Apple Brittle -- June 27, 2018

I haven't watched any television or followed the market (except very, very peripherally) for the past two weeks. I had planned to stay away for a week or so until we got through the "silliness," as Hillary would say.

But I haven't missed televions and it's likely I will avoid television and the market for most of the rest of the summer. Obviously it's impossible to completely avoid the market. A couple days ago my wife mentioned in passing that the market had given up all its gains for 2018.

Buying opportunities.

I continue to check my cash accounts -- the only "new" money I get these days is from dividends. And when my cash accounts, via dividends, reach at least $100, I buy more shares of whatever I'm accumulating at the moment. Yes, even as little as $100. Fully invested. Commissions are so inconsequential these days.

My one concern: AAPL.

It's hard to believe that AAPL could falter, but without question, the hardware business that the Apple Corp is in is strictly a commodity. There are many, many competitors.

Our middle granddaughter is taking coding classes this summer. The engineers teaching them want the students to use the Firefox browser when coding in Java. If they don't have Firefox, their next (and only other) option is Google Chome.

Our middle granddaughter says she won't use Firefox because it is not as secure as the other browsers (she is eleven years old), and she won't use Safari despite the fact she is using an Apple computer.

I only use Firefox. Even though I am an Apple fanboy, I don't use Safari. It seems slow. But maybe that's just me.

In California public schools, the recommended laptop for students is the Google Chromebook and the Google Chrome browser, of course.

Apple used to have the "monopoly" on public schools, but apparently not in California -- were Apple is based.

Apple has the ecosystem. That's hard to beat.

But Apple music: others can do it. I think Amazon with its Amazon store could give Apple a run for its money with regard to music.

Apps? One would think that Apple has the market cornered but it certainly seems Google and Amazon are doing a better job with "home apps."

I'm worried that as good as Apple is, it's brittle.

Apple brittle (first definition: hard but liable to break or shatter easily).

I don't worry about anything else.

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

The Literature Page

Having given up television, I have more time to read. I set a goal to read one consequential book each week for the rest of my life.

For me, to read one consequential book each week for the rest of my life, requires a "different way of doing it."

I've started my first consequential book (which I will talk about later). The problem I have, is that I generally tire of just reading one book at a time; I need to have a couple to choose from at any given time.

So, this is how one solves the problem. One Monday of each week, I check out a consequential book from the city library. I then return it the following Monday, regardless how far I get through it. If it's really, really good, I will finish it in a week. Whether it's good or no, by the end of the week, I've pretty much "figured out" the book. I know what it's about, I know where it's headed, and if necessary, I can always skim through the rest of the book.

If that makes sense.

The book I've been reading off and on for the past several months for pleasure is Edmund de Waal's The White Road (my own copy, not a library copy). I think he (or the publisher) designed the book jacket after the Beatle's White album. It's not a book I want to read quickly. I want to savor it. Read it slowly, and start a chapter over now and then. Get distracted and look something up on the internet that de Waal mentions.

But the consequential book I am reading, which I just checked out from the library two days ago: The Road Not Taken: Edward Lansdale and the American Tragedy in Vietnam, Max Boot, c. 2018.

I think this is the first historical book I've read on Vietnam. I've read very, very few books on Vietnam (I can think of only Tim O'Brien's books as examples). the  about Vietnam, but it's a biography of Edward Lansdale.

Incredibly good book if one is interested in this sort of thing.

There are three themes interwoven through the book that interest me:

• the actual history of the development of the CIA and the problems that arose that still haunt us today (think Iran and Guatemala)
• the tragedy of Vietnam (the subtitle of the book); so many missed opportunities (20/20 hindsight but lack of flexibility is the common theme)
• the personal life of Lansdale -- personal affairs are called "personal" for a reason; the #MeToo movement cannot be funneled into a sound bite; humans are complex social creatures; men are from Mars; women are from Venus; limerence;

With regard to the second bullet, my worldview is that President Obama let the US intelligence agency and some of his closest advisors develop and execute his foreign policy; was very duplicitous and disingenuous, and certainly not as bright as his supporters would like one to believe; as modern as he was, he was very "old school" when it came to foreign affairs; he was not flexible.

