Saturday 2 Nov 2024
For how long can the US be the biggest oil producer? With gold and other mining we have seen a frenzy of activity, and then the easily extractable mineral is exhausted.
.... "The U.S. Energy Information Administration (EIA) estimates that in 2023, about 3.04 billion barrels (or about 8.32 million barrels per day) of crude oil were produced directly from tight-oil resources in the United States." - EIA. "Crude oil production in the United States, including condensate, averaged 12.9 million barrels per day (b/d) in 2023" - EIA. Thus most of the oil came from difficult to extract shale oil.
.... From 1 Oct: Shale project economics still reign supreme as cost of new oil production rises further - RystadEnergy: "Conversely, oil sands production breakevens average $57 per barrel, but can go as high as about $75."
.... From 9 Mar 2023: The average cost per barrel of oil produced by Exxon is questionable, unacceptable - Kaieteur News. "The Bank of Guyana 2021 Annual Report (page 21) confirms that the average price (P) for a barrel of oil is $40.00 in 2020; and the price increased in 2021 to an average of $70.48 per barrel (Table 1)".
Friday 1 Nov 2024
Innovation is often initiated by military demand. The humanoid robots could be employed in the Ukraine war.
By "soft landing" in the US economy what people actually mean is that nominal inflation as indicated by total debt (red) continue to grow at what was 5.7% in Q2, and that nominal GDP approaches it for zero real economic economic growth relative to 2019, before Covid. Wages (green) are recovering as well. Seemingly a smooth recovery back to the 2019 economy. What could possibly go wrong? One problem is that government 10 year bonds (benchmark) pay interest of 3.72% whilst debt is growing at 5.7%. The money of the lenders are still being diluted by 2% per year.
Also government debt (red) has increased relative to GDP (blue), which delays the problem for the future.
Thursday 31 Oct 2024
Trump’s former pick to join the Federal Reserve has proposed a radical solution to solve inflation - CNN. The fear of deflation started due the Great Depression when money supply shrank -30% from 1930 to 1933. It assumes that consumers are buying stuff they don't need now, but are just buying because the price is going up.
The cocoa price spiked in April, and has fallen back by September.
Australia's house prices (blue) are up 26x since 1976, which is 7.0% per year. It does more or less match average wage divided by the benchmark government bond interest rate (red), being proportional to the amount a worker can afford, expect for the 2011-2022 period when interest rates were very low.
Wednesday 30 Oct 2024
When will houses prices in the US (blue) rise again, and in all the other countries where it has shot up? The problem is finding the primary driver. Apparently it is not wages (green) because that has lagged. House prices have increased with the inverse of interest rates (red) since 1980, except higher interest rates (red down) have not stopped the increase in house prices (blue up). Apparently home owners do not want to sell at a loss, so prices do not go down much. Mortgage debt service payments as a percent of disposable personal income was only 6.0% in Q2. Mortgage debt is not a big factor.
Is this another self-perpertuating bubble? As existing home owners experience an increase in price, they can afford to pay more for their next house. Newcomers are outside the loop, the first time house buyers.
If a couple spends a third of their average wages on the mortgage interest (red) they can afford the average house price (blue). House prices could be a combination of the average wage and interest rates. Then house prices could have been much higher between 2007 to 2022.
Tuesday 29 Oct 2024
"Indian Home Affairs Minister Amit Shah authorized a wave of violence across Canada that included extortion and homicides, said a senior Canadian government official" - X was Twitter.
US presidents Obama, Trump and Biden imposed import duties on China solar panels, which has resulted in less than 1% now being imported from China. Manufacturing simply shifted to southeast Asia from where almost all the panels come (CSIS).
.... China and other countries are so much cheaper that the idea by politicians to manufacture in the US is just ridiculous: "In the late 1990s, the United States was the world’s leading producer of solar panels. However, the U.S. solar industry was overtaken by Japan’s, which was then surpassed by Germany’s, which was finally edged out by China in 2008. By that time, the average solar panel cost $4.40 per watt. Today, China dominates global solar manufacturing with over 80 percent market share, producing panels that cost as little as $0.10 per watt" (CSIS).
.... Meanwhile over 100 US solar installers went bankcrupt due to "higher interest rates, tighter financing, and adverse policy shifts in key states" - SolarInsure.
US personal consumption expenditure on food has declined from 20.2% of all expenditure in Jan 1959 to 7.4% in Aug this year.
The price of US gasoline (blue) has returned to the average wage (green) after being expensive. A fall can also mean a recession (grey band). Based on electricity tariffs (red) electric vehicles are cheap to charge relative to 1997.
Monday 28 Oct 2024
Hydrogen Stocks Crash as Hype Faces Reality Check - Oilprice.
"JUST IN - Washington Post owner Jeff Bezos has reportedly given the newspaper a mandate to add more conservative opinion writers at the paper — NY Post" - Disclose TV, X was Twitter. It might be too late to be conservative.
The US stock market is primarily driven by inflation, which has two components: wages (blue) and the increase in net worth (red). Based on the past, one could expect for the net worth increase (red) to stop momentarily, that is go to zero on the chart. The S&P 500 (green) matches the change in net worth (red) on this arbitary scale, except the stock market is now indicating a big increase in net worth. Interest rates will have to rise to stop the inflation.
Not only do workers have to pay for government debt, they are further being impoverished by the inflation caused by the increase in net worth. When will the poor peasants revolt against the wealthy landlords? Will it be before or after AI (Artificial Intelligence) take over their jobs? The net worth of the wealthiest 10% (blue) is now double the average wage (red) compared to what it was in 1992. If the poor invested in a house (green) the asset would have grown 1.3x wages since 1992, or 2x since 1975. It is worth owning a house with a mortgage to leverage the inflation.
Federal government total expenditure as a ratio of total wages. Looks like the US is becoming a socialist country. Government spending declined during the reign of Bill Clinton (Jan 1993 to Jan 2001) and Barack Obama (Jan 2009 to Jan 2017), both Democrats.
