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Which Way Wednesday? Vaccines by May and $1.9Tn – So What?

Ben Sargent Takes on the Texas 'Stay Home' ProtestersStill not enough? 

As I pointed out last week, these things don't happen in a vacuum and the vacuum at the center of the US economy really sucks.  The stimulus package is being passed, Biden has stepped up the pace of vaccination so that we all should have our shots by Memorial Day and, just this morning, the Governor of Texas announced the state will be "100% open as of March 10th" and sure, he's an idiot and not listening to Health Experts but neither is MIssissippi Governor, Tate Reeves, who will open up his state on the 9th.  

"Our hospitalizations and case numbers have plummeted, and the vaccine is being rapidly distributed. It is time!," Reeves tweeted Tuesday.  In the last year, Texans have "mastered the daily habits to avoid getting Covid," Abbott said. As of Monday, 6.57% of Texans have been fully vaccinated, according to Johns Hopkins University.  "Now is not the time to reverse the gains we've worked so hard to achieve," Harris County Judge Lina Hidago said in a written objection: "At best, today's decision is wishful thinking. At worst, it is a cynical attempt to distract Texans from the failures of state oversight of our power grid."

Even Jason Brewer, of the Retail Industry Leaders Association, thinks this is a bad idea – saying: 

"Relaxing common-sense safety protocols like wearing masks is a mistake.  Going backwards on safety measures will unfairly put retail employees back in the role of enforcing guidelines still recommended by the CDC and other public health advocates.  It could also jeopardize the safety of pharmacies and grocers that are gearing up as vaccination centers."
Trump's Screechy Swan Song: Lining Up Ugly Ducklings for Biden | Random  Lengths NewsHouston Mayor Sylvester Turner said Abbott's announcement "really undermines all of the sacrifices that have been made by medical professionals, doctors, nurses, EMS workers, firefighters, police officers, municipal workers, people in the community."  Austin Mayor Steve Adler told CNN's Anderson Cooper on Tuesday night that everyone in the city was "just dumbfounded" over Abbott's announcement.  For America, this is a harsh reminder that we may have gotten rid of Donald Trump, but there's a long way to go before we are safe from his minions that are still in office.

If Texas is willing to be the cautionary tale for the rest of the country, that's fine.  In every disaster movie, there's always the one official who declares the crisis to be over and then dies horribly as an ironic consequence of his own hubris so why not Governor Abbott if he's volunteering?  

Unfortunately, what happens in Texas doesn't stay in Texas and if their carelessness begins to spread a vaccine-resistant strain of the virus through a large portion of the population – they could put the whole country back to square one – when we're only 3 months away from vaccinating the population against the strains that already exist.

Of course, that may be the intention of Governor Abbott, who passed "emergency voting laws" to supress Democratic votes in his state and refused to acknowledge Joe Biden's election victory so why not work to undermine the Biden Administration by using his people as expendable pawns in his political battle?  It was Abbott himself who, last May, when Texas re-opened too soon and led to a super-spreader event for the whole nation – said (to his people, which was leaked):

“How do we know reopening businesses won't result in faster spread of COVID-19?" Abbott asks on the audio. "Listen, the fact of the matter is, pretty much every scientific and medical report shows that whenever you have a reopening … it actually will lead to an increase in spread. It's almost ipso facto … The goal never has been to get COVID-19 transmission down to zero.”

So don't excuse Greg Abbott for ignorance – he knows EXACTLY what he's doing.  The day before he moved to open Texas 25% last May, 50 Texans had died of Coronavirus and there were 1,033 new infections.   Yesterday, 271 Texans died from Coronavirus and 6,613 new cases were reported and the Governor is going to open things up 100% in 7 days.   There have been 2.67M cases in Texas and 44,353 deaths overall – let's have some fun and see what happens, right? 

This is not rational behavior people.  And this Governor is not just endangering his own people but ALL the people who share a country with him!

Speaking of danger, that bounce in the 10-year note ended rather quickly this morning and we're on the way back to re-testing last week's lows as there are more signs of inflation spiking (what a surprise when you print $9Tn, right?) and that's keeping pressure on the market indexes, which have also only weakly bounced off last week's lows

So please, be very careful out there and continue to wear your masks and maintain social distancing – there's ligth at the end of the tunnel but you aren't going to get there if your not willing to keep driving…

Powell is speaking tomorrow at the Wall Street Jou8rnal Jobs Summit.  He was just put on to calm down the markets (again) so we can expect something supportive and today we will see the Fed's Beige Book but that's only an anectdotal snap-shot of the opinions of business leaders in each Fed District – it doesn't reveal much other than the attitudes of businessmen.

Friday we get the FACT of the Non-Farm Payroll Report and that has been anemic, with just 49,000 jobs created in January for a 3-month average of 29,000.  

  

 


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  1. Good morning!

    Off to a rough start.  Woke up at midnight and couldn't get back to sleep – until about 5 am, when I fell asleep and just woke up!


