Saudi Is Back -- And So Is The US Economy -- January 31, 2023

Link here.

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And So Is The US Market

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Area Under The Curve

Update

January 31, 2023: one "word" -- AMEX. 

Original Post

Re-posting from November 20, 2022:

By the way, this is where folks are really hurt by having a poor general education, particularly in math. Folks will look (briefly) at the graph below and note only the "curve" or the solid dark line. Much more important is the "calculus" -- it's the "area under the curve" that should catch your attention.

The "area under the curve." Calculus. Start here.

Link here.

My reply: 

Get a grip. For an investor, it's an open-book test: Mastercard, Visa, Discover, and AMEX. Not only lots of credit card activity but lots of late payments and interest rates rising. They're gonna make out like bandits.

And, oh, by the way, savings rates are at 10-year lows, not all time lows. Went much lower in the mid 2000s.

The area under the curve:

This, without a doubt, the largest ever in the history of mankind.

My favorite chart which correlates exactly with the chart above.

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. 

Why Should She Be Sad? It's An Open-Book Test For Investors -- November 20, 2022

By the way, this is where folks are really hurt by having a poor general education, particularly in math. Folks will look (briefly) at the graph below and note only the "curve" or the solid dark line. Much more important is the "calculus" -- it's the "area under the curve" that should catch your attention.

The "area under the curve." Calculus. Start here.

Link here.

My reply: 

Get a grip. For an investor, it's an open-book test: Mastercard, Visa, and Discover. Not only lots of credit card activity but lots of late payments and interest rates rising. They're gonna make out like bandits.

And, oh, by the way, savings rates are at 10-year lows, not all time lows. Went much lower in the mid 2000s.

The area under the curve:

This, without a doubt, the largest ever in the history of mankind.

My favorite chart which correlates exactly with the chart above.

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.  

US Savings -- March 5, 2023

Locator: 40902B.

Link here.

This guy is one of the best contributors on twitter, but he made a huge mistake in this tweet. Can you spot it? 

Okay, maybe it's not that big a deal. Maybe he's not wrong; he just could have said it better, pointing out one additional data point.

Link here.

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Area Under The Curve

By the way, do folks remember this?

The area under the curve: 

What was the area under the curve? Glad you asked. 

The above is the "personal saving rate," somewhat related to "household wealth" which increased by $13.5 trillion for Americans during the pandemic.

Link here.

The "rich get richer."

In fact, "investors get richer."

So, what's the denominator? What is total American household wealth?

Also, from FRED:

Recent stock market losses and losses in the housing market have tempered these gains. I don't have a dog in the housing market fight, but I'm buying a lot of shares on the equity market at significantly depressed prices. 

Area Under The Curve -- December 11, 2022

Locator: 43800B.

The area under the curve: 

What was the area under the curve? Glad you asked. 

The above is the "personal saving rate," somewhat related to "household wealth" which increased by $13.5 trillion for Americans during the pandemic.

Link here.

The "rich get richer."

In fact, "investors get richer."

So, what's the denominator? What is total American household wealth?

Also, from FRED:

Recent stock market losses and losses in the housing market have tempered these gains. I don't have a dog in the housing market fight, but I'm buying a lot of shares on the equity market at significantly depressed prices.

My Favorite Graph Vs The "Savings Graph" -- July 26, 2023

Locator: 45203ECON

Updates

August 4, 2023: this is an old presentation but it provides a definition of "savings."  The presentation here, see slide 11.  "Savings = income - spending."

Original Post  

I posted this, July 4, 2023 (and I have posted the "area under the curve" graphic several times in the past three months).

US household "savings" collapsing: "area under the curve" ... graph. Link here.

Mainstream media and armchair analysts are misreading and mis-interpreting the chart above but I can't articulate the problem. You are on your own here.

However, today the updated MMF chart was released:

Same question for two different audiences:

• for those looking at the overall health of the US economy, which of the two graphs is better?
• for long-term investors (or maybe even all investors), which of the two graphs is better?

No answer is wrong. 

But, wow, as a long-term investor, I love the second graph. 

It was reported elsewhere that the most recent MMF data showed a slight decline. Obviously not the case based on the graph above.