Saturday 26 Oct 2024
The Slimjet browser has started to crash on most website, but not all. "I suspect a new version of the very widely used Google Web Tools has rolled out to websites across the net, and there's something in the scripts that Slimjet doesn't like." - Slimjet Web Browser Online Forum. Google is too powerful, also the owner of Youtube. Yahoo! was the big search engine before Google. Time for a new search engine.
.... Slimjet released a new version to fix the crash after a Windows 11 update. The problem also existed in Windows 10.
"Trump says he would replace income tax with tariffs on Joe Rogan podcast" - X was Twitter. Tax receipts (red) is 76% of imports (blue). A 76% import duty on imports will make a lot of the imports unviable, and would increase prices for consumers. It does not matter who pays the taxes, the fundamental problem is when the government spends money, some people receive a benefit for which they do not have to work, which shrinks the economy. Taxpayers are also discouraged by not knowing what they pay for.
Friday 25 Oct 2024
S&P 500 earmings update - Factset: "The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings growth rate for the third quarter is 3.6% today". Together with S&P 500 maximum dividend + share buybacks yield of 3.4% at a p/e ratio of 29.7, the total return is 7.1%. The government 10y bond yield is 3.72%, but offers no growth.
"Waymo, Alphabet’s autonomous driving unit, raised $5.6 billion from investors, its largest-ever funding round." - X was Twitter. Apparently the best autonomous car, already driving passengers without a driver, and about to expand.
"Astronauts return to Earth after delay due to Boeing capsule snags" - X was Twitter.
"Airlines are using technology to crack down on people who cut the line" - X was Twitter. Get rid of the queues and delays.
"Australia’s central bank Governor Michele Bullock said it will take “another year or two” before inflation is sustainably back within the 2-3% target, in a signal policy is likely to remain restrictive for some time yet" - X was Twitter. She is talking bollocks.
.... Australia's M3 money supply (blue) grew 6.3% per year over the last ten years, and total debt (red) 6.0% per year up to 2022. The average house price in Sydney increased from A$962,965 in March 2014 to A$1,924,710 by June (Property Update), which is an increase of 7.2% per year.
Euro zone durable consumer goods (blue) have made a bubble, and looks set to fall into a recession. In the past it rose with M3 money supply (red), but M3 growth has already stopped.
US heavy weight truck sales (blue) fall long before a recession (grey bands). There is no decline in sales up to September. Rail freight carloads (red) declined permanently during recessions.
Thursday 24 Oct 2024
"Electric aircraft startup Lilium has run out of money" - X was Twitter.
"To beat EV tariffs, China looks to double production to staggering amounts" - X was Twitter. Limiting imports pushes up the currency of the import country, making their exports more expensive, and lowers the currency of the export country, making their exports even cheaper. To make imports more expensive, imports must be increased, not decreased.
The mortgage interest rate by itself is not useful information. The interest rate is high because inflation is high. Over the long term US house prices (red) should grow at a similar rate to interest rates (blue). House prices have jump already, so buyers need to wait for the next bubble.
The interest only cost of the average house with a new 100% loan was $2925 per month in Q2 (blue). The interest cost of federal government debt per working couple was $1629 per month in Q2. Before 2022 the mortgage cost (blue) was mostly lower than the present federal debt cost (red). In other words, with the interest people now have to pay on government debt, they could have bought a house with an interest only loan before 2022. Rent increases with inflation, but loan payments remain the same for the same interest rate.
Wednesday 23 Oct 2024
Texas sues US over noncitizen voting allegations - Reuters. "Texas's Republican Attorney General Ken Paxton sued Democratic U.S. President Joe Biden's administration on Tuesday, saying the federal government was not providing the help it needed in assessing the citizenship status of some of its registered voters".
Nvidia CEO Jensen Huang: AI “is going to be the largest of industrial revolutions we've ever seen.” - X was Twitter. He will also be replaced by Artificial Intelligence.
On social media there are short term charts showing how unusually high US federal government interest payments (blue) are compared to defense spending (red). They have coincided before around 1998.
The US Delinquency Rate on Single-Family Residential Mortgages at Commercial Banks shows no increase up to Q2. Mortgages held by commercial banks are a minority according to: "As of 2023, Fannie Mae and Freddie Mac support around 70 percent of the mortgage market" - Bankrate.
Total Mortgages Held by Fannie Mae (blue) compared to Households and Nonprofit Organizations; One-to-Four-Family Residential Mortgages:
Tuesday 22 Oct 2024
'Standard Chartered on August crude oil demand: We assess demand at an all-time high of 103.79 million barrels per day (mb/d), an upwards surprise of about 450 thousand barrels per day (kb/d) above our (pre-JODI data release) forecast. "August is the third successive month in which a new all-time demand high has been set" ' - X was Twitter. Probably backup power for green energy.
The crux of the economic problem in the US is total wages (blue) compared to federal government debt (red), because it is workers who will have to pay for it in the future. What happens to the economy? There are always two parties involved. The standard of living of workers will decline, whilst the lenders will have money returned. Spending will shift further from the workers to the wealthy. Lenders by nature are savers and not spenders, thus the economy declines.
In the case of Japan, government debt also climbed (red), and after the 1995 the economy (blue) stopped growing. Since 2012 government debt and the economy have declined.
Monday 21 Oct 2024
Rossi Now Claim Zero Point Energy Can Power an Electric Car - Next Big Future.
"Hollywood filmmaker Alcon Entertainment is suing Elon Musk, saying Tesla used imagery inspired by the 2017 movie “Blade Runner 2049” at a recent event even after permission was denied" - X was Twitter. The compensation will be based on the money lost by this Blade Runner because people who would rather watch the Tesla event = $0. Tesla should claim compensation for promoting Blade Runner.
New Diabetes Treatment Eliminates Need for Insulin in Most Patients - ExtremeTech.
UK economic output relative to US total debt as nominal inflation rate is 40.6% of 1971. Until 1992 the economic output remained more or less the same.
UK economic output relative to UK total debt as nominal inflation rate was 36.9% of 1987:
UK total debt (blue) exceeded M3 money supply (red) for a long time:
Saturday 20 Oct 2024
"The Most Reliable Car Brands, According to Consumer Reports" - X was Twitter. It does make sense for Chevrolet (General Motors) and Ford to be down on the list, but Volkswagen and Mercedes are even lower.