  2. Good Morning Phil.  :)


  3. Phil I trust these Governors are republicans so what do you expect one idiot with kaka in his head just follow the leader. Have we not had enough of the yellow clown?


  4. statement made in Europe the yellow clown had himself vaccinated before he left office.


  5. Texas Gov Abbott had to divert the conversation away from electric generation. He was totally in bed with them but said he would do a "thorough investigation"  


  6. By the way its over 6 month wait to get a Generac GNRC generator


  7. Here is the link to today's webinar

    https://attendee.gotowebinar.com/register/3355211822588712206

    Republicans/Yodi – Yep, they are still in charge of many states.  

    Investigation/Stock – Of course that's never going to get to the root of the problem, which was clearly Texas' unregulated utility system in the first place.  In fact, the whole thing is designed to blame a scapegoat and not the failed GOP concept of unregulated utilities, who fund their campaigns.

    GNRC/Stock – We used to play them when they were cheap, now 60x earnings at $20.5Bn and maybe they make $500M and that's 40x but, as you note, they are supply constrained and can't sell more than they are now.

    Submitted on 2012/10/31 at 2:08 pm

    GNRC – I think they will do very well following this storm.  Tina and I decided to get one as our gas was fine (and, now that we think of it, it always has been) and, for $3-4,000 + installation, we can get a nat gas powered generator that can kick in in a blackout and run the whole house – even the AC.  I imagine a lot of people in the Northeast will be doing the same as this is two years in a row we've had storm damage that's knocked out power and, when you think of it as a 20-year investment – it's a no-brainer.  Also, we have a gasoline generator but, guess what?  No gas at the gas stations!  We were going to have to drain the cars today (which Tina smartly filled up before the storm) if the blackout kept going but, after a while, those generators would have gone dead too.  

    I'm telling you – this society would fall apart in 2 weeks, tops…

    The stock was $30 back then – 10-bagger in less than 10 years.  


  8. Those generators are useless for anything over a couple days. Why? Because they run on gas. And guess what you don't get gas when the electric is down. How do I know? We were up in Canada when the Eastern grid went down at out property on Manitoulin Island. NO gas to get home, no food as stores were empty in hours. A great book to read is Clinton & Pattersons "The President is DEad." No it is not political but what the scenario is when the grids go down. And yes, the Eastern grid is connected to ONtario. I experienced the grid failure and was shocked at the area it covered. When your vacationing you don't lay in a lot of food, but we had plenty of wood, it was summer so we just cooked out on the barbeque. We had family pets with us, but had loads of dog food we probably could have survived on and a lake with fresh water outside the door. Survival was possible.


  9. And fish to eat! At least something.


  10. pirate, for a generator, I can choose natural gas, propane or gasoline.  


  11. No such options like that in NO Wisc or No ONtario. Definately great option though, if available.


  12. Survival/Pirate – We never lost our gas in NJ, not even during 9/11.  Florida, unfortunately, doesn't have much /NG since there's not much heating going on.  I really miss cooking with gas.

    WTF is with this inventory report?

    • EIA Petroleum Inventories: Crude +21.6M barrels vs. -0.9M consensus, +1.3M last week.
    • EIA Gasoline -13.6M vs. -2.3M consensus, +0.0M last week.
    • EIA Distillates -9.7M vs. -3.0M consensus, -5.0M last week.
    • Futures (CL1:COM +1.6%)
    • ETFs: USOUCOSCOBNODBOUSLOLEM.
    • As per American Petroleum Institute, Gasoline inventories reportedly show a draw of 9.93M barrels, distillate inventories show a draw of 9.05M barrels and Cushing inventories show a build of 732K barrels.
    • Oil futures will continue to be volatile as OPEC+ holds a committee meeting, followed by the main decision-making gathering on March 4. OPEC is expected to make a decision on production quotas that would likely take effect in April.
    • OPEC+ could restore 1.5M bbl/day back into the market.

    Someone is moving a lot of barrels around!  Net even is the story but OPEC INCREASING production is not likely to play well once it's digested.

    The Energy Information Administration reported Wednesday
    (http://ir.eia.gov/wpsr/wpsrsummary.pdf) that U.S. crude inventories jumped
    up by 21.6 million barrels for the week ended Feb. 26. On average, analysts
    forecast a climb of 1.3 million barrels, according to a survey by S&P Global
    Platts. The American Petroleum Institute on Tuesday
    (http://www.marketwatch.com/story/api-reports-a-weekly-climb-of-more-than-7-million-barrels-in-us-crude-supplies-sources-say-2021-03-02)
    reported a nearly 7.4 million-barrel climb, according to sources. The EIA
    data also showed crude stocks at the Cushing, Okla., storage hub rose by
    500,000 barrels for the week. However, petroleum-product stocks dropped as
    frigid temperatures in mid-February led to a slowdown in Texas refinery
    activity. The EIA reported that gasoline supply was down 13.6 million
    barrels, while distillate stockpiles were down 9.7 million barrels for the
    week. The S&P Global Platts survey had forecast supply declines of 2.9
    million barrels for gasoline and 3.9 million barrels for distillate
    inventories. April West Texas Intermediate crude  held onto the bulk of
    their gains, trading up $1.08, or 1.8%, at $60.83 a barrel on the New York
    Mercantile Exchange. Prices were at $60.70 before the supply data
    (http://www.marketwatch.com/story/oil-rallies-on-reports-opec-considering-rollover-of-production-cuts-11614779702).