The second graph might not mean as much if the securities market was collapsing and folks were pulling their money out of the stock market and investing in much safer money market funds. But, in fact, the stock market has been on a 12-day rally, the longest in six or more years, and yet more money is flowing into MMFs.

Bonds? I don't follow bonds, but it's my impression a lot of money is also flowing into bonds because of their great rates.

Where is that money coming from? Which by the way, is one of my favorite lines from a Colombo episode, "just where is that money coming from?"

Savings:

As mentioned some time ago, I don't understand where / how the US government measures savings rate. The well-to-do, I imagine consider a lot of their investments in MMFs, shot-term bonds, and even some securities as "savings" and don't really have much in their bank "savings accounts.“

Elderly widows pulling money out of savings accounts to put in MMFs is not exactly a real decrease in their savings. 

So, unless I'm missing something, we have a lot of "new" money coming into the market, into MMFs, and into bonds. Again, from where is that money coming? And how far down into the general economy does it trickle? It's just hard for me to believe if folks are able to put this much money in MMFs, securities, and bonds, they don’t also have money to spend on consumer goods. 

Maybe I'm wrong, naive. Whatever. 

But they are fascinating graphs.

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The Book Club

The Custer Companion: A Comprehensive Guide to the Life of George Armstrong Custer and the Plains Indians Wars, Thom Hatch, c. 2002. 973.8HAT.

Notes.

The Shifting Sands Of Fortune -- EIA -- November 30, 2015

The graphics are most staggering at this EIA site.

This one deserves some attention:

It is best to go to the linked EIA site where one can enlarge the graphic above and make some interesting observations.

By the way, this is quite exciting. The above graphic was a screenshot, but the EIA has announced that one can "embed" its graphics into one's website directly. Life just keeps getting better.

From wiki:

The Hubbert peak theory says that for any given geographical area, from an individual oil-producing region to the planet as a whole, the rate of petroleum production tends to follow a bell-shaped curve. It is one of the primary theories on peak oil.

Choosing a particular curve determines a point of maximum production based on discovery rates, production rates and cumulative production. Early in the curve (pre-peak), the production rate increases because of the discovery rate and the addition of infrastructure. Late in the curve (post-peak), production declines because of resource depletion.

The Hubbert peak theory is based on the observation that the amount of oil under the ground in any region is finite, therefore the rate of discovery which initially increases quickly must reach a maximum and decline. In the US, oil extraction followed the discovery curve after a time lag of 32 to 35 years. The theory is named after American geophysicist M. King Hubbert, who created a method of modeling the production curve given an assumed ultimate recovery volume.

Note: on December 18, 2018, wiki had not changed one word of that lead-in to the page on Hubbert Peak Theory (link here).

How has the theory held up? Also, from the same link:

A 2007 study of oil depletion by the UK Energy Research Centre pointed out that there is no theoretical and no robust practical reason to assume that oil production will follow a logistic curve. Neither is there any reason to assume that the peak will occur when half the ultimate recoverable resource has been produced; and in fact, empirical evidence appears to contradict this idea. An analysis of a 55 post-peak countries found that the average peak was at 25 percent of the ultimate recovery.

EURs in the Bakken have been increasing ever since the boom began.

********************************

Some Observations On Growth In US Reserves, Year-Over-Year

The industry definition of reserves and related terms:

• reserves: those quantities of petroleum which are anticipated to be commercially recovered from known accumulations from a give date forward. 
• contingent reserves: those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from undiscovered accumulations
• commerciality: it is recommended that, if the degree of commitment is not such that the accuulation is expected to be developed and place on production with a reasonable time frame,the estimated recoverable volumes for the accumulation be classified as continent resources. A reasonable time frame for the initiation of development depends on the specific circumstances but, in general, should be limited to around 5 years... reserve quantities would then represent the estimated recover resulitng from the imlementation of that plan. [An exception:gas fields in which there are contracts for the out-years.]

When I look at the map of the US above, the change in reserves from 2013 to 2014, this does not mean that original oil in place has increased or decreased over the past year, rather the data has to do with what is likely to be recovered over the next five years.

