Hi yard_man,
Clx has suppotive offsets for the Dow thru next week.
There are some very credible EW counts out there that put us in a terminal 5 of 5 wave.
I have "Bought to close" 90% of my long ago sold puts that have had big time decay (in conjunction with this November rise).
I hate to spend money to shut them down and I darn sure hate to bring profits into 2023 vs. let them rune into 2024.
That being said, I have dome what I hate to do, as I'm very leary as to how long this rally will last.
There has been a very optimistic view spreading across investors that we are on the edge of interest rate reductions. Admittedly Treasury rates have declined recently, but that is a two edged sword.
A spike in energy is simply all it takes to make Higher and Longer realities.
Counting on OPEC+ to hold their volunteer reductions is a long shot, but all it takes is a supply obstruction and we'll see that happen.
Prices increases on products have come down, but prices on services has not.
It will take a recession to see prices on services to come down. IMO they are going to be sticky as that is the only way the working folks can recover from price inflation of products thathave gone up 20+ over the last three years.
It's the government spending spree that has triggered inflation. The IRA is trillions of spending that mostly is wasteful spending, supporting the build out of an more expensive energy theme that is surely NOT adding to the efficiency of our energy grid - it is doing the opposite and our government's solution is pour more money on it.
I don't see an end to this waste till a removal of the Biden administration hell bent spending on wasteful and more expensive energy grid.
That does not bode well for less inflation!
It does bode well for a recession being assured.
Two quarters of less GDP with a government gone woild spending?
Doesn't add up to me.
My bet is a corrective wave is imminent and I've built cash (and have it in Treasurys yielding 5% plus, laddered out into 2024 and redeeming every month starting April through October.
This runup in equities has resulted in a record setting fast November.. That's a good elixir for some euphoria.
I may well be wrong ,but I'm prepped for a correctve wave that will last 4 to 9 months.
The seasonality of a "PREDIDENTIAL ELECTION YEAR" should be grabbing soon .
yardeni.com
I've just taken a quick look, but slides 10 thru 12 could well look like the market is rolling over.
The fourth year of Biden's term could feature a historic impeachment resulting from his alleged influence peddling. A House of Representatives revolt on excessive spending and huge write offs as the Green New Deal's subsidies get truncated (I'm too close to this but I expect a very likely Black Swan event to happen with in the automobile industry). Huge dealer losses on $100,000 EV's that are quickly becoming sell proof.
GM has purchased 33% of all Cadillac franchised dealers, and told them that by this next model year (2025) all entries will be EV's. They are presently doing the very same thing to the Buick dealer body.
This is a huge shift, a shift that is not being supported by the buying public. When every vehicle on the lot is an EV, and the EV's don't sell, it could take down all but the very well capitalized dealers who have a diversification of other NON GM franchises.
Ditto Ford, but they still have their original dealer body as they took a different transition approach. I'm greatly relieved that my only participation in a dealership is Chrysler Dodge Jeep Ram and they have been very slow to embrace the EV market.
My bet is EV's will grow, but slowly. Our large geography and lacking infrastructure will only make EV's attractive in urban areas, and at best a niche product. Far from mainstream.
GM and Ford will have huge write-offs and layoffs as they put the brakes on phasing out their very profitable ICE models. Inventory of unsold EV's in the h of hundreds of millions will be hard to digest and GM/Ford will watch their dealer body undergo brutal attrition.
That's the kind of decline that GW Bush had just after Clinton rode his second term into the Dot.com decline). Lots of bad and scary headlines causing fear. Not as severe, but a wicked fast decline, the result of terminating the excessive government spending we've become used to. BIG CHANGE!
Politics doesn't change the market.Biden proved that.
Runaway spending and inflation DO change markets. They change even more with high valuations, and we may well be going there first.
I'll be more than happy missing the blow off top, building cash and owning only Dividend Aristocrats.
I'll take my dividends and interest income and buy whatever sector takes the biggest dump.
Just think if you bought Lam Research @ 4 in 2003 (or a basket of semis), JPM below 20 (or a basket of banks) in 2008, or XOM or CVX or a basket of oil stocks in 2020.
It's a portfolio of buy the dips and never sell them again.
