14.80	17.75	13.21	13.40	32.46%
WI	9.37%	2.55%	16.46	16.05	16.48	14.28	15.05	9.50%
NV	40.72%	-2.56%	16.38	16.81	15.55	11.60	11.64	33.59%
OH	22.97%	8.80%	15.58	14.32	15.69	12.64	12.67	23.84%
DE	23.35%	8.91%	15.53	14.26	16.32	12.05	12.59	29.63%
IL	15.29%	-7.09%	14.93	16.07	14.98	12.56	12.95	15.68%
FL	23.04%	-0.94%	14.79	14.93	15.26	11.37	12.02	26.96%
AL	12.59%	0.28%	14.40	14.36	14.13	12.41	12.79	10.48%
CO	11.84%	0.42%	14.26	14.20	14.15	12.28	12.75	10.98%
TX	27.80%	0.42%	14.25	14.19	14.58	11.36	11.15	30.76%
AZ	11.54%	11.81%	14.11	12.62	14.41	13.16	12.65	13.91%
MN	0.57%	7.34%	14.04	13.08	13.94	14.09	13.96	-0.14%
OR	26.16%	14.95%	13.84	12.04	12.56	11.02	10.97	14.49%
NM	2.61%	1.70%	13.76	13.53	13.65	13.37	13.41	1.79%
IN	14.11%	-10.89%	13.75	15.43	14.58	12.02	12.05	21.00%
WV	16.68%	4.20%	13.64	13.09	13.37	11.57	11.69	14.37%
SC	3.60%	-3.22%	13.54	13.99	13.61	12.91	13.07	4.13%
VA	13.35%	-3.78%	13.50	14.03	13.61	12.40	11.91	14.27%
NC	18.07%	3.16%	13.07	12.67	13.22	11.24	11.07	19.42%
KS	-3.83%	0.54%	13.04	12.97	12.96	11.56	13.56	-4.42%
MS	11.58%	-3.49%	12.72	13.18	13.25	11.55	11.40	16.23%
GA	-1.52%	-4.12%	12.34	12.87	12.79	12.26	12.53	2.08%
KY	14.89%	-3.23%	12.27	12.68	12.21	10.56	10.68	14.33%
TN	10.25%	-0.50%	12.05	12.11	12.18	10.79	10.93	11.44%
MT	2.13%	11.65%	11.98	10.73	12.61	11.85	11.73	7.50%
IA	-14.87%	4.87%	11.85	11.30	11.88	13.81	13.92	-14.66%
AR	4.75%	-1.58%	11.24	11.42	11.61	9.99	10.73	8.20%
AR	-49.23%	-1.58%	11.24	11.42	11.61	22.54	22.14	-47.56%
SD	-11.06%	-0.62%	11.18	11.25	11.69	12.39	12.57	-7.00%
OK	5.98%	1.82%	11.16	10.96	10.99	10.72	10.53	4.37%
WA	11.46%	5.82%	11.09	10.48	11.00	9.79	9.95	10.55%
WY	-11.06%	5.64%	10.86	10.28	11.21	12.30	12.21	-8.19%
UT	-5.49%	1.88%	10.85	10.65	10.86	10.63	11.48	-5.40%
LA	6.18%	-9.38%	10.82	11.94	11.40	9.37	10.19	11.87%
MO	-18.34%	0.84%	10.82	10.73	11.20	13.23	13.25	-15.47%
ID	-5.52%	1.98%	10.79	10.58	11.60	10.58	11.42	1.58%
ND	-19.94%	-0.30%	9.88	9.91	10.23	12.07	12.34	-17.10%
NE	-18.33%	5.35%	9.85	9.35	10.58	11.31	12.06	-12.27%