President Trump, again, this is my worldview, ... nope .. I'm not going to get started.

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Perspective

Photo taken at the end of the two-day water polo tournament in nearby Southlake, TX. Arianna's team won all four of their games and most of them by a lopsided margin.

Sophia was there to watch all four games over the two days.

They were enjoying a post-tournament cupcake.

An Unreported Story -- Re-Posting -- June 27, 2018 -- Making America Great Again

Because no one else is reporting it (except Fox Business which "blogger app" won't link), I will post this story again, but as a stand-alone post.

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

First, my original post:

Making America great again. This story is being reported at Fox Business (unable to link). Look at the amount of American money flowing back into America. Before I post the graphic, here's the lede:

Despite President Trump's tit-for-tat trade barbs, America’s CEOs are not wasting anytime in taking advantage of his tax reform plan. Over $300 billion was repatriated to the U.S. in the first quarter, according to the Bureau of Economic Analysis (BEA) -- the most on record.

“U.S. firms that used to build their factories overseas in order to avoid U.S. taxes, they stopped in their tracks because of the tax bill, they are bringing all the money home,” said Kevin Hassett, chair of the president's Council of Economic Advisers, during an interview on FOX Business’ Varney & Co. in June.

Now the graphic -- staggering -- 

Now the comments from the reader who sent me the link:

The media is burying this story - virtually unreported. And even this article makes light of the ripple effect. $300 billion moved back to the USA in the first quarter of 2018.

That's ~ $1000 per man/woman and child in MAGA land. [In all fairness, the Dems, particularly their leader, Nancy Pelosi, suggests that to Americans, $1,000 is "peanuts."]

Free advice, and worth every penny.... I think the market is going to go gangbusters. (The Dow has retained a ~30% gain since the day Trump was elected. I think that's the baseline - remarkable as that gain has been.)

Again, that huge surge -- straight up.

Three things:

• that's just for one quarter $305 billion repatriated; 
• equates to about $1,000 for every woman, man, child in the US -- including the new immigrants 
• estimated additional tax revenue: $46 billion

Stop The Presses! US Crude Oil Inventories Plunged Almost 10 Million Bbls From Previous Week -- June 27, 2018

Link here. Data points:

• US crude oil inventories: decreased by a staggering 9.9 million bbls -- this is absolutely unprecedented. I have followed the data weekly for the past two years, and never, never, anything like this
• US crude oil inventories now at 416.6 million bbls; I forget, but I think I posted by "new" norm was 400 million bbls (the "old norm" was 350 million bbls -- decades of data)
• US crude oil inventories now 4% below the five year average for this year of the year
• refineries operating at an incredible 97.5% capacity -- rarely ever higher than this; generally in the 93% range
• gasoline production right on historical average: 10.1 million bbls/day
• distillate fuel production slightly above historical average at 5.4 million bbls/day

Gasoline demand: pending.

Oil prices immediately follow weekly release of US crude oil inventories:

• WTI: $72.62; up almost 3%; up over $2/bbl
• LLS: $76.23; up about 0.75%; up about 60 cents/bbl -- this correlates closely with DAPL-Bakken
• Brent: $77.68; up about 2%; up about $1.50/bbl
• OPEC Basket: $72.69; up about 0.75%; up about 50 cents/bbl

The Market, Energy, And Political Page, T+27 -- June 27, 2018

NOG: I'm sure this was announced earlier but I'm not sure I posted it. NOG now released the announcement in a press release:

• NOG will acquire producing assets in the Williston Basin of North Dakota
• a negotiated exchange agreement with an institutional holder of its 8% senior unsecured notes
• NOG will acquire small amount of daily production and 1,900 acres of the Pronghorn area
• Pronghorn: southwestern part of the state? the southern Bakken; Whiting's neighborhood around Belfield, ND;
• exchange agreement will result in a debt reduction of $10 million in exchange for common stock
• NOG, over the past two weeks, now has entered into agreements to retire almost $54 million of its remaining notes

Canadian deficit. This is quite amazing. It speaks volumes about how really small the Canadian economy is. I saw the article earlier but did not post it; seemed irrelevant, but when I saw the actual percent -- wow. From CBC, buying Trans Mountain pipeline could add 36% to Canadian deficit. Imagine that. Canada didn't buy a Fortune 500 company; it didn't buy Amazon. Canada bought one of many Kinder Morgan projects and just by buying that one project, a Canadian study suggests it could ultimately increase the Canadian deficit by 36%. I find that quite ... incredulous? It certainly sounds like Kinder Morgan got a heck of a deal.