1. Oil losers

• Gulf of Mexico
• California
• Alaska
• Utah

2. Oil winners

• Texas
• North Dakota
• Oklahoma
• Colorado
• New Mexico

3. Most interesting -- look at this -- the natural gas winners include North Dakota; it may be trivial compared to the state of Texas, but it is huge for a state like North Dakota with a small population

4. There are not many states or areas that are losers in both oil and natural gas, but Alaska is a huge loser in both -- dark red.

5. The tale of two states: New York and Pennsylvania. It's all politics. 

War Across The Mideast -- Saudi Arabia, Allies Attack Yemen -- March 26, 2015

My daily routine changes little. Occasionally I don't start the day at Starbucks but it is rare. The location of the Starbucks varies. There are three in my immediate area and a fourth that is 5.5 miles away -- a nice bicycle ride. For various reasons, I usually go to the Target Starbucks in the immediate area -- it is never busy. More accurately, it "was" never busy. However, now it is extremely busy. They normally have one barista; today three. The line is 7 deep compared to the usual "no line." It turns out that the new owners of the grocery store up the street did not keep the contract with the in-store Starbucks, so now many of those customers are coming down here.

Left over from yesterday's Rigzone. I don't think I will link any of the stories; most are old by now; for the archives only.

• Hess pulls out of Kurdistan
• Wood Mackenzie: "demise of unconventional oil exaggerated"
• North Dakota oil rig count drops below 100 (to 98 to be exact)
• as oil prices slide, North Dakota sees manufacturing future (okay, maybe that one I will post later)
• in an attempt to further hobble US oil industry, US Senate Democrats push White House on oil train safety

***********************************

Active rigs:

	3/26/2015	03/26/2014	03/26/2013	03/26/2012	03/26/2011
Active Rigs	99	198	186	206	170

RBN Energy: part 7 of the series on natural gas in the Marcellus / Utica

The U.S. Midwest region is slated to get an infusion of cheaper Northeast natural gas supply later this year as the first of five new westbound pipeline expansions is expected to begin service in November. Already a couple of projects are moving gas to the Midwest from the Northeast.  The Northeast-to-Midwest capacity will have a huge impact on the Midwest supply stack and consequently on prices. The Chicago Citygates forward curve shows prices flipping from premiums to discounts later this year. Today’s blog continues our look at how new pipeline capacity will re-shuffle the Midwest’s supply stack and change regional pricing.

This is Part 7 in our natural gas forward curve series. Part 1 provided a definition of forward curves and how they work. Part 2 and Part 3 dove into two Northeast gas markets – Transco Zone 6 in New York and Dominion South in Appalachia. The region is poised to transform from a net demand region to a net supplier of natural gas to the U.S. but is sorely constrained by takeaway capacity in the near- to mid-term, resulting in distressed pricing. In Part 4, we laid out the fundamental drivers influencing Northeast forward curves for the next several years, the biggest factor being the slew of pipeline expansions proposed to relieve supply congestion in the region. In Part 5 we concluded that based on expected supply/demand fundamentals and our variable cost assumption, the current forward curve correctly suggests extreme price weakness through 2016, but that the back of the curve (2018-19) may be too pessimistic and holds some upside potential based on timing of capacity expansions – assuming all of those expansions happen.

**********************************

JV-Led

ISIS/Syria/Iran/Yemen now have Saudi Arabia surrounded (with one trivial exception: Oman). Iraq is pretty much neutralized / occupied as far as Iran is concerned. Iran's rear flank is secure. Once John Kerry and Barack Obama remove the sanctions on Iran, Iran becomes a much bigger threat to its neighbors in the Mideast. Most importantly: they have the money they need to pursue their regional goals. Remember: it's called the Persian Gulf, not the Saudi Arabian Gulf. The relationship between the US and Saudi Arabia was once a solid relationship (and, of course, that was true with regard to the Shah of Iran, also). Saudi Arabia could not have missed the fact that the Obama administration has thrown the Israelis under the bus AND will soon conclude an "agreement" with Iran allowing the latter unfettered development of their nuclear "energy for peaceful uses" program. Saudi Arabia does not have a warrior culture; without US support it cannot defend itself. As important as Saudi Arabia is to the stability of the western world, the fact that the US has thrown Israel under the bus certainly suggests to princes that with regard to the present regime in Washington (DC), nothing is off the table.

