Best Market Ever -- August 18, 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. 

Disclaimer: I'm an eternal optimist with a 60-year horizon.

Random comments about the market:

The pullback today: a buying opportunity. Exactly what was the news that precipitated a second day of losses on the market?

Comment: unless this pullback is associated with risks of a recession, I'm not worried. Anybody see a recession in the next twelve to eighteen months. The counter-argument, of course, is the end of stimulus and the Fed begins tapering and raising interest rates.

Headlines:

• Ten-year treasury: 1.283%.
  

•  The "Fed": no decisions made about asset purchases. Kick that can down the road for another month. Talking heads: still six months before asset purchases are halted. Next question: how soon / fast does the Fed put these assets back on the market? Link here.
  

Best market ever:

• between the Fed taking shares off the market and corporations buying back their own stock, there are less shares for traders / investors to buy; that's bullish
• I remember thinking about that in 1983: generally speaking, companies don't often authorize additional shares; what you see, is what you have
  
• the most recent wave of Covid-19 -- either the third or fourth wave, depending where one lives -- a) was somewhat of a surprise; b) will last longer and be steeper than expected; and, c) will slow down the re-opening

Slowing the re-opening:

• slows down the hyper-upward movement of the market over the past year anticipating a broad re-opening by now;
• extends the time in which traders and invaders have to purchase more shares
• the market is being a stock-pickers' market

August doldrums.

Banks are starting to show some life.

Super-spreader meeting:

• Jackson Hole, WY: August 26 - 28, 2021
• Bank of England, EU won't be represented this time at this meeting: focus will be on domestic issues

The next big thing:

• on another down day for the market, SQ is up another one percent; in one year has gone from $141 to $261 

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. 

Oil: an enigma --

• "everyone" says producers are falling behind; that may have changed a bit with the latest, deepest "delta" wave slowing demand;
• look at how much oil the US is now importing; an under-reported story;
  
• Kabul falls, and price of oil falls;
• strength of dollar: in a relatively narrow range for the past year; and, at 93 today, is pretty strong; to put that in perspective, the "dollar" was at 70 in March, 2008;
  
• WTI at $66 seems just a bit on the high side if the sweet spot for all concerned runs $60 to $65
• predicting the price of oil is a fool's errand
• allows more time for investors/traders to build a position 

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The Book Page

Seventeen months old.

The Taliban Began Their Final Assault The Weekend Of President Obama's Birthday Bash -- August 18, 2021

Other than the Donald Trump administration, which former president probably knew most about Afghanistan?

The Taliban began their final assault on Kabul at the very time the Biden presidency was pre-occupied with the Obama birthday bash planning and celebration. The Taliban has learned a lot fighting the Americans for twenty years. And the Russians before that.

See this post. 

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The Taliban - US Arms Deal
The Deal Of The Century

On another note, I've always said the Arabs are the best traders / dealers in the world. I know that from first-hand experience after spending years in Turkey. They know their stuff.

But, without question, the military deal the Taliban made with the US under the Biden administration was unprecedented.

Anyone who knows the story, knows that the Afghan army was heavily infiltrated by the Taliban. After twenty years, even the lowliest recruit had risen to the top of the organization. 

Bagrum Air Base was perhaps one of the largest overseas bases maintained by the US military on July 1, 2021. Look how huge this base was. Just the food alone is probably enough to support the military for another year.

Unlike other wars, the US did not destroy equipment it left behind. In this case, the US turned over all equipment to the "Taliban" and not only that, one knows that the Afghanis that operate this equipment and know how to maintain this equipment quickly changed uniforms on August 15, 2021. 

I'm waiting for a "freedom of information" request by the US mainstream media for a line-item list of what was handed over to the Taliban on July 1, 2021, at Bagrum. 

Again, I think a lot of folks assumed the US military would destroy equipment left behind but in fact it was left in best condition possible so that the Afghanistan army would still be able to defend itself. 

This is an incredible story: a US arms deal of unimaginable proportions. 

Feel free to fact check this.

Here's the time line provided by The Guardian and USA Today:

• Friday 6: The Taliban shoot dead the head of the Afghan government’s media information centre at a mosque in the capital. They also capture their first Afghan provincial capital, the city of Zaranj in southwestern Nimroz, “without a fight”.

• Saturday 7: President Obama's 60th birthday party on Martha's Vineyard.  The former president and his staffers pre-occupied with biggest birthday spectacular since The Great Gatsby; Afghanistan dropped off their radar scope, sometime in July, if not before.
  

• Monday 9: The northern city of Kunduz follows on Sunday 8 August and Monday 9th, along with Sheberghan, Sar-e-Pul, Taloqan, Aibak and Farah. In what becomes a familiar pattern, fighters reportedly swept into Aibak without meeting any resistance. The deputy chief of Samangan province confirmed that the local governor had withdrawn his soldiers in order to protect the civilian population.

• Despite the bloodshed and sweeping advances, US president Joe Biden gives no suggestion he will delay the troop withdrawal, which is to be completed by 31 August, ahead of the 20th anniversary of the 9/11 attacks.

