Wednesday, June 22, 2022

Why Inflation Is Yesterdays News or Why Biden Needs Better Advisors

 I love it all of Wall Street and the Fed Gov are in agreement. INFLATION!!

WAIT,  wasn't that long ago we had to super size FED stimulus. Was that a bit overdone? The market did crash right or am I imagining that?

 If you asked the 50% of  US households below the mean income of $60g's per yr..the stimulus was probably just right to pay bills, buy cars and laptops...participate in the American Dream for 18 mo.s ...but I digress or do I?

The marginal propensity of lower and middle income households to consume is now long gone. 

AND for most of the rest ....wait till they get their Q2 Statements.  

Commodity markets are already reflecting this reality. 

Starting with GASOLINE. Everyone's favorite complaint. 

Monthly Bars


The red arrows are on May. I wish I was that regular.
Retail prices OF COURSE will lag.






A closer look reveals that prices HAVE ALREADY come down almost $1.00. How bout your station? I know I know...

 30 Min Bars










Next up Wheat

 Daily Bars

Down about 30% from the highs and at the low side of  the last 3 mo.s range.








How bout Copper? Big industrial component right?


And last but not least NG which of course is a component of the summer AC/ utility bill. 

In this case the US consumer got a little help via an LNG facility outage for the summer season.

Weekly Bars

 Note the circled move represents Ukraine/Russia driven export demand pressure. 

Additionally GDP is I believe pumped up with excess inventories.

Next up:  HARD TO PORT Full steam ahead!

Oh did we mention the USD strength and generally tighter Central Banks globally?

Maybe the anomalous events will keep on comin but this is a reaction to a reaction to an action.










Wednesday, March 2, 2022

WTI Blow Off Top?

 Take a look at the Fibonacci .62 relationship between the last leg up on the long term chart below and the preceding 1 thru 3 legs up from the 2020 low.   

 Monthly Bars

                                                                 click on chart to enlarge

Crowded I know,  the .62 extension is denoted by the dotted line here. The 6.44 low is a rolling chart low obviously.  

Have to go to the hourly bar chart for the RSI to generate a negative divergence. 

If selling into this run keep leverage low and beware your prime broker. 

Just ruminating out loud not trading advice. 

Thursday, February 3, 2022

Am I being Alarmist?

 What if this IS the correct Elliott Wave Count? If it is , the counter rally, possibly a wave 2 up, 

will be followed by an accelerating wave 3 down.

click to enlarge

 Note the Long Term RSI negative divergence. 

Even if the above is not the existential penultimate Wave -5-, of 5 of V, and is merely a sub wave,

a pullback to the 4th wave of lesser degree, is somewhere between 2200 and 3400!


 click to enlarge

 Note the negative divergence on the RSI.

A .618 retrace AND a failed test of the very long term upward trendline suggests a high risk of further downside. 

Fib targets and extensions? If we're seeing a relatively bullish abc correction down, equal legs would project to roughly 4000. If we get a 3rd wave down it could do a 2.62 extension hitting 3000.

Its not every day you get all the innovation in the Finance space we saw last year. 

And its not every day you get the combined drop off in fiscal and monetary stimulus we will see in the next year.



Wednesday, February 2, 2022

Carbon Credits on FIRE


The  Krane Shares Global Carbon Strategy ETF, KRBN, is the most liquid and as far as I know the only 

ETF following a Carbon  Credit value strategy. It has been consistently bid for the last year, and is now 

breaking up from a bullish flag. 

KRBN Daily

Click to enlarge


   Where to?? There is Fib extension resistance around 59. See below.

KRBN Daily

Tuesday, November 30, 2021

WTI Update

 WTI it's been too long. LOL

Short term the risk of a $6 or $7 bounce is pretty high over the next several days.

See the hourly chart below and the positive divergence on the RSI, and the "right look" of the move down over the last week from the label -2-. the fib .78 retrace.

Longer term I think the risk remains significantly higher possibly exceeding the old highs at $158. Why not? Who can deny the inflection point completion of the down move last year. 

