"The one thing that has changed dramatically is US shale production, the ability to unlock vast swathes of previously unreachable reserves. There are environmental concerns, those are well documented. I always say, if you have a problem with it, buy a Tesla and charge it from the biggest and closest power source, the sun."
To market, to market to buy a fat pig. Oh. I read the headline that said that the reason the markets ended down was as a result of Greek woes and signs that US shale oil production was rising again, thanks to higher prices. I guess that this means that there is likely to be a lid kept on oil prices, the shale oil producers technology has improved so much that they can turn the tap on and off at will. This is excellent news for all of us, consumers of the product, we do use a lot of it. You may be inclined to drive your motor vehicle smarter, in order to better your Discovery DQ score, thereby actually saving yourself on your fuel bill, the simple fact is that in 50 years, from 1965 to present day, daily oil consumption by the planet has tripled.
Since 1980, it is up 50 percent. So, we have certainly managed to slow down our pace of consumption, even as more and more folks used transportation. There are only 2 countries that consume more than 10 million barrels of oil per day, that is China at 10.28 million barrels (in 2013) and the US, which consumed 18.49 million barrels per day. Figures courtesy of the EIA -> oil consumption.
There are, according to that data, only 17 other countries that consume more than 1 million barrels of oil a day. They are, in order: Japan (4.5), Brazil (3.0), Canada (2.4), Germany (2.4), India (3.7), South Korea (2.3), Mexico (2.0), Russia (3.5), Saudi Arabia (3.0), Australia (1.1), France (1.8), Indonesia (1.7), Iran (1.9), Italy (1.3), Singapore (1.2), Spain (1.2), Thailand (1.2) and the United Kingdom (1.5). Add that all up and you get to 39.7 million barrels per day.
Add in the US and China, you get to 68 and a half million barrels of consumption per day. The rest of the countries, 199 that the US Energy Information Administration has collected data for, use 33 odd million barrels. In other words, around 165 thousand barrels per day each. One percent of the US's daily usage. Of the "lesser" consumers amongst this pretty elite grouping, which countries do you think have the ability to double their demand in the next two decades? India? Yes, probably. Indonesia and Thailand? Maybe. And of all the other countries that are amongst the 199, including ourselves? Possibly, although not as a collective.
The one thing that has changed dramatically is US shale production, the ability to unlock vast swathes of previously unreachable reserves. There are environmental concerns, those are well documented. I always say, if you have a problem with it, buy a Tesla and charge it from the biggest and closest power source, the sun. Economics will dictate ultimately whether or not we all adopt electric cars. Or a consciousness globally in a turn away from fossil fuels will dictate that for us. It will have to compete on price, the more adopted (electric motor vehicles), the cheaper it will get. I get the sense that we are on the cusp of early adoption, that will certainly dent the landscape a little, and take a long, long time to change the oil markets, that is for certain.
Equities sold off as bonds sold off. This was bound to happen. Lower rates for longer meant that there was a search for yield, negative yields were kind of idiotic. Why would I give the Swiss or German government money in order to park funds for a while? It did not and does not make sense to me, then again, we are equities people, we are not involved in the fixed income market. Searching for yield for those who have monthly obligations has become tougher and tougher over time, asset prices have risen and that certainly has helped a lot, no doubt.
So what do you do as someone who owns companies? The fixed income market dwarfs the equities market. According to SIFMA, the US Bond market (all outstanding) is approaching 40 trillion Dollars. I saw an internet piece that suggested that the stock market last evening was 22.319 trillion. It trades at a premium to US GDP. In fairness, many more US businesses have offshore exposure than at any other time in history.
I must be some sort of barbarian who does not appreciate nice things, most especially modern art. I am more interested in the Renaissance period. Grand paintings that I don't have to think too hard about, I can appreciate the art without having to interpret anything. I knew there was a reason why I liked math and not art. Can you always tell when something is fine and something is just rubbish? I suspect that a one of a kind piece from a one of a kind artist captures the imagination in the same way that a rare diamond does. There is only one of them and that makes it valuable. That is why I am both amazed (and not surprised) that someone paid $179 million for a Picasso, which is the most ever for a piece sold at an auction.
Christies, via their website piece ahead of the auction: Picasso's Les femmes d'Alger (Version "O") set to star in New York, describes the piece as: "This majestic, vibrantly-hued painting is the final and most highly finished work from Picasso's 1954-55 Femmes d'Alger series in which he looked back to 19th century French master Eugene Delacroix for inspiration, and in the process created a new style of painting." Again, I am a barbarian, because I had no idea until now who Eugene Delacroix was, until I saw several pieces that I recognised. I must admit, I far prefer his pieces, Delacroix that is.
What puzzled me is that someone is willing to pay nearly 180 million Dollars, or 160 million euros for a painting in the blink of an eye, yet the main story dominating headlines is the Greeks having met their obligation for 750 million Euros today. The payment to the IMF was made a day early. The amount of a whole nation of 11 million people versus 1 individual shelling out that money. It is just another reminder that even amongst rich people, life is unbalanced.
Things that we are reading
Self driving cars have been in the news recently over a number of accidents they have been involved in - Self-driving cars getting dinged in California. Based on what Google have said: "a handful of minor fender-benders, light damage, no injuries, so far caused by human error and inattention.", It would seem the weak link when looking at self driving cars is the flesh and blood behind the wheel of other vehicles.
Given the global explosion in population it is not surprising that the younger generation are starting to dominate the work place - Millennials Become the Biggest Generation in the U.S. Workforce. Looking at population pyramids there are many young people still coming up through school which are going to need jobs.
I saw a couple of Tesla's on the road in Hong Kong, they looked great! - Tesla to Modify Cars to Fit China Charging Standards
Here is some interesting but not very useful information - Every day this week is a palindrome
Great post by Bob McTeer. It is pretty astonishing that a 10 year old boy could be allowed to pick cotton at the same rate as "older" folk, he turned into a pretty fine central banker however. He tackles the prickly issue of productivity, that always implies less of it equals lazy, not always the case he says: Productivity Is Down: Are U.S. Workers Slacking Off?
Via the Abnormal Returns daily linkfest comes a VERY interesting piece on vanity spending: "Vanity capital" is the new metric for narcissism, and analysts say its value worldwide is greater than Germany's GDP. It is in some senses reflecting both advancing of society, as well as an equally unawareness of the plight of others.
Home again, home again, jiggety-jog. Markets are marginally higher here at the beginning, we are seeing more of a bounce in commodities.
Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.
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