American Optimism About The Economy Hits An All-Time High -- CNBC -- October 4, 2017

Huge story for ND mineral owners: I was remiss in forgetting to post this story. I had it in the queue to post but then forgot about it until a reader reminded me. There is a huge amount of history to this story, so for now, will simply post the bare minimum from The Bismarck Tribune:

Family members who took their fight over oil and gas minerals to the North Dakota Supreme Court said they’re “elated” over an opinion issued this week in their favor.

The Supreme Court reversed an earlier ruling in a court case involving the William S. Wilkinson family and the North Dakota Board of University and School Lands, sending the case back to district court.

The Supreme Court, in the opinion released late Thursday, also ruled that new legislation adopted this past session related to minerals under Lake Sakakawea and the Missouri River should apply retroactively to the mineral dispute.

Jon Patch, a descendant of the Wilkinson family, called the ruling “a big win for those who care about personal property rights.”

The family argues the state took their oil and gas mineral rights from property acquired by the federal government for the construction of the Garrison Dam.

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Making America Great

Holiday spending expected to increase 6% this year. From NYPost: 

It’s going to be a ho, ho, ho Christmas — for the wealthy.

Overall holiday spending across the US is expected to rise 6 percent this year, to an average of $1,189 per person — but wealthier shoppers are expected to really cut loose, a national survey has found.

Those earning $100,000 to $149,999 are expected to jack up their holiday spending by 15 percent, to $1,609 per person.

American optimism on the economy at an all-time high. From CNBC:

The third-quarter CNBC All-America Economic Survey found 43 percent of the public believes the economy is excellent or good, a record high in the 10-year history of the survey. 

Thirty-six percent believes the economy will get better, down a couple of points from last quarter, but just 23 percent say it will get worse, down 6 points.

The four-quarter average for every major economic metric in the poll --- the outlook for the economy, housing, wages and the stock market --- is at a record 10-year high. Those four quarters cover the time span since President Donald Trump's election.

"Top 5 Winners" Following Report Of Record-Setting ISM -- October 4, 2017

Worth re-posting, previously posted October 2, 2017:

ISM: September, 2017. Hitting new records. An incredible report. The ISM hit a six-year record in August, 2017, and now it looks like an 11-year record with the September, 2017, report. When I find a link for today's report I will post it. Yes, here it is: US factory activity surges last month to highest since 2004 -- thirteen years. The Trump rally continues. Let's see, we're almost into Trump's first year, especially if one considers the optimism he drove began in early November, 2016. One year. From the linked article:

U.S. manufacturing activity shrugged off a series of hurricanes and rose to the highest level in 13 years last month.

The Institute for Supply Management said its manufacturing index rose to 60.8 from 58.8 in August, the highest reading since May 2004. Anything above 50 signals that manufacturers are growing, and the ISM survey shows they've been on a 13-month winning streak.

New orders, production, hiring and new export orders all grew faster in September.

Seventeen of 18 manufacturing industries reported growth, led by textile mills and machinery. Only one industry — furniture manufacturing — contracted last month.

Now, we have the top 5 winners among manufacturers as recommended by Zacks but reported by Nasdaq.com:

• Twin Disc, Incorporated TWIN designs, manufactures and sells marine and heavy duty off-highway power transmission equipment.
• Lincoln Electric Holdings, Inc. LECO is a manufacturer of welding, cutting and brazing products.
• H&E Equipment Services, Inc. HEES is an integrated equipment services company. The company is focused on heavy construction and industrial equipment. 
• Stanley Black & Decker, Inc. SWK is a global provider of hand tools, power tools and related accessories, and products and services for various industrial applications.
• UFP Technologies, Inc. UFPT is a designer and custom converter of foams, plastics, composites and natural fiber materials. 

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 think you may have read here.

Disclaimer: I don't invest directly in any of the companies mentioned above. Never have and probably never will.

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Meanwhile in Georgia: Too Big To Fail

All Of A Sudden, Rick Perry Likes Nuclear Energy

Total Federal Loan Guarantee Rises To $12 Billion

From The Wall Street Journal:

The Trump administration on Friday offered an additional $3.7 billion in loan guarantees to a troubled nuclear power plant project in Georgia that is billions over budget and years behind schedule, raising the total federal loan guarantees to $12 billion.