     U.S. inventories of crude oil soared last week as refinery activity slid
    further following a major winter storm in Texas, according to weekly data
    released Wednesday by the Energy Information Administration.
      Benchmark U.S. oil prices that were sharply higher before the report came
    out remained so afterward. The Nymex front-month crude contract for April
    delivery was recently 2.4% higher at $61.24 a barrel.
      Crude-oil stockpiles rose by 21.6 million barrels, to 484.6 million barrels,
    and are now 3% above the five-year average, the EIA said. Analysts surveyed
    by The Wall Street Journal had predicted crude stockpiles would fall by
    700,000 barrels from the prior week.
      Oil stored at Cushing, the delivery point for U.S. stocks, rose by 485,000
    barrels from the previous week, to 48.3 million barrels, the EIA said in its
    weekly report.
      U.S. crude-oil production rose by 300,000 barrels a day to 10 million
    barrels a day, according to the EIA.
      Gasoline stockpiles decreased by a huge, 13.6 million barrels to 243.5
    millions barrels, compared with analysts' expectations for inventories to
    fall by just 1.9 million barrels from the previous week.
      Distillate stocks, which include heating oil and diesel fuel, fell by 9.7
    million barrels, to 143 million barrels and are now 2% below the five-year
    average, the EIA said. Earlier in the week, analysts had forecast distillate
    supplies would fall by 3 million barrels from the previous week.
      The refining capacity utilization rate unexpectedly slid by 12.6 percentage
    points from the previous week, to 56%. This compares with forecasts for a 5
    percentage-point increase from the previous week.
    U.S. oil inventories for the week ended Feb. 26:
              Crude  Gasoline  Distillates   Refinery Use
    EIA data: +21.6  -13.6     -9.7          -12.6
    Forecast: -0.7   -1.9      -3.0          +5.0
    Note: Numbers in millions of barrels, with the exception of refinery use,
    which is in
    percentage points.

     

    1107 ET – US refinery activity slides further after last month's major
    winter storm in Texas knocked out several processing plants, some of which
    have struggled to restart. The refinery utilization rate now stands at just
    56%, down from 83% just before the storm hit almost two weeks ago. "The
    unprecedented winter storm in Texas has resulted in refining activity being
    pushed to a record low, with runs dropping below 10 million barrels per day
    for the first time in the EIA's weekly records – going back to 1982," says
    Matt Smith at ClipperData. "The lion's share of the drop was on the Gulf
    Coast, where crude inputs fell a further 2.1 million barrels per day."
    (dan.molinski@wsj.com)

     

    So the storm knocked out refineries, which didn't use oil (causing a build) and the stockpiles were drawn down to net 0 overall.  Things will get back to normal but the surplus oil will still show in the moving average for a while.  The only macro here is OPEC adding 1.5Mbd of oil no one needs.


  13. So oil is good again for shorting?

    Thanks


  14. Stockbern-Phil propane, yes that is an option. Didn't realize that. Thanks


  15. Hi Phil:  PLTR is an interesting company to me and although it may not align with your normal stock selection, I was hoping you can weigh in on what a potential long term trade would be on PLTR with the assumption that it would be above $35 by 2023.  Thanks in advance.




  16. Oil/Kgab – I'd like to see it a bit higher and we don't know what OPEC will finally end up doing so not a great Futures bet at $61.50.  I'd like to see Brent hit $65, which should be a bit over $62 on /CL/RB also a good short at $1.985 but we're only at $1.955 at the moment, so also too dangerous.

    PLTR/Hicket – Specialty software mostly relies on Government spending and $54Bn is an INSANE valuation for a company with only $1Bn in revenues that only first broke even in 2020.  Let's say they immediately morph into the next MSFT and drop 30% of their revenues to the bottom line because all they do is sell the same thing over and over again every year.  They STILL need to get to $7.5Bn in sales to justify that cap which means a whole slew of Government agencies need to allocate 7x more of their IT budget to PLTR.  Will that take one year or 5 years?  

    This is just a cool-sounding start-up that's trading 150% higher than their own backers thought they should be priced at 6 months ago, when they went public at $10.  Just because they are slightly less idiotic at $24 than they were at $38 doesn't mean $24 is a good deal.  

    Webinar time!


  17. With sale of the Venetian, Las Vegas Sands exits the Strip


  18. Nasdaq is getting very ugly on these drops.