Market -- About An Hour Before The Close -- February 16, 2021

Before we get started, New York governor Cuomo under a lot of fire for his handling of the Covid-19 pandemic in his state, his grandstanding, and accusations of outright lies, how does Cuomo get out of this? My hunch: he doesn't do a thing. It is what it is and the story will gradually burn itself out. However, having said that, some might argue, especially "Broadway" and the restaurants in NYC, will pressure him to "open up The City. Cuomo needs friends fast and this might be one way to do that. If NYC "opens," that sends a huge message to the rest of the country. 

Pardon the interruption. Now back to the market.

If Dow stays where it is right now, it would close at a new all-time high.

First group:

• 10-Year Treasury: link here. 1.297% -- 48-week high;
  
• DXY: link here.  90.52
  
• Silver: link  here. $27.36
• CBOE volatility index: link here. 21.17 (lower the better, for me)
  

Second group:

• 30-Year Treasury: link here. History.  2.084% --52-week high, and quite a steep jump;
  

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.  

Bonds: a reader mentioned the "bond story" to me today. See above; bond rates increasing. My not-ready-for-prime-time reply:

Ten-year Treasury at nearly 1.3% at a 48-week high --

In February, 2020, a high of nearly 1.5%, but after the high of 1.27% in March, it was lower for the rest of year until today.

Right now it looks like the bond yield will pull non-bond equity shares down, but the tailwinds for higher equity prices remain:

• stimulus / stimulus checks / infrastructure bill (two different things)
  
• FOMO -- fear of missing out by new traders
• YOLO -- you only live once by new traders
• pent-up demand as Covid scare quiets a bit
• GDP of 7% this year
• better earnings by end of the year

Oh, and I read a story (Bank of America?) high-value investors are moving cash into the market; apparently cash in their accounts in last couple of weeks at near all-time low. I wish I would have caught the link. (See below.)

I don't trade in bonds so I won't participate in any gains there.

I think the three major indices are near all-time highs. They may have had intra-day highs before dropping back.

It certainly seems to be a stock-picking market now.

I found the study I was looking for: link here, Bloomberg via Yahoo!Finance. Archived. From the linked article:

Bank of America Corp. clients with $614 billion combined are in the throes of an unprecedented frenzy of risk-taking, as more Wall Street banks sound the alarm on greed across markets. [Think: FOMO, YOLO]

After a week which recorded the strongest-ever inflow into stocks, a record net 25% of investors surveyed by the investment bank this month are taking higher-than-normal risks. Cash levels slumped to the lowest since 2013, while optimism on cyclical risk assets rose to the highest since 2011. [They will pull this money out in a New York minute if things start to go sour.]

All this is being fueled by unprecedented optimism on the growth outlook, with 84% of fund managers expecting global corporate profits to improve over the next 12 months. 

For the first time in a year, investors say companies should focus on spending rather than improving their balance sheets.

As a JPMorgan Chase & Co. gauge of cross-asset complacency, including valuations, positioning and price momentum, hits the highest in two decades, BofA clients aren’t concerned about market exuberance.

Just 13% of these BofA clients] say that U.S. stocks are in a bubble, while 53% see a late-stage bull market.

With a bond “tantrum” dubbed the second tail risk after the vaccine rollout, bond allocations dropped 3 percentage points to a 62% underweight -- the lowest since March 2018.

Nearly a year after the Covid-19 crisis fueled an unprecedented rout in global markets, stimulus measures and vaccination efforts are pushing investors into reflation trades of all stripes. But after a record flood of money into equity funds, BofA strategists have warned that such exuberance may precede a correction.

Other highlights of the Feb. 5 to 11 survey:

• Cyclical rotation paused in February, with investors boosting equity exposure to tech, healthcare and consumer staples versus January (as I noted above, a sotck-picking market now]

• Exposure to commodities and equities is at decade-highs

• Long tech stocks retook its top spot as the world’s most-crowded trade, followed by long Bitcoin, short U.S. dollar and long ESG

• Allocation to U.S. stocks increased 5 percentage points to net 9% overweight 

• Exposure to euro-area stocks dropped 9 points to net 20% overweight 

• Allocation to EM equities dropped 5 points to net 57% overweight, remaining the most-preferred  region 

• Exposure to U.K. equities increased 5 points to 10% underweight, remaining the top regional underweight.
  