There IS a fib .78 retrace of the last leg up on the (daily chart labeled 5). Right here.  Supports short AND possibly medium term risk higher. 

Or do we get a deeper longer term retrace of the whole move up over the last year? Like to the mid $50's?  See weekly bar chart.

So above $75 an overlap of the assumed -1- and risk remains higher, vs. taking out todays low by .half a buck points lower longer with the previous low $61.85 targeted next.




Saturday, November 27, 2021

EU Declares Omnicron Risk High to Very High

 From one of the very best sources of pandemic information, Croftsblog:

given its immune escape potential and potentially increased transmissibility advantage compared to Delta, we assess the probability of further introduction and community spread in the EU/EEA as HIGH. In a situation where the Delta variant is resurgent in the EU/EEA, the impact of the introduction and possible further spread of Omicron could be VERY HIGH.  In conclusion, the overall level of risk for the EU/EEA associated with the SARS-CoV-2 variant Omicron is assessed as HIGH to VERY HIGH.

Thursday, April 22, 2021

Biden Climate Plan and Global GDP

 KUDOS, and I mean it, to Biden. Real implementation will be incredibly difficult and failure will mean doom (don t think your grandchildren are going to survive in a world without plankton).  By next election cycle the path the world is on will be visible to all and most likely we will see spiking carbon emissions, devastating weather catastrophes, the need for even more investment, carbon taxes, and even more weaponizing of painful choices.

 The pandemic definitely decreased global emissions. To stay under the limit on future emissions needed to keep climate temps under the 1.5 centigrade increase, that same decrease in emissions Y on Y has to be achieved every year until 2030.

Reality No.1)  Co2 and other greenhouse gas emissions have a very high correlation w Global GDP, .87 to .93

Climate change is unfortunately global so don t bother with arguments based on regional data. In the United States some progress growing GDP while cutting emissions has been achieved in some locales. Most of the progress is a result of a one time switch from coal to nat gas by utilities AND relatively poor main street economic performance since 2007. Yes, it is true that there is evidence (weak) of an uptick in consumer interest in sustainability in very developed countries as GDP grows, but half the worlds people can t wait to get a stove and AC.

 Reality No.2)  The multi trillion dollar stimulus in the pipeline is going to significantly increase Global GDP, unless everybody dies. April IMF forecasts is for 6 % global growth in 2021, and 4.5% for 2022.  IMF forecasts for the next few yr.s have been trending higher each Q. 

Global GDP in 2019 grew 2.3%, yet 2020 was tied for the hottest year on record even with the pandemic. Spending on the infrastructure to transition to a green economy will be slow to have measurable effect on emissions yet the stimulus is immediate.

Additionally, Green infrastructure spending ( think "good jobs" ), will likely have an immediate multiplier effect greater than what we've seen over the last 20 yr.s, ramping the marginal propensity of lower and middle income households to consume. Rates at the lower bound, moderating the crowding out effect, will add fuel to the fire.  

Reality No.3)  Much hope is based on switching the transport sector out of Internal Combustion Vehicles to  EV's.  It makes sense, it's a thing, big Fed investment committed, unfortunately the auto fleet in the US has a 15 year life span, EV's represent under 2% of that.  See below for Global % sales history.

 Meanwhile the total Global Auto and Light Truck Fleet sales clocks about 70 million.

Even with radical gov incentives like BUYING and DESTROYING your 2021 Sierra Pick Up  and its SUPER unlikely to happen this term, EV s won't make any significant dent in the fleet before 2030 or even 2040. Sorry. 

Reality No.4)  The next 5 to 10 years are going to see the fastest growth of Co2 emissions ever, most likely exceeding current projections of worst case scenarios, as a result of the above. 

IS there a solution? All the above we can do but more, and most importantly LESS. Less global GDP growth has to be engineered in there somehow, aimed at anything NOT actively contributing to Zero Emissions growth.  A very painful decade.

 A great start would be for the US Fed to stop forcing rates down.  We've  engineered and directed our growth with monetary, fiscal,  tax policy, subsidies, grants,  etc. for decades. We need to engineer this economy as if we are in a world war, which in fact we are.

Now our survival depends on getting it right.