• Wednesday 11: With the key besieged northern city of Mazar-i-Sharif the next Taliban target, Afghan president Ashraf Ghani flies up to rally his forces. But his visit is overshadowed by the surrender of hundreds of Afghan soldiers in nearby Kunduz and the overnight capture of a ninth provincial capital, Faizabad. Pul-e-Khumri, 140km north of Kabul, also falls.

• The US military warns that the whole of Afghanistan could fall “within 90 days.”

Within 90 days? Well, that was correct.  

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This Technology Is Amazing

As usual, we were a bit late getting around to sending a wedding anniversary gift to our younger daughter. Not to worry. Ordered something from Amazon today; the gift will arrive tomorrow, and that is one day before the wedding anniversary. It may be the cleverest gift we've ever gotten them. LOL.

Verizon / iPhone: my wife bought a new iPhone a few days ago and established her own account, saving (remarkably) her existing phone number, at the same time. Today, on the day the switch-over officially began, her phone quit working. As in "quit working." 

She had to use my phone to call Verizon. It was a complicated problem to describe, and the process took about ten minutes. During that entire ten-minute conversation, my wife never once spoke to a human being ... unless the human being was impersonating a robot .... the solution was incredibly simple, which my wife was able to accomplish on her own. I overheard a very little bit of the conversation and was completely amazed what Verizon AI (if one calls it that) was able to do.

My hunch: the robot answering my wife's questions was probably playing chess with another robot while listening to my wife. Or mining cryptocurrency.

TGT Not Feeling The Love -- August 18, 2021

These two charts tell me everything I need to know what to do next:

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The Book Page 

From a book review, How The Mountains Grew: A New Geological History of North America, John Dvorak, 2021, Pegasus, 304 pages, in The Wall Street Journal:

For a book about North America, it’s fitting that it opens and closes near the center of the continent. The prologue deals with the ancient granites of Mount Rushmore, SD, the stuff from which Gutzon Borglum carved four presidential faces. The epilogue describes the vast coalfields of Center, ND, where experiments in carbon sequestration are now in high gear.

The book’s 16 evocatively titled chapters are arranged chronologically, but set wherever that slice of time is best revealed. “Bombardment and Bottleneck,” for example, deals with microbial life of the Archean Eon that survived a storm of asteroids. “The Great Dying” examines Earth’s greatest mass extinction, at the end of the Paleozoic Era. “A Grand Staircase” steps forward through the Mesozoic Era. “The Great Lakes of Wyoming” concentrates on the abrupt pulse of strong global warming in the Cenozoic Era that led to our class of mammals, the primates. 

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The Book - Sofa Page

These boys are seventeen months old. 

Pop Quiz: One Of The Three Following Headlines Is Fake -- Which One? -- August 18, 2021

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Twitter

Former president Trump: banned.
Taliban: not banned.

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Weekly EIA Petroleum Report

Before we get started, a reader wrote to tell me that farmers in Minnesota are paying 40% more for propane this year than last year. 

The numbers:

• US crude oil in storage: decreased by 3.2 million bbls;
• US crude oil in storage: now stands at 435.5 million bbls; 6% below the five-year average
• Refiners are operating at 92.2% of their operable capacity (yawn).
• Imports averaged 6.4 million bbls/day, down by 46,000 bbls; imports are now a whopping 14.1% more than same four-week period last year. Thank you, Mr Biden. I believe, Russia is our second biggest supplier, after Canada.
  
  
  
• Propane: inventories are 18% below the five-year average. Thank you, Mr Biden.
  
• Distillate fuel inventories decreased by 2.7 million bbls last week; are not 8% below the five-year average;
• But look at this: total products supplied are up by 13.2% from same period last year.
• Jet fuel supplied: was up 56.1% compared to same period last year

Gasoline demand, link here, down on both the top line (four-week average demand) and the bottom line (weekly demand):

One Well Coming Off Confidential List -- WTI Holds Above $66 -- August 18, 2021

Active rigs

$66.54	8/18/2021	08/18/2020	08/18/2019	08/18/2018	08/18/2017
Active Rigs	23*	12	61	59	53

*Current active rig data released COB.

One well coming off the confidential list:

Wednesday, August 18, 2021: 10 for the month, 21 for the quarter, 201 for the year:

• 37843, conf, WPX, Charles Blackhawk 31-30HY, Heart Butte, no production data, 

RBN Energy: Wolf Midstream sanctions straddle plant to increase Canadian NGL supplies. 

Supplies of natural gas liquids, especially propane, have become increasingly tight in recent months, with prices reaching multi-year highs in the U.S. and Canada. 

Despite the strong price signals, increasing production is typically a lengthy, complex, and expensive process involving producers drilling new wells to yield more liquids-rich natural gas and crude oil. There is also another way to increase supplies: by extracting them from already processed and pipelined natural gas via a straddle plant that more intensively recovers additional NGLs, such as propane, from the existing gas supply. Canada’s Wolf Midstream has recently sanctioned such a plant, as well as a related pipeline and extraction plant in Alberta that it hopes to bring into service in 2023. In today’s blog, we examine this new straddle plant and Western Canada’s current propane supply situation.

Here's a headline from the EIA yesterday: US natural gas net trade is growing as annual LNG exports exceed pipeline exports.  

From the EIA weekly petroleum report: Propane: inventories are 18% below the five-year average.