Full article above, will be removed and archived later. Archived.

Texas: the "state" is now "looking at" ERCOT to see they screwed this up so badly. I don't think it will take a lot of brain power to figure it out.

Notes From All Over -- Early Afternoon Edition -- February 16, 2021

Olympics 202One: it's being reported by CNBC that Japan, which will begin vaccinating tomorrow, will not require vaccination for athletes or spectators. Earlier the IOC had suggested all athletes would require vaccination "to save the Olympics." Perhaps this remains in flux.

 

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Retirees: Which State Is Best?

Retirees: best states in which to retire. These lists are incredibly ridiculous but they are always fun. 

This is from MoneyRates via Yahoo!Finance.  The ten data sets used:

• cost of living: okay
• property taxes: okay
• unemployment: why would retirees care? Sure, some relevancy but it's far down the line.

• safety: okay, but generally retirees will pick safe places regardless of the state to which they move
• violent and property crime (2): okay, but generally retirees will pick safe places regardless of the state to which they move

• nursing facility capability: perhaps
  life expectancy: by the time in the life expectancy for any retiree has already been determined; where the retiree moves will hardly affect the retiree's own life expectancy
  health care costs: maybe; Medicare is the great leveler

And the results? 

Using those criteria, the best state for retirees:

• Iowa
• West Virginia
• Arkansas
• Mississippi
• Florida
• Kentucky
• Connecticut
• Missouri
• Alabama
• Rhode Island

The five worst:

• Colorado
• California
• Washington
• Nevada
• Alaska
  

One would think amenities, hobbies, quality of life, would be a bit more important. 

But Iowa, the #1 state for retirees? I love Iowa, but give me a break. Mississippi, Alabama, West Virginia. 

North Dakota, at #14, outranked Washington State, Oregon, California, Colorado, Nevada, and Texas. As much as I love North Dakota, I don't see retirees preferring North Dakota to these states.

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EVs vs Fracking

Exxon Mobil: energy demand, three drivers.

Link at WSJ. 

The Joe Biden administration will be piling a lot of chips on electric cars, the most popular and least useful way of fighting climate change. How much do the cars you and I drive actually contribute to emissions?

Don’t ask the Union of Concerned Scientists, an EV promoter habituated to quickly changing the subject to “transportation” emissions. Many inventories also ignore the full range of greenhouse emissions, focusing on CO2 to foster a nevertheless-untenable illusion that passenger cars provide leverage over a global climate problem. No matter how you fiddle the data, personal EVs are a single-digit factor and belong low on any sane list of priorities.

If the Environmental Protection Agency is right, the average light vehicle racks up 11,500 miles a year and sits idle 96% of the time. The World Resources Institute says passenger vehicles account for 7.5% of all emissions, but this includes buses, taxis, etc. Rental cars average 31,000 miles. Other fleet vehicles average 23,000 or more. Heavy trucks average 63,000 miles. One finding that appalled fleet operators is that their vehicles spend up to 33% of their time idling, which is not how people treat their personal vehicles.

The International Energy Agency in 2016 estimated that if 50% of all new cars were electric, petroleum use would continue to grow because of “trucks, aviation and the petrochemical industry and we don’t have major alternatives to oil products there.”

Exxon Mobil estimated more recently that if all new cars were electric by 2025, and the world’s entire fleet were electric by 2040, liquid-fuel demand in 2040 would be the same as 2013’s.

Few talk about it, but mining battery-related minerals generates emissions too. An electric car that’s sitting in your garage, not displacing a significant amount of gasoline-powered transportation but still sucking power out of a wall socket, can be a net emissions contributor when all is said and done.

I no longer have a dog in this fight but it's interesting to watch. 

Clearing Out The In-Box -- February 16,2021

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.  

Not much in the in-box. The focus has been on the winter storm. If ERCOT had not crashed (think one or two coal plants) this would have been a non-story. By the end of the week, the worst will be over; in a month, all will be forgotten, and the Californians that have moved to Texas will be back to building wind farms. And so it goes.

Clearing out the in-box:

Apple: Apple's legacy 50 years from now? Health and wellness, led by the Apple Watch. Link here to Inc. Tim Cook doesn't mention the autonomous vehicle. At least not in the article.

XOM: one of the best performers so far in 2021.

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. 