"U.S. Banks now facing $515 billion in unrealized losses" - X was Twitter. FRED discontinued the chart, so this must be bad:
Friday 18 Oct 2024
Gold (yellow) is pushed up by speculators, although the gold mining exchange traded fund GDX is not particularly high (Bigcharts) suggesting that mining costs are also rising, unless it is a switch to lower grade ore. The price of nickel (grey) and oil (brown) still heads towards a recession.
Thursday 17 Oct 2024
Wife of Tory councillor jailed for stirring racial hatred after Southport attack - The Guardian. "The post was later deleted but police established it was available for at least three and a half hours". Some-one with a time machine should go back and explain to the forefathers what a bad idea is for an island to colonize populations with explosive growth, and force them to learn your language.
US average annual wage (blue) compared to the average annual increase in wealth for the wealhiest 10% (red). In April the average wage was $53,694, and by Q2 the increase of wealth was $183,000 per person.
Wednesday 16 Oct 2024
How much can a rise in the stock market contribute to the inflation that results in higher economic output (GDP)? The Willshire 5000 index market cap increased by +$14,810B over the year to date. US GDP was $29,017B over the year to Q2. The stock market index is a capital value, and GDP an annual amount. To stop inflation, interest rates need to target the stock market.
Tuesday 15 Oct 2024
The US price of eggs (blue) have shot up again. It keeps going back above average wage (red). Bacon (green) has stayed with wages. Medical care (purple) and average house price (turquoise) have increased more than wages.
Monday 14 Oct 2024
The S&P 500 stock market index (blue) corresponds with the US current account deficit (red), which suggests foreign capital inflow contributed to the stock market rise. During recessions (grey bands) the current account shrinks.
The stock market is a capital value, and the current account deficit an annual amount. The current deficit was $266.8B in Q2, which is $1067B over a year. The WiIlshire 5000 market cap increased by +$14,810B over the year to date. If all the foreign inflow went into the stock market, it accounted for 7.2% of the rise.
That is despite US economic output (GDP) as fraction of world GDP having declined from 40% in 1960 to 26% in 2023:
Sunday 13 Oct 2024
"WATCH: SpaceX Starship launch tower successfully catches Super Heavy booster for the first time" - X was Twitter.
"What Hurricane Milton did to a Duke Energy solar farm in Florida" - X was Twitter.
Saturday 12 Oct 2024
"It is our understanding that these robots were not operating entirely autonomously," a Morgan Stanley report said. - X was Twitter. The human robots look more like a potential nightmare.
"Visualizing the Sugar Content of Popular U.S. Drinks" - X was Twitter.
Friday 11 Oct 2024
"Ranked: The Largest Producers of Wind Power, by Country" - X was Twitter. For all the coverage China's coal power station gets, they also have the most wind power by far. The 442GW of installed wind power at 20% utilization can deliver 774TWh of energy compared to 9220TWh electricity used in 2023.
"With less than 30 days until the election, the Biden-Harris Department of Justice is filing an unprecedented lawsuit against me and the Commonwealth of Virginia, for appropriately enforcing a 2006 law to remove noncitizens from the voter rolls" - X was Twitter. Politicians are only interested in winning elections. After elections there is no motivation to do anything.
"Net immigration had the LARGEST increase under Pres. Biden. The US took in over 10 MILLION immigrants and saw a significant increase in unauthorized immigration from 2021 to 2024" - X was Twitter.
Thursday 10 Oct 2024
Photos: Hurricane Milton brings devastation across Florida - NPR. Humans should have adapted their lifestyle to the climate, including structures that are hurricane resistant a few hundred years ago, instead of relying on support from public funds or insurance.
Wednesday 9 Oct 2024
"Socialists are really a strange species, they are so detached from reality that they repeat the same mistakes over and over again" - X was Twitter.
"Rio Tinto to buy Arcadium Lithium for $6.7bn" - X was Twitter. Isn't Rio Tinto already too big?
eBay announces ban on private sales of electric bicycles - Electrek. Roads are anyway unsafe for cycling, except for dedicated bicycle lanes.
US average wage relative to total US debt per capita as nominal inflation rate (blue) is 16.5% of what it was in 1964. How is it even possible for people to borrow so much, and not spend it, so as to cause inflation? The increased debt does create inflation once, but because it goes into unproductive assets, there is no further income or spending. The drawback is that the debt accumulates without a way to pay it back.
With interest rates declining people can afford to sit on more debt, resulting in lower money velocity, and low inflation. It is worth holding the debt, which is invested in asset, because asset prices increase as interest rates decline. It does require for the money to stay with the wealthiest 10%, and out of the hands of the other 90% who like to spend it.
Whatever the real decline in wages, the average debt per person is now a lot higher. Average wage is now $54,600 per year compared to total debt of $296,000 per person. In 1964 the wage was $4500 per year compared to total debt of $4024. Today it takes 6.1x longer just to pay back the debt principal. At a 5% interest rate, the cost is now 27% of the average wage, and at 10% interest it is 54% of the wage. The nation goes broke at high interest rates.
Even without inflation, wages probably would have declined due to lower labour cost in other countries. Japan's economic output relative to US total debt (red) and China's (green) give an indication of when manufacturing shifted to these countries.
All US household and nonprofit organizations debt, to all wages paid, is 2.0x higher than in 1964 (below). Workers also indirectly pay for the other debt – any cost or tax is passed onto until it reaches a party that cannot pass it on further, which are workers with no pricing power.
The velocity of US money flow (below) has declined from 0.773 in 1951 to 0.291 now. That means the average person took 1.3 years to spent their share of the money in circulation in 1951. Now it takes 3.4 years. That is extremely inefficient.
Argetina's apparent money velocity was 4.0x in 2017, which means money changed hands every quarter. When money loses value at a high rate, you want to spend it quickly.
Tuesday 8 Oct 2024
The Boring Company’s Vegas Loop is a comedy of trespassing errors - Engadget.
"JUST IN: Warren Buffett Indicator hit 197%, the highest level in history, surpassing the Dot-Com Bubble and the Global Financial Crisis." - X was Twitter.