Energy Secretary Rick Perry said it was important for the U.S. government to support the Alvin W. Vogtle Electric Generating Plant, which would be the first new nuclear reactors built in the country in more than three decades.

“I believe the future of nuclear Energy in the United States is bright and look forward to expanding American leadership in innovative nuclear technologies,” Mr. Perry said in a statement, adding that nuclear power was important to the stability of the nation’s power grid.

GM With Best September Since 2007; Scotland Indefinitely Bans Fracking -- October 4, 2017

ADP:

• ADP figures are out
• historically, at least the past few months, ADP estimates have been way off
• August, 2017, employment data revised downward 7,000 to 228,000
• September, 2017, following three huge hurricanes, new jobs increased by a paltry 135,000

GM: there was so much news yesterday, this was easily missed. Worth re-posting -- GM had its best September US retail performance since 2007. Link --

• 12% increase year-over-year increase in total sales in September, at 279,397 vehicles
• 17% increase at Chevrolet; 9% increase at GMC
• crossover deliveries were up 43%
• trucks up 10%
• but: passenger gars were down 11%

Luddites: Scotland indefinitely bans fracking.

Solar energy, 2016 summary: unpredictable, not dependable, non-dispatchable -- but it's setting records. Mostly in China.

Active rigs:

$50.21↓	10/4/2017	10/04/2016	10/04/2015	10/04/2014	10/04/2013
Active Rigs	57	32	68	190	183

RBN Energy: crude oil shuttle pipelines in the Permian's Delaware and Midland basins, Part 2.

Shuttle pipelines in the Permian provide high-volume, straight-shot links between crude oil gathering systems and multiple takeaway pipelines out of the play ­­— giving producers and shippers critically important destination optionality. Assuming the shuttles are well-positioned and tied to increasing production on one end and multiple takeaway pipes on the other, existing intra-basin shuttles are highly valued and being gobbled up by major midstream players. And to keep pace with Permian production growth, existing shuttle systems are being expanded and new ones are being planned. Today, we continue our review of key crude-related infrastructure in the nation’s hottest oil production region.

The 80.1% rule: Motley Fool has a great article on why Buffett prefers to buy the whole company when investing in large-dividend payers. Bottom line: mom-and-pop retail investors experience double-taxation on dividends; Buffett, when he owns 80.1% of the company, pays taxes on dividends only once. And not directly.

US LNG export update: from Rigzone. A nice overview but nothing we did not know already.

Norway? from a contributor over at SeekingAlpha it remains unclear (actually it's more than unclear; there's nothing to explain) what drove Norway to deliver unusually strong Tesla sales. I find the entire Tesla story fascinating. The company said it would ramp up its Model 3 production from essentially zero to 1,500 in two months. The company completely missed, producing, apparently, only 260 of that model. And yet, investors continue to buy shares of Tesla pushing the company's market value greater than GM. And Tesla produced less than 10,000 vehicles each month this past quarter. GM sold in excess of 275,000 vehicles this past month. Let's see, 10/275 = less than 4%. Meanwhile, today, Tesla surges, up another $7 today.

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Fall Festival Means Kettle Korn

Making America Great -- It Never Quits -- The Second Wave Of Ethane Crackers Begins -- October 3, 2017

Wow, it never quits! Making America great. The positive ramifications from the shale revolution continue to reverberate through the economy.

A reader sent me this story from the Pittsburgh Business Times about the new ethane cracker being built in Pennsylvania. From the article:

Shell Chemicals' $6 billion ethane cracker being built in Beaver County [Pennsylvania] isn't just important to the tri-state region, it's also playing a big role in the U.S .petrochemical industry.

"That essentially is the beginning of the second wave" of ethane crackers, ...

The Potter Township plant made the list of 13 ethane crackers being built from 2017 until 2021 ...

"You'll see the biggest buildup in the U.S. petrochemical industry we have ever seen," [a spokesman] said. It's part of the estimated $85 billion a year in investment in the domestic petrochemical industry since 2010, a big change since the industry's downturn a decade ago.

What revived the petrochemical industry from stiff foreign competition? The shale boom that has lifted many parts of the country, including southwestern Pennsylvania.

