The Political Page, T+212 -- August 20, 2017 -- GDP Growth -- Making America Great

It's been my impression that actual results don't always meet forecasts when it comes to forecasting quarterly US GDP, but here it is for what it's worth.
From a reader:

The Atlanta Fed estimated US 3Q17 GDP growing at 4.0 percent -- from Reuters. 

This is hard to believe. Remember all these headlines?
 
--- BUSINESS INSIDER: The clearest part of Trump's economic plan is also the most delusional part.

Three percent GDP growth. Three percent GDP growth. Three percent GDP growth.

Get it stamped on your brain. Get it tattooed somewhere. Have some T-shirts made, because this is team Trump's goal for the economy. In a time of extreme policy confusion, 3% GDP growth is one of the only firm targets we have to hang onto.

The problem is that in interview after interview, Donald Trump and his surrogates have demonstrated that they have no idea how to get there.

--- CNBC: Trump needs GDP growth, but one of his favorite policies works directly against him

 
--- THE HILL: Why is Trump's 3-percent growth target pure folly? Because math. ---

--- VOX. Trump: I will achieve 3 percent growth! CBO: No, you will not. ---

By the way, something that is not being talked about very much: most agree that the way economists measure GDP is no longer valid. It completely misses productivity gains because of technology. Most pundits agree that GDP growth would be significantly higher if measured "properly."

With all the anti-Trumpers out there, it's a given that the way GDP is measured will not be changed during the Trump administration. This, by the way, works in the favor of investors vs savers. 

Filloon: Permian Update -- August 20, 2017

Disclaimer: same as usual.

From Mike Filloon at SeekingAlpha, summary:

• recent Delaware core completions have raised the bar with respect to production per foot
• the Midland Basin is excellent, but the Delaware seems to have better geology and the best source rock outperforms
• the most recent results have been better than expectations, but the question seems to focus on repeatability
• operator hedging in the Permian is being done at lower oil prices, which seems to show operators can hold on at today's prices.  These hedges will continue to decrease the chances of a break out in oil prices
• Even with payback times decreasing in the Delaware, we expect a test of 52-week highs in the USO this year

More:

Enhanced completions continue to better unconventional well economics in the United States. While there are considerable differences in the bullish and bearish narratives for oil prices, production numbers are concrete. 

We continue to see operators increase production, and many have been able to decrease proppant volumes. Either we have hit a peak in production per foot or operators do not need to pack as much sand in frac's. Enhanced completions are the new normal.

Operators are moving to plug and perf with cement liners. Ceramic proppant is being pushed out given the expense.  It was once thought frac sand could only be used in more shallow plays. Worries that sand would crush out and stop production, are not a concern with newer designs. We have covered enhanced completions in several plays. 

Summary:

In summary, we think economics from core plays will continue to provide a ceiling for the USO and oil prices in general. There is still considerable inventory in very good geology.

This means we will see operators continue to hedge at $50/bbl. We expect this oil price ceiling will slowly increase in the coming months, as Permian operators get hedge positions in for 2017 and 2018.

When oil reaches $54 to $55, other plays like the Bakken will begin to increase hedging and provide a new ceiling. It will take an additional, unforeseen catalyst to push oil to $60.

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From Sophia's Art Studio

"Leprechaun Behind a Tree"

Sophia, age 3.

August 20, 2017

Making America Great, Images And Graphs -- November, 2016 -- November, 2017

This was in draft. It appears that I originally drafted it August 20, 2017, to be posted later. I'm posting it now simply to close out several posts in draft.

Read GDP, historical:

Unemployment:

The graph above is hard to interpret. At least it was for me. Two points are being made:

• after the November, 8, 2017, election, the overall U3 unemployment plummeted
• the Journal focused on the unemployment rate of those who "flipped" -- those who had voted for Obama in the previous election, but voted for Trump in this election -- although the bold red line catches one's attention, it appears that "all" voters participated in better employment picture

But then, connect that bold red line to specific states -- Michigan, Wisconsin, Pennsylvania -- the three states that gave the election to Trump were "in" that red line. See graph below.