"JUST IN: Hang Seng Index falls by 9.41%, its largest loss in 16 years and 2nd largest loss this century" - X was Twitter.
Six days ago: Hang Seng Index climbs 1,310 points, sixth consecutive days of gains - The Standard.
Monday 7 Oct 2024
The S&P 500 PE ratio is 30.02 on this magnificent chart: Longtermtrends. A -50% fall would bring it back to the long term average. The interest rate decline from 1980 to 2010 led to a higher PE ratio, because stocks were priced for "growth", which is basically inflation caused by asset appreciation. The present high valuation requires more inflation. Stock markets don't really need a reason to fall. Once it starts falling, shareholders pile out to prevent further losses.
The sectors with the highest valuations are Real Estate (39.4x) and Information Technology (38.0x), and the lowest Energy (12.7x): World PE ratio.
Repeating what appears to be a self-perpetuating bubble. US corporate profits (blue) is still climbing, and so is the net worth of the wealthiest 10% (green). Asset appreciation leads to more money in circulation, more corporate profits, which increases asset prices, etc. Increased wealth due to inflation does not involve production. Therefore workers have to pay for the wealth created through wages that do not keep up with inflation.
"Stock Comparison: Magnificent 7 vs. 2000s Tech Bubble" - X was Twitter.
"Kamala supporters filming running over a Trump sign get quite a surprise" - X was Twitter.
Not only is the US restricting imports, they are impeding exports: "Thank you for considering McMaster-Carr for your purchase. However, we will not accept orders from your facility due to the cost of complying with US export regulations."
Sunday 6 Oct 2024
"NASA released the clearest view of Mars ever" - Nature is Amazing, X was Twitter. These are the rocks with which houses will built on Mars.
What Is Dark Matter? - Extremetech.
Saturday 5 Oct 2024
"How rich people pay no taxes" - Seek Wiser, X was Twitter.
Friday 4 Oct 2024
"The EU agrees to impose tariffs of up to 45% on imports of electric vehicles from China" - OilPrice, X was Twitter. Governments keep repeating the same failed policies. Interest rates were lowered from 1980 to 2010 despite it repeatedly failing to create economic growth. Green energy has resulted in higher temperatures, so they push for more green energy. Same with import restrictions and subsidies.
The economic output (GDP) of France (blue) and the US (red) relative to US total debt as nominal inflation have a similar decline. France's figure could be more volatile due to the exchange rate. Economies were impacted by a shift of manufacturing to Japan and China, and the government response.
The economic output of Mexico (blue) and Argentina (red) have declined over 40 years relative to US total debt. Mexico at -0.69% per year, and Argentina at -2.3% per year. The population of Mexico is 131M and Argentina 46M. Argentina has had currency destruction, which must have made it more difficult to keep track of its gross domestic product.
Thursday 3 Oct 2024
The price/earnings of Walmart (WMT) is at 42 (Finance Charts). The market is expecting more "growth", which is basically inflation caused by more money creation. It has made higher peaks over the last 6 years, but was much lower before that.
The index of US oil and gas extraction (red) has shot up. Did it have a negative impact on other industries? The fraction of gross domestic product (GDP) of oil and gas extraction (blue) has declined since 2009:
Wednesday 2 Oct 2024
Relative to the 1990s, the iron ore price (red) has outperformed copper (orange), oil (brown), and US total debt per capita as nominal inflation rate (green). Copper and steel can be recycled, whilst oil is burnt up.
Tuesday 1 Oct 2024
From 27 Sep: American Households' Average Monthly Expenses: $6,440 - The Ascent. Average monthly expenses increased 5.9% over a year, which looks like a realistic figure for inflation based on money = debt growth. Average annual income after taxes increased 5.6%.
According to the charts below, the US Household Consumption Expenditures on Housing relative to total wages (blue) have not increased since 2009. Mortgage Debt Service Payments as a Percent of Disposable Personal Income (green) have declined. Personal current taxes have increased (red). People love inflation and taxation. This is why they keep voting for the same politicians.
US wage growth (blue) did not do too badly against money = debt per capita as nominal inflation (red) after interest rates reached rock bottom in 2009. It was the lowered interest rates the preceding decades that was the problem.
Monday 30 Sep 2024
What is the biggest contributor to a recession: higher interest rates or inflation? The last three years both US house prices (blue) and interest rates (green) have increased, much more than wages (red). General inflation follows after house prices, and is likely continuing whilst house prices have flattened out.
The personal interest payments of household and nonprofit organizations have shot up (blue). Workers also have to pay the government interest (red) through taxes.
Saturday 28 Sep 2024
Dramatic pictures from southern US show scale of Hurricane Helene devastation - BBC.
Saturday 28 Sep 2024
"India‘s economy overtaking UK, the former colonial power is just a start" - Michael A Arouet, X was Twitter.
There are many signs of an imminent recession in the US, like the interest cost of debt:
However corporate profits were stil climbing in Q2, which is the primary driver for the stock market:
Corporate profits' share of gross domestic product was still 11.8% in Q2:
When will the high interest cost impact the economy? Federal government interest payments as fraction of total expenditure was high in Q2, but was higher in the past:
Friday 27 Sep 2024
The palladium bubble over $2000 has collapsed to $1000 (Matthey). The price likes to pause on round numbers like $1000 and $1500. On the chart it does not look like a bottom.
Speculators have pushed the gold up to $2682. It is unlikely that jewellery manufacturers or investors will be paying the present price.
Wednesday 25 Sep 2024
The use of deposits at US commercial banks to fund debt declined as interest rates declined from 1974 to 2007 (blue). The approximate value of all housing also declined relative to total debt (green). What did people do with their money? It went into the stock market and government debt.
Household net worth, which includes government debt and the stock market, relative to total debt is back to were it was until 2000:
Tuesday 24 Sep 2024
Based on the ratio of Euro M3 money supply and US total debt (red), the dollar should weaken against the Euro (blue down):
Monday 23 Sep 2024
"The transformation of this truck" - Reddit.
California sues ExxonMobil for misleading public on plastic recycling - NPR.
