Comments of the Day
12 January 2021
Video commentary for January 11th 2020
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: bitcoin wobbles, rotation out of megacap tech underway, Dollar unwinds short-term oversold, Treasury yields extend advance, Fed talking market down. virus success markets outperforming.
Bitcoin whales are profiting as 'weak hands' sell BTC throughout $40K bull run
This article by William Subery for cointelegraph.com may be of interest to subscribers. Here is a section:
While institutional buy-ins have become the standard narrative of Bitcoin over the past few months, a rogue “weak hands” signal from one of them caught analysts’ attention this week.
As Cointelegraph reported, Guggenheim Partners, which announced a sizable fund allocation to BTC in late November, is allegedly planning to sell some of its holdings already. The trigger came from chief investment officer Scott Minerd, who on Monday said that Bitcoin’s weekend drop provides the impetus to rethink its position.
“Bitcoin's parabolic rise is unsustainable in the near term," he wrote. "Vulnerable to a setback.”
“The target technical upside of $35,000 has been exceeded. Time to take some money off the table.”
His suggestion appeared to confuse market participants, with responses questioning the rationale behind the decision, coming just weeks after Guggenheim’s initial entry.
“CIO of huge firm day trading btc? It's a 5-10yr hold minimum,” macro investor Dan Tapeiro argued.
Institutional uptake comes amid a more fundamental supply and demand squeeze for Bitcoin, with large buyers already outpacing what miners can produce each month. At the same time, miners have stepped up their sales in recent days in what one theory suggests is some well-earned profit-taking at or near all-time highs.
The ownership of bitcoin has become more concentrated over the last six months because institutions have been buying in size. Meanwhile the concentration of mining in a handful of companies is detracting from the decentralised argument for bitcoin. Both of these factors contribute to the speculative nature of the market but detract from the long-term store of value argument.
There is no way the storming of the Capitol can be justified. Overwhelming an unsuspecting police cordon and disrespecting the nation’s seat of power is an affront no government is going to tolerate. That’s on top of what impact it has had on the vast majority of people who live their lives by a code of common decency.
By the same token, riots where private businesses are destroyed, police stations set light and people afraid for the integrity of their homes should also be condemned.
The problem with the polarization of political discourse in the USA is neither side is willing to sharply criticize the actions of their adherents. To do so would be political or busines suicide.
We are currently being treated to commentary fomenting fear that there will be a great deal of unrest at the upcoming Presidential inauguration. It’s a significant risk but it is far from the only form of intimidation.
My doorbell rang on Saturday night while we were sitting down to dinner. I thought it was an Amazon delivery so I went out to see what it was. Two BLM activists were waiting and informed me they were collecting donations. I told them we were in the middle of dinner and closed the door. They left chanting Black Lives Matter.
One way of looking at this encounter is that it was innocuous. Another is that they were indeed innocently collecting donations for their cause. Another is that they were canvasing the leafy suburb to identify who supports them and who doesn’t. For Mrs. Treacy’s part, she saw correlations with the Cultural Revolution.
The challenge is that the rioters during the summer threatened they would come into the neighborhoods. It never happened, but when fund raisers come knocking on the door it feels like they are after protection money. I think our days in Los Angeles are numbered. This is not the city we moved to seven years ago.
President-elect Biden says he wants to heal the country. That’s a tall order but regardless of its success it will mean throwing money at the problem. There is clear potential the USA is now moving towards formal adoption of MMT.
As Polar Vortex Stirs, Deep Freeze Threatens U.S. and Europe
This article by Brian K. Sullivan for Bloomberg may be of interest to subscribers. Here is a section:
Technically, the polar vortex refers to a band of winds that encircle the Arctic and keep the cold locked far to the North. But with that temperature spike, known as sudden stratospheric warming, the band can buckle, allowing frigid air to head south. Gas traders used to call it the “polar pig.”
That could mean chills anywhere in the Northern Hemisphere, though this year it’s likely to end up in the U.S. according to Ryan Truchelut, president of Weather Tiger LCC. A wave of deep cold could give the Great Lakes and East Coast their first real blast of frigid winter weather, along with a storm pattern that delivers snow storms as well.
It will be a big shift for the U.S., where winter has been a bit lackluster so far. In New York, January readings have been 5.1 degrees above normal through Thursday, and Chicago has been 7.2 degrees warmer for the month.
Still, there’s no guarantee it will happen. While a sudden stratospheric warming usually leads to a burst of frigid weather, sometimes the clockwork of gears in the atmosphere doesn’t deliver.
“Many times in the past, the forecast for a cold weather event across the country resulted in a false alarm,” said Jim Rouiller, lead meteorologist with the Energy Weather Group LLC.
Weather is indeed fickle so no one can be sure that the expected wintry weather will in fact arrive. However, it is worth considering that the global economy is attempting to recover and delivery drivers are more a part of the fabric of the economy than ever before.
Musings From the Oil Patch December 29th 2020
Thanks to a subscriber for this report by Allen Brooks for PPHB. Here is a section:
What is most interesting is the impact of the JKM price rise on the global LNG market and its implications for the U.S. LNG industry. The sharp JKM price increase has diverted LNG cargoes away from Europe and toward Asia. This means Europe is drawing down on its record gas inventories. With JKM trading at the highest premium to the Dutch and U.K. gas benchmarks since 2014, this shift in cargoes will continue. That will help boost European gas imports during 2021, meaning there is less risk of another gas glut developing that would force Gulf Coast cargo cancellations. It also means the expansion of the domestic LNG business will be supported, leading to ‘final investment decisions” on several of the new terminals under development.
On December 7th, Cheniere Energy announced that its Train 3 at the firm’s Corpus Christi terminal had loaded its initial commissioning cargo. This will add about 700 million cubic feet per day to the LNG gas feed rate, the amount of domestic gas flowing from producing wells to LNG terminals, pushing the total to more than 11 billion cubic feet per day (Bcf/d). The EIA’s Short-Term Energy Outlook for December estimated that November dry gas production in the U.S. was 89.6/Bcf/d. It also estimates that net LNG exports were running at a 9.2/Bcf/d rate, or slightly over 10% of domestic supply. Assume that gas production remains at this level, lifting the feed gas flow to 11/Bcf/d will push LNG’s share of domestic gas output above 12%, which will likely grow further. That prospect was captured in a chart from a gas market report by Grand View Research. Under their outlook, growth will steadily increase, driven primarily by increased use of gas in power generation. As the world’s energy system decarbonizes, coal will be displaced by natural gas.
There is an abundance of natural gas and the price is also cheap. Together that creates an incentive to use more of the commodity. The fact that natural gas is less polluting than coal for power generation is at least a medium-term stop gap measure until the presumed utopia of carbon free power is achieved.
Eoin's personal portfolio - stop triggered on hedge position
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