It doesn't matter that any of this is hyperbole or even remotely likely or possible, the market does not like uncertainty. And we're going to see that today.

Disclaimer: this is not an investment site. Do not make any investment, financial, or relationship decisions based on anything you read here or think you may have read here.

******************************

Snooker

This week's issue of The New Yorker has a great article on snooker. The author writes:

People who grew up in Britain in the nineteen-eighties, as I did, found themselves steeped in snooker whether they liked it not.

That is so incredibly accurate. As a family we lived in England for three years in the late 1980's. As much as one might have wanted to "remain an American" it was almost impossible. British television (BBC 1, BBC 2, ITV, and a fourth station, and that was it); British radio (BBC 1 and BBC 2); fish, chips, and mashed peas (not for the faint-hearted); consistent weather (overcast, cool, rain); pubs; pub food (best food in England); queues; darts; and, snooker.

Of all those mentioned, there was only one exception for me: I didn't get interested in snooker. So now, the article in The New Yorker on snooker. Highly recommended. Very, very interesting. Usually I find New Yorker articles are too long; this one is not long enough at seven full pages and only one small drawing.

*****************************
Apple

Re-posted from late last night: Apple will release three new iPhone models in the second half of 2015, according to a new report from DigiTimes. The site claims that a 4-inch iPhone model will join the 4.7-inch iPhone 6s and 5.5-inch iPhone 6s Plus.

I don't have a smart phone and have no plans to get one. However, a clamshell phone about 3 inches x 1.5 inches when closed and very, very thin would be the cat's meow. Now that, I would consider.

Headlines -- December 14, 2023

Locator: 46306CHINA. 

Last observation: before heading to bed -- midnight, December 14, 2023 ... my favorite color at Christmas -- green:

Bakken: a reader noted that after years (?) of "no activity" in the Bakken, XTO now has an active rig in the state. A huge "thank you" to the reader who alerted me to that observation.

China: all that talk about the cratering Chinese economy -- oh, give me a break. Link here.

Smucker: I mentioned Smucker on the blog on December 5, 2023, but unfortunately, I forgot to provide the link and I don't recall what Smucker was doing that caught my attention. 

I don't have a position in SJM and doubt that I ever will but that doesn't mean Smucker is not worth. Explore it on your own; I don't have time to post much on it tonight

What happened tonight that brought me to JMSmucker. It was Café Bustelo. I saw this in my daughter's kitchen. My son-in-law bought it -- probably at Walmart -- some months ago when coffee was hard to come by due to Covid-related supply chain issues. It is now my wife's favorite coffee when she visits the twins in Portlan, Oregon.

So, what's with Café Bustelo. It turns out Café Bustelo is a JMSmucker brand. From the JMSmucker coffee brand site: 

From Motley Fool, September, 2023. 

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Restaurants

Updates

December 15, 2023: completely unexpected --

Original Post

 The tea leaves suggest we're going to see a lot of regional fast-food and sit-down restaurants start to fail over the next couple of years. Anecdotal, based on what I'm seeing in our north Texas neighborhood, a suburb of Ft Worth / Dallas. 

I think this guy is wrong on the specifics but not the generalities. Link here. He assumes there will be a recession / hard landing.

********************************
In-N-Out

One that won't fail: In-NOut.

Link here. First In-N-Out  the state of Idaho recently opened. Outrageous video.

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EIA Accounting

Link here. 

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Trans Mountain Pipeline Delay

I'm not going to waste time looking for a link -- the link is easy to find -- but it's possible that the pipeline -- scheduled after years of delays to be operational in the next month or so, may now be delayed another two years and another billion dollars or more in overrun costs due to regulators -- bureaucrats who think they understand drilling better than the operators. As long as I don't have a dog in the fight, I don't care. Here's a link: I had to look up something.

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Hope Springs Eternal

Pending:

• OXY: CrownRock
• CVX: Hess
• XOM: PXD

Headline: "Consolidation Push Could Turn US Oil Industry Into Handful Of Giants." 

Not if the FTC can help it.

******************************
The Area Under The Curve

I still need to talk about "the area under the curve," but I don't have the energy or interest to do it tonight.

Link here for a tease.