Now a corrective wave two is not the end of the world like the:2000 Dot.com semi collapse, 2008 Great Financial Crisis in housing ,or 2020 pandemic were, BUT for the US to pursue the Green New Deal transition with Trillions of debt spent and it greatest accomplishment achieved is it provides the USA with expensive energy that precludes a competitive industrial base! There's a long climb back to prosperity coming. If you want to see what it looks like watch germany - now already in recession, Thanks to the bone headed wrong moves of Merkel for years. No coa;, No nuclear and now they're clawing back to restart whet they shut down. I'm thinking that is very wasteful and expensive debt for a long time.
Sorry for the long post here, but this is an excellent read and I believe it to be brutally factual. Follow the science, and stop cutting our democracy down to be no longer leading the world. There are a lot of countries out there laughing and hopeful our crooked politicians keep selling our exceptionalism down the drain for their personal wealth!
41 Inconvenient Truths on the "New Energy Economy"
Bill Gates has said that when it comes to understanding energy realities “we need to bring math to the problem.” He's right.
Sunday, July 7, 2019
Mark P. Mills
A week doesn’t pass without a mayor, governor, policymaker or pundit joining the rush to demand, or predict, an energy future that is entirely based on wind/solar and batteries, freed from the “burden” of the hydrocarbons that have fueled societies for centuries. Regardless of one’s opinion about whether, or why, an energy “transformation” is called for, the physics and economics of energy combined with scale realities make it clear that there is no possibility of anything resembling a radically “new energy economy” in the foreseeable future. Bill Gates has said that when it comes to understanding energy realities “we need to bring math to the problem.”
He’s right. So, in my recent Manhattan Institute report, “The New Energy Economy: An Exercise in Magical Thinking,” I did just that.
Herein, then, is a summary of some of the bottom-line realities from the underlying math. (See the full report for explanations, documentation, and citations.)
Realities About the Scale of Energy Demand
1. Hydrocarbons supply over 80 percent of world energy: If all that were in the form of oil, the barrels would line up from Washington, D.C., to Los Angeles, and that entire line would grow by the height of the Washington Monument every week.
2. The small two-percentage-point decline in the hydrocarbon share of world energy use entailed over $2 trillion in cumulative global spending on alternatives over that period; solar and wind today supply less than two percent of the global energy.
3. When the world’s four billion poor people increase energy use to just one-third of Europe’s per capita level, global demand rises by an amount equal to twice America’s total consumption.
4. A 100x growth in the number of electric vehicles to 400 million on the roads by 2040 would displace five percent of global oil demand.
5. Renewable energy would have to expand 90-fold to replace global hydrocarbons in two decades. It took a half-century for global petroleum production to expand “only” ten-fold.
6. Replacing U.S. hydrocarbon-based electric generation over the next 30 years would require a construction program building out the grid at a rate 14-fold greater than any time in history.
7. Eliminating hydrocarbons to make U.S. electricity (impossible soon, infeasible for decades) would leave untouched 70 percent of U.S. hydrocarbons use—America uses 16 percent of world energy.
Since 1995, total world energy use rose by 50 percent, an amount equal to adding two entire United States’ worth of demand.
8. Efficiency increases energy demand by making products & services cheaper: since 1990, global energy efficiency improved 33 percent, the economy grew 80 percent and global energy use is up 40 percent.
9. Efficiency increases energy demand: Since 1995, aviation fuel use/passenger-mile is down 70 percent, air traffic rose more than 10-fold, and global aviation fuel use rose over 50 percent.
10. Efficiency increases energy demand: since 1995, energy used per byte is down about 10,000-fold, but global data traffic rose about a million-fold; global electricity used for computing soared.
11. Since 1995, total world energy use rose by 50 percent, an amount equal to adding two entire United States’ worth of demand.
12. For security and reliability, an average of two months of national demand for hydrocarbons are in storage at any time. Today, barely two hours of national electricity demand can be stored in all utility-scale batteries plus all batteries in one million electric cars in America.
13. Batteries produced annually by the Tesla Gigafactory (world’s biggest battery factory) can store three minutes worth of annual U.S. electric demand.
14. To make enough batteries to store two day's worth of U.S. electricity demand would require 1,000 years of production by the Gigafactory (world’s biggest battery factory).
15. Every $1 billion in aircraft produced leads to some $5 billion in aviation fuel consumed over two decades to operate them. Global spending on new jets is more than $50 billion a year—and rising.
16. Every $1 billion spent on data centers leads to $7 billion in electricity consumed over two decades. Global spending on data centers is more than $100 billion a year—and rising.
Realities about Energy Economics
17. Over a 30-year period, $1 million worth of utility-scale solar or wind produces 40 million and 55 million kWh respectively: $1 million worth of shale well produces enough natural gas to generate 300 million kWh over 30 years.