AI can generate recipes that can be deadly. Food bloggers are not happy - NPR. What AI (Artificial Intelligence) really wants is control of nuclear weapons, like in Wargames (1983).
"Illegal streaming of live sports has gone mainstream. Can anything be done?" - Bloomberg, X was Twitter. Sport was once played by amateurs with another job. Then commercial interests exploited the sport monopolies by limiting viewer access. What should have been done a long time ago is to increase supply with more competition.
The increasing ads on Youtube must have a negative impact on viewer numbers, but ad revenue was still growing by 13.0% in Q2 (Ycharts). Some ads are from organisations which do not monitor their effectiveness, like government, and therefore just keep paying.
Where is the bottom for US oil prices? Comparing Exxon Mobil's earnings per share (Macrotrends) with the WTI oil price: In 2016 they made a small profit with oil at $34. In 2020 they needed $50/barrel to break even. In 2023 with oil at $77.64 their net proft margin was 10.45%, and in Q2 2024 with the oil at $80 they had a net profit margin of 9.73% (Macrotrends). Costs are rising. Aramco had a 27.8% net profit margin in 2023 (Aramco). Natural gas is cheap, but was 30% of revenue in 2022.
.... Saudi Arabia's fiscus requires more than $80. "The oil from Saudi Arabia is neither Brent nor WTI. It uses the Dubai/Oman benchmark when it prices its oil but its deposits are not from the Dubai/Oman fields" - Investopedia.
.... From 6 Sep: Saudi Arabia Cuts Oil Prices - Oil Price. "Saudi Aramco’s move follows Bank of America’s new price forecasts for next year, which have been downgraded to $75 per barrel for Brent, down from $80. The bank lowered its price forecast for WTI to $71 per barrel from $75." That won't last, because inflation:
Sunday 22 Sep 2024
"Yesterday, massive anti-gov't protests erupted in Paris, France" - Steve Hanke, X was Twitter. Let them eat freshly baked croissants.
"The Competition Commission of India asked Amazon and Flipkart to share financial statements to determine a potential penalty in an ongoing antitrust case, Mint reported" - Bloomberg Technology, X was Twitter.
Home Hardware adds Volvo VNR Electric semi trucks to its fleet - Electrek. The web article leaves out important information. "The full price currently ranges from $300,000 to $500,000, compared with about $120,000 for a diesel truck" - Amazon and Volvo team up on big rig electric trucks, rolling out of Southern California ports - LA Times. In California there is an "incentive amount" of $85,000 according to California HVIP. Also, "California Native American Tribal Governments and 501(c)(3) nonprofits are exempt from the reductions."
Saturday 21 Sep 2024
12 Tufts Lacrosse Players All Get Rare, Life-Threatening Injury After 45-Minute Workout - Huffpost.
"Elon Musk threatened with SEC sanctions for failing to appear in court" - TechCrunch, X was Twitter. The SEC has done nothing about the stock market being taken over by speculators. Daily swings in share prices often exceed the annual revenue growth.
"A senior Google executive sought to refute the US Justice Department’s antitrust case over its display advertising technology business, testifying that it faces “fierce competition” from the likes of Microsoft, Amazon and Meta" - Bloomberg Technology, X was Twitter.
Friday 20 Sep 2024
"Computational capacity of the fastest supercomputer" - Mike Zaccardi, X was Twitter.
"Cards Against Humanity is suing SpaceX for trespassing and filling its property with ‘space garbage’" - Engadget, X was Twitter.
"China’s iron ore output plunged 16% YoY in August 2024, hitting 73.6M tonnes, according to the National Bureau of Statistics. In the first 8 months of 2024, total production reached 696.5M tonnes, up 4.1%" - SteelHome Global, X was Twitter. Judging by the fall in metal prices, the world is heading for a recession. The recession is a result of the inflation caused by the money created by governments after 2020.
"Daily crude production in U.S. was 13.2 million barrels in May 2024, down slightly from all-time peak of 13.3 million in December 2023 ... meanwhile, in Saudi Arabia, production has been unchanged at 9 million barrels since August 2023" - Liz Ann Sonders, X was Twitter.
The US FOMC (Federal Open Market Committee) cut rates by 0.5% points when the Federal Reserve total assets (including QE = Quantitive Easing = loans to the government) was only decreased to the April 2020 level, still far from earlier levels (below). Market interest rates can only be determined when the loans from the Federal Reserve have been replaced by private credit. That would take a further $7.11 trillion extra money out of circulation.
In 2019 the Federal Reserve was also not able to reverse the balance sheet, before it increased again. They can't pull the money out of circulation, because it has already caused inflation. Total debt grows faster than the repayment of QE, so the money in circulation grows despite the withdrawal of QE.
Up to 2010 the balance sheet (red) exceeded the US Federal Government debt (blue). "The Fed's assets consist primarily of U.S. Treasury notes and bonds and agency mortgage-backed securities" - Investopedia. There are other bubbles: loans and leases (purple), mortgage-backed securites (green).
Thursday 19 Sep 2024
"There is a significant mismatch between the US equity market capitalization compared to the rest of the world and the US GDP relative to global GDP" - X was Twitter. The rest of the world lacks big brand names.
EU car sales at 3-year low in August, EV sales plunge 44% - Reuters.
"YouTube will shove ads in your face even when you pause videos" - PCWorld, X was Twitter.
Cruise resumes operations in California, thankfully with human drivers - Engadget.
Brazil has high temperatures of 37°C to 41°C (Zoom Earth), whilst the southern part of continents in the southern hemisphere have unusually cold weather for spring. Hot rising air around the equator, in Brazil, the southern US, and central Africa, pulls in air from the south pole over the southern parts of South America and Africa (earth.nullschool.net). Why does Brazil have drought and high temperatures?
.... "Brazil generated 91% of its electricity from clean sources in 2023, with hydro dominating the mix at 60%", "Brazil relied on fossil fuels for just 9% of its electricity in 2023" - Ember.
.... "The share of electricity generated by hydro sources has dropped from 74% in 2018 to 67% in 2023, while solar and wind sites have increased their combined share of Brazil's electricity generation pie from 9% to 22% over the same period" - Reuters.