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The Fourth Industrial Revolution

I don't have the energy or interest to write about 4IR either, but here's one article about which to think with regard to 4IR.

********************************
GM EVs

OMG. Ready to spend more time with her family?

Link here.

One Year Ago: 100% Probability Of A Recession Within Twelve Months -- Bloomberg -- October 21, 2023

Locator: 45781ECON. 

The Fed: to move from 3% to 2% inflation, the Fed will kill the housing sector, the auto industry and renewable energy.  

JPow's memoirs title: Doing It My Way: The Operation Was A Success But The Patient Died.

Mester's memoirs title: No Regrets: How We Stopped Renewable Energy.

***********************
The Economy

One year ago, Bloomberg Economics predicted with a 100% probability a recession within 12 months.

100% probability.  

100% probability.  

So, what happened?

***********************
The Blog

The area under the curve:

This, the area under the chart, without a doubt, the largest ever in the history of mankind.

My favorite chart.

Link here.

******************************
Transfer of Wealth -- Already in Play

Now, let's add another data point: the greatest wealth transfer in the history of mankind. Link here.

My parents' generation transferred to me and my generation: $16 trillion.

My generation will transfer to the next two generations, our children, Gen X and Gen Y: $53 trillion.

First off all, I can't get my mind around one trillion dollars, much less $15 trillion, much less $60 trillion.

This transfer has only just begun.

My generation, the baby boomers: 1946 - 1964.

Today: ages 77 years of age - 59 years of age.

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RMDs

Baby boomers: first generation with tax-deferred (and tax-exempt) IRAs.

IRS changed the rules and now inherited tax-deferred IRAs must be exhausted in ten years.

The phenomenon of RMDs from the baby boomers has also just begun.

Age 73: must begin to take RMDs from IRAs.

Human nature: most folks who have sizeable IRAs and understand investing will try to wait as long as they can to start taking their RMDs each year. So, now, we're coming to the end of the year, and the holidays are coming. RMDs for 2023 start to hit their stride now.

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Housing

Baby boomers: big families. Common for folks like me to have four, five, or six siblings. But, Gens X, Y, and Z will have youngsters with zero or one sibling and that's it. 

Much less money being spent on housing (high interest rates, also, of course, but less money on housing translates into more money in non-housing retail sector.

Link here. 

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Transportation

Due to high cost of automobiles, shortage of vehicles, etc., folks spending a lot less on autos. That leaves a lot more money for non-auto retail sales.

Excluding autos, sales were up 0.6%, also well ahead of the forecast for just 0.2%. The so-called control group, which strips out items such as auto dealers, gas stations, office supply stores, mobile homes and tobacco stores and is used for the department’s GDP calculation, rose 0.6% as well.

***********************
Disposable Income

In the US, averages $50,000 per capita. Previously reported. Link provided by a reader, thank you.

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Bottom Line

From the linked CNBC article:

 “The U.S. consumer cannot stop spending,” said David Russell, global head of market strategy at TradeStation.

“All three retail sales reports for Q3 were above estimates, which puts us on track for a strong GDP number later this month. It also gives the Fed zero reason to loosen policy, which keeps the 10-year Treasury yield pushing toward 5%.”

Sales gains were broad-based on the month, with the biggest increase coming at miscellaneous store retailers, which saw an increase of 3%.

Online sales rose 1.1% while motor vehicle parts and dealers saw a 1% increase and food services and drinking places grew by 0.9%, good for a yearly increase of 9.2%, which led all categories.

There were only a few categories that showed a decline; electronics and appliances stores as well as clothing retailers both saw decreases of 0.8% on the month.

*************************
GDPNow

Link here.

Estimates for 3Q23 coming in at 5.4%.

Holy Mackerel -- This Economy Is On Fire -- Recession? What Recession? -- Consumer Expenditures And The Area Under The Cure -- June 29, 2023

Updates

Later, 12:58 p.m. CT: jobless claims, link here.Wow, it's hard to find this data sometimes. 

Later, 12: 53 p.m. CT:

• Link here.

Original Post

Link here. The last estimate from GDPNow (see down below) was a paltry 1.1 -- missing the actual by quite a bit.