June 20, 2017:

July 7, 2017:

McGregor Oil Field

May, 2017, and June, 2017, data for top producing oil fields in the Bakken. Ranked by greatest increase in field production, by percentage, month-over-month, column 10.

Field	May 2017 Prod	May Wells	May Oil / Well / Month	Percent Change Apr-to-May	Change in # of wells	June 2017 Prod	June Wells	June Oil / Well / Month	Percent Change May-to-June	Change in # of wells
McGregor	67,570	41	1,648	-14.64%	0	150,444	47	3,201	122.65%	6
Chimney Butte	309,533	81	3,821	73.06%	0	428,056	83	5,157	38.29%	2
Eagle Nest	444,943	97	4,587	2.36%	0	605,165	101	5,992	36.01%	4
Lost Bridge	346,933	68	5,102	17.38%	4	466,193	73	6,386	34.38%	5
Elm Tree	483,522	62	7,799	19.72%	8	599,055	63	9,509	23.89%	1
Grinnell	143,053	60	2,384	-14.42%	4	176,416	60	2,940	23.32%	0
Pershing	88,664	39	2,273	-10.08%	0	107,479	39	2,756	21.22%	0
Todd	102,636	56	1,833	-8.19%	0	117,161	59	1,986	14.15%	3
Camel Butte	178,363	41	4,350	10.16%	4	200,069	41	4,880	12.17%	0
Bailey	321,556	149	2,158	18.63%	0	347,829	149	2,334	8.17%	0

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McGregor Oil Field

McGregor oil field was a fairly "regular" rectangular oil field until the Bakken when additional sections were added. For the most part, prior to the Bakken, it was a 2 section x 6 section field, running north/south. Now it's a bit more irregular and encompasses fifteen sections. It is located on the Nesson Anticline, about five or six miles north-north-west of Tioga.

There are a number of operators in the field, but for the most part, Liberty Resources "owns" the field and accounts for the huge increase in production, on a percentage basis, month-over-month, May, 2017, to June, 2017, as seen in the chart above.

Area of most activity in the McGregor oil field at the time of the original post, August, 2017:

Making America Great Again -- Joblessness Falling In Trump-Supporting States -- August 20, 2017

Active rigs:

	8/20/2017	08/20/2016	08/20/2015	08/20/2014	08/20/2013
Active Rigs	53	32	75	191	184

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Making America Great Again

Jobs. From The Wall Street Journal:  Joblessness Falls Quickly in Several Trump-Supporting States.

Swing states that played a key role in electing Donald Trump president have posted some of the biggest declines in unemployment during the early phase of his administration.

Six states voted for President Barack Obama, a Democrat, in 2012 and then Mr. Trump, a Republican, in 2016: Ohio, Michigan, Florida, Iowa, Pennsylvania and Wisconsin.

The median unemployment rate of those switchover states has fallen far faster than the national median this year, according to an analysis of data released by the Labor Department on Friday. The median rate of those states stood at 3.9% as of July, down from just under 5% in December. By comparison, the national median fell to 4.1% in July from 4.7%.

Among the switchover states, Wisconsin and Michigan have seen unemployment fall the quickest this year. Over the past three months, the average jobless rate in Michigan fell nearly 1.2 percentage points, to 3.9%, compared with the final quarter of 2016, just before Mr. Trump took office. Only three other states in the U.S. saw a deeper drop in joblessness.

The rate fell 1 percentage point in Wisconsin to 3.1%. That drop ranked seventh in the U.S. Florida, where joblessness stood at 4.2% in July, ranked 12th with a 0.7 percentage point drop.

Most switchover states are in the Midwest, where the economy has diversified in recent years but still remains big in manufacturing.