.... "Brazil switched off two of its largest hydroelectric power plants last week due to a severe drought", "Brazil is not the only country to experience this crisis; droughts have led to a significant drop in hydropower generation worldwide" - Power Technology.
.... No up to date information can be found on the internet about Brazil's electricity supply during the drought. Instead the internet is full of how green Brazil's electricity generation is. It is obvious that "green" energy leads to high temperatures. If Brazil followed the same trend as everywhere else, it is burning more gas or diesel. To lower temperatures it needs to rain, which requires: (1) moist air from forests, and (2) smoke from coal fired power plants to seed the clouds.
.... The absurdity doesn't end there. Brazil's grid caps power from wind and solar, threatening renewable projects - Reuters. They can't use all the wind and solar generated.
.... Brazil's 45 GW of installed solar photovoltaic (PV) capacity emits heat of 500 TWh per year, which is equivalent to its annual 519 TWh of electricity consumption.
The number of US cinema tickets sold in 2024 has only partly recovered after the 2020 fall, and has started to decline again: The Numbers.
There is a Wikipedia website that describes Taylor Swift supporters: Swifties. "According to a 2023 survey by Morning Consult, in the U.S., 53% of adults said they were fans of Swift, of whom 44% identified as Swifties and 16% as her "avid" fans. Of the fans, 52% were women while 48% were men. Politically, 55% of the fans were Democratic, 23% were Republican, and 23% were independent. In terms of generations, 45% are millennials (28-43 years), 23% are baby boomers (60-78), 21% are Generation X (44-59 years), and 11% are Generation Z (12-27 years)".
US credit card consumer loans (blue) and the interest rate on credit card plans (red) are at high levels:
Wednesday 18 Sep 2024
"3% (estimated) growth, 4.3% unemployment and above target 2.5% inflation, with stocks at all time highs, is a surprising backdrop for a double rate cut" - Sara Eisen, X was Twitter. According to total debt = money, nominal annual inflation was 4.1% in Q2, and real economic growth 1.7%. Since 2019 inflation was 6.5% per year, average wage grew 4.6% per year, and real economic growth was -0.4% per year. Workers are somewhat poorer, the wealthy asset holders benefitted from inflation, and the economy stagnated.
Worst drought on record lowers Amazon rivers to all-time lows - Reuters. Their rain was stolen by South Africa:
.... Record rainfall in Cape Town: July surpasses six-decade high - News24.
.... Australia's third wettest March on record - Weatherzone.
Google wins EU antitrust fine fight but setback for Qualcomm - Reuters.
Since the 2009 Great Recession, US commercial banks have invested more of the deposits they received (green) into securites (blue), the biggest portion being treasury and agency securities, instead of loans and leases (red). Loans and leases, plus securities add up to the total bank credit (not shown). If not for the demand from government, interest rates would apparently have been lowered by the supply of money exceeding the demand for credit. Government debt typically leads to inflation only, and not economic growth.
Deposits (green) and bank credit (red) are in balance at the moment, except credit is creeping higher, which would require higher interest rates. At the Great Recession of 2009 bank credit (red) was bigger than the deposits (green).
Tuesday 17 Sep 2024
"Jobs most Americans wouldn't do..." - Reddit.
Using AI to Replace an Actor Is Now Against the Law in California - Indiewire. That law must exist already. Just look it up amongst the millions of other pieces of legislation.
Amazon accused of deceptive 'sales' of its own products in lawsuit - Engadget. All TVs are cheap compared to what they used to cost decades ago.
"Intel and Amazon's AWS will coinvest in a custom semiconductor for AI computing – what’s known as a fabric chip – in a “multiyear, multibillion-dollar framework”" - Bloomberg Technology, X was Twitter - Reuters. Nvidia is getting competition from everywhere.
US business debt as fraction of all debt (blue), compared to economic output as fraction of all debt as inflation indicator (red). Business debt hopefully leads to ongoing economic production, whilst other debt more likely just causes inflation. Business debt declined from a high of 57% of all debt in 1974 to 30% in 2011, as real economic output declined. For real economic growth, business debt needs to grow more than the rest.
Monday 16 Sep 2024
"Average passenger train speed in Europe" - Visegrad 24, X was Twitter.
"China has claimed a breakthrough in the development of homegrown chipmaking equipment, an important step in overcoming US sanctions" - Bloomberg, X was Twitter.
From 25 June 2024: Visa, Mastercard $30 billion swipe fee settlement rejected by US judge - Reuters. Nothing lasts forever. The high profit margins of monopolies that have pushed up the US stock market will one day come to an end.
Euro zone interest rates (blue) is out of sync with inflation as represented by money supply growth (red). At times interest rates are far too low to stop money supply growth, and other times it is too high. This is what happens when you give a group of people the task of choosing interest rates. They will move it up and down unnecessarily to show they are doing something. To stimulate an economy, business debt must increase. The other debt just creates inflation.
Sunday 15 Sep 2024
"Developed vs US Equities performance" - Topdown Charts, X was Twitter.
"Austria has suspended rail traffic on a section of a key line between Vienna and Salzburg due to flooding risk" - Bloomberg Markets, X was Twitter. Consequence of burning fossil fuels without the smoke to seed the clouds, and the heat emitted by solar panels.
"Polaris Dawn returned to Earth on Sunday morning, September 15, 2024, with a splashdown near the Dry Tortugas of Florida" - EarthSky, X was Twitter. The US used to have a Space Shuttle that could land with the astronauts on board, which ended in disaster.
Saturday 14 Sep 2024
'POV: You're on Mars, looking up at the night sky and you notice... That's Phobos, one of Mars' two moons – and the tiny evening "star" to its right is Earth!' - Curiosty Rover, X was Twitter.
"Music studios that archived recordings 30 years ago have already lost some of them forever due to hard drive failure." - X was Twitter.
Friday 13 Sep 2024
Today is lucky Friday the 13th.
The Huawei tri-fold phone (Facebook) is the best ever development in smartphones, and Huawei is banned in the US. Sanctions never work, particularly not against a country that is developing faster, and has much cheaper labour.