A reader suggested to me yesterday that JPow will raise rates by 50 bp in July. I said JPow would either keep rates the same or raise only 25 bp. After this report, JPow will have to raise rates by 25 bp.

50 bp? Possibly.

The reader is right; I am wrong. So, we'll see in July.

The market is about to diverge:

• the Dow will head in one direction;
• NASDAQ in another direction;
• same overall direction, but where one will head ENE (30°), the other will have a NNE heading (60°).

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.

From the linked report:

The U.S. economy showed much stronger-than-expected growth in the first quarter than previously thought.

Gross domestic product increased at a 2% annualized pace for the January-through-March period, up from the previous estimate of 1.3% and ahead of the 1.4% Dow Jones consensus forecast.

This was the third and final estimate for Q1 GDP.

The growth rate was 2.6% in the fourth quarter.

The upward revision helps undercut widespread expectations that the U.S. is heading toward a recession.

According to a summary from the department’s Bureau of Economic Analysis, the change came in large part because both consumer expenditures and exports were stronger than previously thought.

Consumer spending, as gauged by personal consumption expenditures, rose 4.2%, the highest quarterly pace since the second quarter of 2021.

At the same time, exports rose 7.8% after falling 3.7% in the fourth quarter of 2022.

There also was some good news on the inflation front. Core PCE prices, which exclude food and energy, rose 4.9% in the period, a downward revision of 0.1 percentage point. The all-times price index increased 3.8%, unchanged from the last estimate.

The area under the curve:

My favorite chart:

 This was the last estimate that I captured from "GDPNow" for 1Q23:

 **************************
A Musical Interlude

Link here.

Interactive Inflation Graphic -- December 16, 2023

Locator: 46318ECON.

Link here. Tag inflation chart graphic.

At the link scroll down to the graphic and then click on the sector at the legend to the right of the graph.

I don't think any of these graphs make me a better investor but it helps me fact-check the talking heads on CNBC and helps put things in better perspective.  

Farther down on that same page, the CPI since 1913.

Looking at the last column: average annual percent change -- "AVG - AVG":

• 2019: 1.8%
• 2020: 1.2% -- Covid-19 lockdown
• 2021: 4.7% -- Covid-19 lockdown
• 2022: 8.0% -- "area under curve" meets "supply chain woes"; inflation spike had very little to do with anything else
• 2023: 3.5%? -- Fed,other analysts foresee change around 2% going into 2024 - 2025

Important to note:

• "area under the curve": well understood
• "supply chain woes": has never been adequately explained to average investor

So, we had one year of a spike to 8% coming off something we had never seen before: "area under curve" meets "supply chain woes."

And worse, the "supply chain woes" were exacerbated by challenges of the Fourth Industrial Revolution.

So, a one year spike.

We have had it worse: look at the period from 1968 to 1991 -- 23 years.

Much, then, derives from that. 

I think it's fascinating.

It doesn't make me a better investor but it reassures me I'm on the right track.

It also speaks volumes about CEOs who say they are struggling due to inflation.  

Which brings me to Mary Barra and another stand-alone post later.

Part 3, T+58, Idle Chatter -- January 3, 2019

This is really, really cool. A reader alerted me to the fact that "Peak Oil" highlighted one of my recent posts. See this site. The comments are always the best, of course. They are trying to defend Hubbert. LOL. My favorite comment:

Hubbert got his butt kicked by LTO. Y’all are making excuses. The only things he factored out were tar sands and kerogen (oil shale, not shale oil). And he said he was anticipating new finds and methods. His paper was about all the oil in the “sedimentary basins”.

He was wrong pre war too. When he was a Technocrat in the 30s, he predicte peak at 1950! Just a typical peaker like Colin Campbell or Deffeyes. Getting his butt kicked for making doomer rojections that didn’t work out.

Many Hubbert supporters suggest he was talking about conventional oil, not UTS. Conventional oil vs UTS is not mentioned in the wiki article, at least as far as I read. It begins:

The Hubbert peak theory says that for any given geographical area, from an individual oil-producing region to the planet as a whole, the rate of petroleum production tends to follow a bell-shaped curve. It is one of the primary theories on peak oil.