The Shell cracker in Beaver County is scheduled to go online in the second half of 2021. That will come at a good time for the petrochemical industry, which is growing at a rate of about four world-class steam ethane crackers like the Shell plant a year.

Additional data points:

• ethane production has doubled since 2005 and is likely to grow another third by 2020
• already, 318 petrochemical projects worth a total of $185 billion since 2010
• the shale boom is likely to supply enough ethane for a second wave of crackers; will be lead by the Potter Township plant

Comment: it should go without saying that Hillary Clinton promised to do what she could to stop fracking in the US had she been elected president. I am absolutely convinced that she may not have been able to stop the US shale revolution and fracking but she certainly could have slowed it down with executive orders, additional EPA regulations, and the use of the bully pulpit. 

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And In Minnesota, This Beats Solar Panels

Meanwhile in Minnesota, being reported in Minneapolis/St Paul Business Journal:

Emerson Automation Solutions is growing again in Minnesota, investing in plants in Chanhassen and Shakopee as it enjoys renewed strength from oil-industry customers.

The Star Tribune reports that the company will soon embark on a $14 million project in Chanhassen that will add another 80 workers to that location and convert 30,000 square feet of offices into more factory space. That follows a $10 million renovation project in Shakopee, where Emerson has hired 100 new workers.

The company, a division of St. Louis-based Emerson Electric Co., makes pressure, temperature, flow, level and wireless measurement instrumentation. It employs more than 2,400 people in Minnesota.

The company expanded into Shakopee in 2013 with a $70 million, 500-job facility, but work slowed shortly afterward as oil prices tumbled. (Emerson has a big chunk of the market for oil and gas monitoring equipment.) Prices since stabilized again at about $50 a barrel — not boom-era prices but enough to get customers spending on equipment again.

Huge Drop In US Crude Oil Inventories; Re-Balancing Drops To 41 Weeks; WTI Slips Below $50 -- October 3, 2017

Updates

Later, 11:21 p.m. Central Time: wow, that was fast. Just minutes after posting the original post in which I noted that WTI was flirting with $50 again, I re-checked the site and see that WTI has now slipped below $50:

 

Original Post

 

US crude oil inventories: the original estimates were way off (posted last night). The EIA weekly petroleum report (a dynamic link) shows that there was a significant decline in US crude oil inventories: declining by 6.0 million bbls. The number of weeks to "re-balance" decreased from 46 weeks to 41 weeks with that data:

Week	Date	Drawdown	Storage	Weeks to RB
Week 0	Apr 26, 2017		529.0	180
Week 1	May 3, 2017	0.9	528.0	198
Week 2	May 10, 2017	6	522.0	50
Week 3	May 17, 2017	1.8	520.2	59
Week 4	May 24, 2017	4.4	515.8	51
Week 5	May 31, 2017	6.4	509.9	41
Week 6	June 7, 2017	-3.3	513.2	60
Week 7	June 14, 2017	1.7	511.5	57
Week 8	June 21, 2017	2.5	509.0	62
Week 9	June 28, 2017	-0.2	509.2	71
Week 10	July 6, 2017	6.3	502.9	58
Week 11	July 12, 2017	7.6	495.3	47
Week 12	July 19, 2017	4.7	490.6	43
Week 13	July 26, 2017	7.2	483.4	38
Week 14	August 2, 2017	1.5	481.9	47
Week 15	August 9, 2017	6.5	475.4	35
Week 16	August 16, 2017	8.9	466.5	30
Week 17	August 23, 2017	3.3	463.2	29
Week 18	August 30, 2017	5.4	457.8	27
Week 19	September 7, 2017	-4.6	462.4	32
Week 20	September 13, 2017	-5.9	468.2	39
Week 21	September 20, 2017	-4.6	472.8	46
Week 22	September 27, 2017	1.8	471.0	46
Week 23	October 4, 2017	6.0	465.0	41

Futures: futures don't mean squat but it is interesting that WTI right now is flirting with $50 again. Right now, this dynamic link shows that WTI is down 0.7% (36 cents) and trading at $50.06. It's very possible WTI could drop below $50 tomorrow.

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A Man And His Dream

The trusses were put in place yesterday; and today the roof was entirely enclosed. My son-in-law built a "sled" of sorts, leaning against the building, and then brought the 4x8 plywood sheets up to the roof. Shingles and the building will be protected from the elements.