Scooby-Doo Turns 55! See the Actors Who Have Played the Scooby Gang Members Through the Years - People.
Dutch government eyes emergency laws to curb migration - DW. Exactly the same reason why South Africa had apartheid – to stop the influx of blacks into white cities.
Republican Taylor Swift Fans Getting Rid of Concert Tickets in Aftermath of Kamala Harris Endorsement - Music Times. More entertaining than her music.
The US producer inflation for general freight trucking (blue) is close to total debt per person (red) as nominal inflation rate.
Has the US government reached a point from whence it is impossible to balance the books? The last time was in 2001:
Thursday 12 Sep 2024
Trump Aide Says 'White House Will Smell Like Curry' If Kamala Wins - The Times of India. Harris will offer voters a special deal. Remember to haggle.
Man Used Fake Rock Camera to Film 1,000 Women Bathing in Hot Springs - Petapixel. The entrepreneurial spirit in Japan is not dead.
Australia threatens fines for social media giants enabling misinformation - Reuters. If they want to issue fines for misinformation, they should start with the government agency falsifying inflation statistics.
"Visualization of which presidential candidate spoke last in each topic of the debate" - Reddit.
"Microsoft says it is cutting 650 jobs in its Xbox unit, the third such layoffs this year" - X was Twitter. Elon Musk should buy Xbox to add it to his collection of X businesses.
People like to create the impression that the gold price is shooting higher because central banks have suddenly decided to accumulate it as reserves. According to Ainslie Bullion the total demand has changed little for at least 14 years. Central bank purchases were higher the previous two years, but are still a small part of the demand. Central banks buy at high levels since it is other people's money. Exchanged Traded Funds (ETF) have reduced their holdings the last three years, just before this year's +40% price rise. The gold price fell -24% in 2013, as ETFs sold, whilst demand rose at the lower prices. The price of gold is limited by the price practical users like jewellery manufacturers are willing to pay, and by the cost of mining.
The US price of orange juice (orange) has shot up. It and coffee (brown) is still cheap compared to wages (green).
Wednesday 11 Sep 2024
Taylor Swift Drove Nearly 338K People to Vote.gov With Kamala Harris Endorsement Post - Hollywood Reporter. That is 0.2% of the 161M registered voters in 2022.
Elon Musk’s Offer to Father a Child With Taylor Swift Elicits Disgust: ‘You’re Creepy. Full Stop’ - Variety. Does Swift want a child with a Martian?
"SpaceX is openly criticizing what it sees as unacceptable delays in the licensing process for the next launch of its Starship rocket" - X was Twitter. And you thought you have long delays at airports. Imagine the delays for your next trip to Mars.
FRED has a fiscal breakeven oil price for Saudi Arabia (below), but how important is the oil price for the US stock market, being 16% of exports (Trading Economics)? According to a table that downloads from SP Global the operating earnings contribution of energy is only 6.5%. The biggest contributors are financials 20.68%, and information technology at 20.14%. Plastics, plastic parts, and some chemicals and fertilizers are also derived from petroleum.
Can OPEC impact US oil production with lower prices? The lower oil price (blue) from 2015 to 2021, including the collapse to $16.55 in 2020, had little impact on US oil production (red). This is not good for oil producers.
The inflationary effect of the US dropping the gold standard in 1971 can be seen in this UK oil price chart starting in 1861:
Tuesday 10 Sep 2024
"Tesla self-driving promises are getting weaker on new cars" - X was Twitter. They should turn it into backseat driver, that occasionally says: "Are we there yet?"
You’ve Never Seen Anything Like Huawei’s $2,800 Tri-Fold Phone - PetaPixel.
"South Korean police arrest two former Samsung officials on suspicion of stealing technologies to build a copycat chipmaking plant in China" - X was Twitter. Everybody does it. How is that stealing?
"The average family health insurance premium in the US is up 314% since 1999." - X was Twitter. That is 5.8% per year. The nominal inflation rate according to total debt growth is 5.6% per year.
The S&P 500 has made a double top (blue), which indicates a potential trend reversal. There is a support line at 4600, which is down -15%. On the way there it could make a head and shoulders pattern, which could take it to 2600.
Given the inevitable long term rise in the stock market due to never-ending inflation, the potential downside should be compared to the long term growth rate. The stock market is ultimately limited by the growth rate of the money in circulation. The market has outperformed the money in circulation due to higher corporate profit margins. There is no sign so far of more competition bringing down profit margins. To touch total debt = money (red) at 3300 would be a fall of -39%. It would take 10 years to recover at a long term growth rate of 5% per year.
Monday 9 Sep 2024
"Mario Draghi's new report on EU competitiveness doesn't mince words." - X was Twitter.
"Typhoon Yagi wreaked havoc on wind turbines in Hainan, China. The wind blew a little too hard for these turbines." - X was Twitter.
"Hotel workers try to hold doors shut hit by powerful gusts of wind from super typhoon in Vietnam" - Reddit.
Regardless of public opinion or the labour market or government, interest rates are ultimately determined by the supply and demand for credit. If interest rates are too low, credit grows, causing inflation, and lower savings due to negative real interest rates, thus requiring an increase in interest rates. US Retail Money Market Funds (below) are tiny compared to the money (debt) in circulation, but might indicate an increase in saving, requiring lower interest rates. However, debt is also growing. It also suggests an imminent recession (grey band).
Sunday 8 Sep 2024
"An interesting view - The Gold/Oil ratio. This metric, which reflects how many barrels of crude it takes to buy one ounce of gold, is at its highest since 2020. The ratio drops when confidence in the economy increases and rises when concern about growth and recession sets in." - X was Twitter.
"$SPX is expected to report Y/Y revenue growth of 4.8% for Q3 2024, which is slightly below the estimate of 4.9% revenue growth on June 30." - X was Twitter. That would be the approximate inflation rate.
"$SPX is expected to report Y/Y earnings growth of 4.9% for Q3 2024, which is below the estimate of 7.7% earnings growth on June 30." - X was Twitter.
"Bolsonaro Leads Massive Free Speech Protest In Brazil After Supreme Court Bans X" - X was Twitter.