Choosing a particular curve determines a point of maximum production based on discovery rates, production rates and cumulative production. Early in the curve (pre-peak), the production rate increases due to the discovery rate and the addition of infrastructure. Late in the curve (post-peak), production declines because of resource depletion.

The Hubbert peak theory is based on the observation that the amount of oil under the ground in any region is finite, therefore the rate of discovery which initially increases quickly must reach a maximum and decline. In the US, oil extraction followed the discovery curve after a time lag of 32 to 35 years.[1][2] The theory is named after American geophysicist M. King Hubbert, who created a method of modeling the production curve given an assumed ultimate recovery volume. 

I doubt Hubbert differentiated between conventional and UTS. As far as I know, UTS was pretty much a non-phenomenon when Hubbert was writing. 

Repeating: late in the curve (post-peak), production declines because of resource depletion.

Obviously with UTS that is absolutely untrue. MRO has proved that beyond a shadow of a doubt for individual wells, and the Bakken has shown that for a geographical area. 

Retail Sales Rose Almost 4x That Forecast In September -- October 17, 2023

Locator: 45800ECON. 

Big winners? Banks, today, are reporting huge earnings on interest payments for the third quarter, July - September, 2023, off strong retail sales. Investors worried the Fed will not simply be "higher for longer, but "much higher for longer." Link to WSJ.

Link here.

Let's review some charts.

The area under the curve:

This, the area under the chart, without a doubt, the largest ever in the history of mankind.

My favorite chart.

Link here.

******************************
Transfer of Wealth -- Already in Play

Now, let's add another data point: the greatest wealth transfer in the history of mankind. Link here.

My parents' generation transferred to me and my generation: $16 trillion.

My generation will transfer to the next two generations, our children, Gen X and Gen Y: $53 trillion.

First off all, I can't get my mind around one trillion dollars, much less $15 trillion, much less $60 trillion.

This transfer has only just begun.

My generation, the baby boomers: 1946 - 1964.

Today: ages 77 years of age - 59 years of age.

***************************
RMDs

Baby boomers: first generation with tax-deferred (and tax-exempt) IRAs.

IRS changed the rules and now inherited tax-deferred IRAs must be exhausted in ten years.

The phenomenon of RMDs from the baby boomers has also just begun.

Age 73: must begin to take RMDs from IRAs.

Human nature: most folks who have sizeable IRAs and understand investing will try to wait as long as they can to start taking their RMDs each year. So, now, we're coming to the end of the year, and the holidays are coming. RMDs for 2023 start to hit their stride now.

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Housing

Baby boomers: big families. Common for folks like me to have four, five, or six siblings. But, Gens X, Y, and Z will have youngsters with zero or one siblings, and that's it. 

Much less money being spent on housing (high interest rates, also, of course, but less money on housing translates into more money in non-housing retail sector.

Link here. 

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Transportation

Due to high cost of automobiles, shortage of vehicles, etc., folks spending a lot less on autos. That leaves a lot more money for non-auto retail sales.

Excluding autos, sales were up 0.6%, also well ahead of the forecast for just 0.2%. The so-called control group, which strips out items such as auto dealers, gas stations, office supply stores, mobile homes and tobacco stores and is used for the department’s GDP calculation, rose 0.6% as well.

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Disposable Income

In the US, averages $50,000 per capita. Previously reported. Link provided by a reader, thank you.

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Bottom Line

From the linked CNBC article:

 “The U.S. consumer cannot stop spending,” said David Russell, global head of market strategy at TradeStation.

“All three retail sales reports for Q3 were above estimates, which puts us on track for a strong GDP number later this month. It also gives the Fed zero reason to loosen policy, which keeps the 10-year Treasury yield pushing toward 5%.”

Sales gains were broad-based on the month, with the biggest increase coming at miscellaneous store retailers, which saw an increase of 3%. Online sales rose 1.1% while motor vehicle parts and dealers saw a 1% increase and food services and drinking places grew by 0.9%, good for a yearly increase of 9.2%, which led all categories. There were only a few categories that showed a decline; electronics and appliances stores as well as clothing retailers both saw decreases of 0.8% on the month.

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GDPNow

Link here.

Estimates for 3Q23 coming in at 5.1%.

Next estimate will be released later today: released — rises again, now, 5.4%.