18. It costs about the same to build one shale well or two wind turbines: the latter, combined, produces 0.7 barrels of oil (equivalent energy) per hour, the shale rig averages 10 barrels of oil per hour.
19. It costs less than $0.50 to store a barrel of oil, or its equivalent in natural gas, but it costs $200 to store the equivalent energy of a barrel of oil in batteries.
20. Cost models for wind and solar assume, respectively, 41 percent and 29 percent capacity factors (i.e., how often they produce electricity). Real-world data reveal as much as ten percentage points less for both. That translates into $3 million less energy produced than assumed over a 20-year life of a 2-MW $3 million wind turbine.
If solar power scaled like computer-tech, a single postage-stamp-size solar array would power the Empire State Building. That only happens in comic books.
21. In order to compensate for episodic wind/solar output, U.S. utilities are using oil- and gas-burning reciprocating engines (big cruise-ship-like diesels); three times as many have been added to the grid since 2000 as in the 50 years prior to that.
22. Wind-farm capacity factors have improved at about 0.7 percent per year; this small gain comes mainly from reducing the number of turbines per acre leading to a 50 percent increase in average land used to produce a wind-kilowatt-hour.
23. Over 90 percent of America’s electricity, and 99 percent of the power used in transportation, comes from sources that can easily supply energy to the economy any time the market demands it.
24. Wind and solar machines produce energy an average of 25 percent–30 percent of the time, and only when nature permits. Conventional power plants can operate nearly continuously and are available when needed.
25. The shale revolution collapsed the prices of natural gas & coal, the two fuels that produce 70 percent of U.S. electricity. But electric rates haven’t gone down, rising instead 20 percent since 2008. Direct and indirect subsidies for solar and wind consumed those savings.
Energy Physics… Inconvenient Realities
26. Politicians and pundits like to invoke “moonshot” language. But transforming the energy economy is not like putting a few people on the moon a few times. It is like putting all of humanity on the moon—permanently.
27. The common cliché: an energy tech disruption will echo the digital tech disruption. But information-producing machines and energy-producing machines involve profoundly different physics; the cliché is sillier than comparing apples to bowling balls.
28. If solar power scaled like computer-tech, a single postage-stamp-size solar array would power the Empire State Building. That only happens in comic books.
29. If batteries scaled like digital tech, a battery the size of a book, costing three cents, could power a jetliner to Asia. That only happens in comic books.
EVs using Chinese batteries will create more carbon-dioxide than saved by replacing oil-burning engines.
30. If combustion engines scaled like computers, a car engine would shrink to the size of an ant and produce a thousand-fold more horsepower; actual ant-sized engines produce 100,000 times less power.
31. No digital-like 10x gains exist for solar tech. Physics limit for solar cells (the Shockley-Queisser limit) is a max conversion of about 33 percent of photons into electrons; commercial cells today are at 26 percent.
32. No digital-like 10x gains exist for wind tech. Physics limit for wind turbines (the Betz limit) is a max capture of 60 percent of energy in moving air; commercial turbines achieve 45 percent.
33. No digital-like 10x gains exist for batteries: maximum theoretical energy in a pound of oil is 1,500 percent greater than max theoretical energy in the best pound of battery chemicals.
34. About 60 pounds of batteries are needed to store the energy equivalent of one pound of hydrocarbons.
35. At least 100 pounds of materials are mined, moved and processed for every pound of battery fabricated.
36. Storing the energy equivalent of one barrel of oil, which weighs 300 pounds, requires 20,000 pounds of Tesla batteries ($200,000 worth).
37. Carrying the energy equivalent of the aviation fuel used by an aircraft flying to Asia would require $60 million worth of Tesla-type batteries weighing five times more than that aircraft.
38. It takes the energy equivalent of 100 barrels of oil to fabricate a quantity of batteries that can store the energy equivalent of a single barrel of oil.
39. A battery-centric grid and car world means mining gigatons more of the earth to access lithium, copper, nickel, graphite, rare earths, cobalt, etc.—and using millions of tons of oil and coal both in mining and to fabricate metals and concrete.
40. China dominates global battery production with its grid 70 percent coal-fueled: EVs using Chinese batteries will create more carbon-dioxide than saved by replacing oil-burning engines.
41. One would no more use helicopters for regular trans-Atlantic travel—doable with elaborately expensive logistics—than employ a nuclear reactor to power a train or photovoltaic systems to power a nation.
fee.org |