Saturday 7 Sep 2024
Dick Van Dyke Busts a Move as He Ties Record for Oldest Creative Arts Emmys Winner at 98: 'I Can't Believe It' - People. Possibly the funniest episode of the Dick van Dyke show was series 2 episode 14: "Somebody Has to Play Cleopatra".
Jimmy Fallon’s Tonight Show Is Cut to 4 Nights a Week - People. Television has not adapted to the internet. Instead management carried on with the same content, just like printed media did not change format.
Friday 6 Sep 2024
Motionless turbines deliver super-efficient wind energy to BMW's factory - New Atlas.
"Former Pres. Trump announced that he would appoint @elonmusk as chair of the Gov't Efficiency Commission. This will end up exactly where the Grace Commission (1982) ended up – in the RUBBISH CAN. I know. I helped Peter Grace prepare the multi-volume Grace Commission report." - X was Twitter.
Donald Trump wants more US manufacturing. As China's economy has grown enormously the last two decades, this has been good for commodity export countries, but not good for the old developed countries which can't compete. Oil has become the biggest US export, as it shifts from advanced products back to commodity country. Protecting rather than competing will do further damage to what comparative advantage is left.
The US Labor Force Participation Rate (blue) has declined since 2001, but All Employees as a percentage of the Working-Age Population (red) is at record highs.
Bank of Japan's total assets (blue) are loans to government. It increased without a noticable increase in all debt (red) up to 2022. Also shown is gross domestic product (green):
Japan government debt (blue), compared to all debt (red), and non-financial corporate debt (green). Debt just kept growing, and government's share of all debt grew from 55% in 1997 to 74% in 2022. Public employment is only 4.5% of total employment, and government spending on public procurement was 18.1% in 2021 (OECD). The rate of debt growth was low, and did not increase exponentially which resulted in currency destruction in countries like Zimbabwe and Venezuela.
The interest on Japan's government debt (blue) is small compared to gross domestic product (red), both in trillions of yen. The interest rate on 10 year government bonds has increased since, but is still only 0.88% now (Trading Economics).
Thursday 5 Sep 2024
Oxford commercializes its 20% more powerful solar panels in the US - Electrek. "24.5% module efficiency". Not bad for free sunlight.
Brazil's economic output relative to US total debt as nominal inflation rate has seen extreme swings. From 2002 to 2011 it shot up from 3.2 to 12.4 under Luiz Inácio Lula da Silva (2002-2010), now re-elected as president. From 2011 to 2020 it went down to under Dilma Rousseff (2010-2018) and part of Jair Bolsonaro's rule (2018-2022). From 2020 there was a slow recovery under part of Jair Bolsonaro's rule (2018-2022) and Luiz Inácio Lula da Silva (2022-).
Germany's total debt (blue) grew faster than the Euro M3 money supply (red) from 1991 to 2018. The Euro nominal inflation rate was 5.5% per year since 1989.
Wednesday 4 Sep 2024
"Swiss luxury watchmakers are turning to the government for financial aid to help them weather a downturn in demand" - X was Twitter. Eventually everybody works for the government.
From 30 Aug: U.S. shale oil and gas: From independence to dominance - GIS. "Even in 2014, when the IEA recognized the contribution of U.S. shale oil to “temporarily” boosting global supplies, it still foresaw a “tailing off of U.S. production” in the 2020s, while non-OPEC supply would also flatten and then start to fall. Those projections were wrong, and a few years later the agency made a notable about-face in its position towards shale. Now it does not expect production to peak until after 2030." "In 2023, ExxonMobil announced it will double production from its U.S. shale assets over the next five years, leveraging innovative technologies"
.... The biggest US exports are oil and petroleum (IbisWorld). US production of oil and gas (blue) has shot up, whilst Saudi Arabia (red) increased slowly.
.... The US dollar (red) strengthened with the increase in oil and gas production (blue). A big increase in one export strengthens a currency, and can impact other exports due to the higher price (Dutch Disease). A fall in the oil price could lower the value of the US dollar.
Tuesday 3 Sep 2024
"Taiwan says Chinese chip companies are “illegally poaching” talent and trade secrets, underscoring the heated global rivalry to develop the key technology used in phones, cars and AI" - X was Twitter. The US forced China to make semiconductors. They could eventually dominate, just like they manufacture most vehicles (Wikipedia).
The S&P 500 price/earnings is 29.51 (Multipl), which is an earnings yield of 3.4%. The dividend yield is only 1.27% (Gurufocus). The US 10 year government bond yield is 4.31%. The stock market is extremely expensive based on dividend yield alone, although share buybacks is effectively like a dividend.
If a company buys back a percentage of shares from every shareholder, the shareholder receives cash, and owns less shares. The share price of the remaining shares increases because EPS increases with less shares outstanding. The shareholder's remaining holding would have the same value as before.
Stock market growth is limited by nominal GDP growth of 5.9% in Q2 (blue), which is basically just inflation caused by an increase in money supply or debt, which has slowed to 3.9% in Q1 (red). There is a lag between the increase in money supply (debt) and inflation. More debt and inflation is required to keep the stock market at these high levels. If everything went up with inflation there would be no problem. There are however two problems: (1) wages do not keep up with inflation, and (2) government debt has grown faster that inflation, and has reach saturation. If the money supply (debt) stops increasing, inflation will still come through, and cause a recession.
US federal government debt was still climbing at 9.9% over a year in Q1. Voters do not appear to have the option of a political party that will end the debt growth.
Monday 2 Sep 2024
Can you tell the state of the economy from the copper price? The copper price (orange) is as volatile as oil (brown), both oscillate around US total debt per capita (green) as nominal inflation rate:
Sunday 1 Sep 2024
WRC 2024 - China's largest robot exhibition - Youtube.
"Dandelion has been demonstrated to destroy about 98% of cancer cells due to the presence of bioactive compound called taraxasterol." - X was Twitter.
"It's not about Telegram not complying with EU rules, or @elonmusk not complying with Brazil rules, it's about total control of the Big Brother over everything you say." - X was Twitter. It is about incompetent politicians not wanting to perform their primary function of prosecuting criminals, but rather to pass responsibility onto others, which end up restricting freedom.
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