Resigned in disgrace: David Ismay resigns after telling folks in Massachusetts it's time to "break the will" of the seniors in that state. Link here. He will surface somewhere else.

Japan: will start vaccinating tomorrow with Pfizer's vaccine. Link here.  But, Japan is short syringes.

Unreliable: renewables. But we already knew that. Just a visual reminder.

SD attorney general: no news. But the little that trickles out pretty much tells the likely story. 

LTL: new trucking term for me. Some truckers are thriving as companies reset supply chains. It's all possible due to technology. From the linked article at The WSJ:

Companies including Old Dominion Freight Line Inc., ArcBest Corp. and Saia Inc. are expanding as businesses try to make their supply chains more nimble to catch up to rapidly shifting consumer demands. That is driving more freight into less-than-truckload operations, where trucking companies carry shipments from multiple customers on a single trailer, boosting revenues and pricing leverage for the carriers.

Old Dominion, the second-largest operator in the sector after FedEx Corp.’s FedEx Freight unit, this month said it has added nine service centers to its U.S. network since the start of 2020 and plans several additions this year. That puts the Thomasville, N.C.-based operator among the businesses that are growing even as the coronavirus pandemic batters big parts of the U.S. economy.

Operators in the highly competitive sector are benefiting as businesses scramble to meet surging e-commerce demand from shoppers who are ordering everything from paper towels to furniture online.

Companies that used to ship truckloads of merchandise to big, remote distribution centers are opening compact warehouses in cities and suburbs, where space constraints require smaller and more frequent shipments to keep goods in stock.

Four Wells Coming Off Confidential List But No Data -- February 16, 2021

Active rigs:

	2/16/2021	02/16/2020	02/16/2019	02/16/2018	02/16/2017
Active Rigs	15	56	64	56	39

Tuesday, February, 16, 2021: 11 for the month, 44 for the quarter, 44 for the year.

• 37556, loc/NC, CLR, Norway 12-5H2, Fancy Buttes, first production, --; t--; cum --;
  

Monday, February 15, 2021: 10 for the month, 43 for the quarter, 43 for the year.

• 37555, loc/NC, CLR, Norway 11-5, Fancy Buttes, first production --; t--; cum --;
• 32853, loc/NC, BR, Remington 1B MBH, Blue Buttes, first production --; t--; cum --;

Sunday, February 14, 2021: 8 for the month, 41 for the quarter, 41 for the year.

• 37554, loc/NC, CLR, Norway 10-5HSL1, Dimmick Lake, first production --; t--; cum --;
  

Saturday, February 13, 2021: 7 for the month, 40 for the quarter, 40 for the year.

• None. 

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RBN Energy

From Monday:

RBN Energy: US natural gas spot prices race to $600 / MMBtu as mid-continent runs out of gas.

Physical natural gas spot prices in the U.S. Midcontinent trading as high as $600/MMBtu, while Northeast prices barely flinch – that was the upside-down reality physical traders were contending with Friday in trading for the long weekend, with Winter Storm Uri bearing down on large swaths of the Lower 48 and spreading bitter-cold, icy weather from the Midwest and Northeast to Texas and the Deep South. The record-shattering, triple-digit spot prices, mostly all west of the Mississippi River, were indicative of some of the worst supply shortages the market has seen during the generally oversupplied Shale Era, or ever. But the East vs. West price divergence also marks the culmination of years of shifting gas supply and flow patterns that have redefined regional dynamics. The market will be digesting the various impacts of this still-unfolding event for days, but some of the effects and implications can be gleaned already from daily pipeline flows. In today’s blog we provide an early look at the market impacts of the polar plunge.

RBN Energy: western Canada's refineries provide a bonanza of fuels, part 2

Long established as an oil-producing region, Western Canada has also become a major producer of refined products. With enough oil available to serve the nine refineries in the region, there is no need to import crude oil, making Western Canada one of the few parts of the world where the refineries are completely self-sufficient regarding oil supply. The region is also noteworthy in that, like the U.S. Gulf Coast, its refining capacity and gasoline, diesel, and jet fuel output is vastly greater than its own demand, resulting in a large surplus of refined fuels that can be sent across Canada and exported to the U.S. Today, we look westward, focusing on the nine refineries located in the Canadian West.

ERCOT -- Texas -- Historic Cold Snap -- February 15, 2021

Link here.