The Permian is a monster. I said the same thing a few days ago, and the article in Hobbsnews/Business Wire, I think, is nothing new. Just a repeat of what's been said over the past few days. Data points:

• Permian Basin oil production will more than double from 2017 - 2023
• adjective used: "stunning"
• the Permian's stunning level of growth will comprise more than 60% of net global production growth in those five to six years
• at 5.4 million bopd in 2023, the Permian production will exceed that of any OPEC country other than Saudi Arabia
• nearly 41,000 new wells and $308 billion in upstream spending will drive that growth
• $308 billion / 41,000 =  $7.5 million / well; that number suggests the cost of drilling/completing a Permian well is going to come way down in the out years
• in the past two years, production from just this one region has grown more than any other entire country in the world -- Daniel Yergin
• $308 billion, context: the Permian saw $150 billion in investment from 2012 - 2017

Small towns are booming -- thanks to oil prices -- The WSJ. Data points -- actually none worth posting. Only one town was mentioned, Hobbs, New Mexico, and not much was even said about that.

Making America great again. This story is being reported at Fox Business (unable to link). Look at the amount of American money flowing back into America. Before I post the graphic, here's the lede:

Despite President Trump's tit-for-tat trade barbs, America’s CEOs are not wasting anytime in taking advantage of his tax reform plan. Over $300 billion was repatriated to the U.S. in the first quarter, according to the Bureau of Economic Analysis (BEA) -- the most on record.

“U.S. firms that used to build their factories overseas in order to avoid U.S. taxes, they stopped in their tracks because of the tax bill, they are bringing all the money home,” said Kevin Hassett, chair of the president's Council of Economic Advisers, during an interview on FOX Business’ Varney & Co. in June.

Now the graphic -- staggering -- 

Canada Loses 10% Of Its Westen Canadian Production Due To "Technical Difficulties," As The Kuwaitis Would Say -- June 27, 2018

Active rigs:

$71.13↑↑	6/27/2018	06/27/2017	06/27/2016	06/27/2015	06/27/2014
Active Rigs	65	59	30	75	193

RBN Energy: western Canadian Crude takeaway constraints to ease, but only temporarily.

The weeks-long shutdown at Syncrude Canada’s oil sands production facility in northeastern Alberta will alleviate pipeline takeaway constraints that have significantly widened the price spread between Western Canadian Select (WCS) and West Texas Intermediate (WTI) crude oil.

But when Syncrude returns later this summer, there’s every reason to believe that the constraints will too, as will the need for significantly more crude-by-rail shipments. Railed volumes out of Western Canada have been increasing in recent months, but not by enough to avert WCS-WTI differential blowouts to $25 and even $30/bbl.

The catch is that most of the rail-terminal capacity built a few years ago is mothballed, and that railroads are reluctant to dedicate more locomotives and personnel unless shippers make one-, two- or even three-year commitments to take-or-pay for that logistical support.

Today, we consider the ongoing challenges Western Canadian producers face in moving their crude to market.

The biggest news in the crude oil business the past few days was OPEC’s June 23 announcement that its members will be increasing their output by as much as 1 MMb/d.

But the runner-up was likely the news that Syncrude’s 360-Mb/d operation may be offline through the end of July — a shutdown triggered by a power outage.

Syncrude accounts for nearly 10% of Western Canadian production, and the suspension of flows from its production facility north of Fort McMurray, AB, opens up a lot of space on the region’s takeaway pipelines — pipelines that have been running at or very near capacity for months. Syncrude’s troubles and their effects on Western Canada’s takeaway constraints are very likely to be only temporary, though. The underlying problem — insufficient pipeline capacity and profit-sapping differentials — isn’t going away.