Predictions and Observations

[TASFarms]

Guys that’s were predicting a crash this time last year we’re off alittle. It amazes me how much this can, can be kicked.

[blackpowder]

Some investor buyers getting nervous at $1M+/quarter here.

[Old Cowzilla]

Retail sales through Nov, Dec coming in 2.5 % better than year ago . Restaurant sales good ,unemployment numbers still good still shortage in labour around the country. People saving money on heating bills and winter work cloths will put that money somewhere else. Sunny plus 2 here today and no wind pretty nice.

[errolanderson]

It's a Santa Claus rally, they say . . . . U.S. debt-to-GDP ratio now sits at a staggering 120%. At what point will investors lose confidence?

Tread carefully with gold, heavily overbought (IMO). Deflation is a precious metal killer.
[email]errolanderson@substack.com[/email]

[errolanderson]

AGRIVILLERS NOTE:
The M2 money supply stateside is collapsing. This is highly deflationary. Unemployment is apt to soar in 2024.
Deflation impacts everyone.

Central bankers total lost puppies right now despite thousands of PHDs figuring things out. (My apologies for sarcasm).

Cash remains king for some time now. U.S. housing market in trouble. Bank of Canada, good grief. My opinion, not widely shared.

Errol’s Commodity Wire

[wheatking16]

Anticipate a 1-4 week pullback for the following:

US Homebuilders (XHB)
DOW (DIA)
NASDAQ (QQQ)
S&P (SPY)
20- YEAR (TLT)
US Financial (XLF)
Russell 2K (IWM)

M2 could get a slight increase here.

[wheatking16]

The USD is inversely correlated with the stock market, and the USDCAD and DXY are poised for a 1-4 week rise.

[fjlip]

Doomsday scenarios....should have QUIT a year ago, auction past spring....but it's DRY! I pray it stays DRY till August then!
Volcanoes, Frost, dry, floods should cure prices.

I predict anything can happen...I will be right. Happy New Year!

[biglentil]

The Fed didn't win against inflation they through in the towel. The dollar will always be sacrificed to protect the system. Cpi is going to remain stubborn and get a whole lot worse I predict. We are moving from a unipolar world with the US having a firm grip to a multipolar world with the rise of ghe Brics and the end of the Petro dollar as the Saudis entertain trade outside the USD for oil. This dedollarization is coming home to roost and those dollars will inevitably drive up commodity prices.

"The accelerated phase of the commodity cycle, NATO's increasing supply of weapons to Ukraine, and the strengthening Chinese-Russian military alliance analysed alongside the historical patterns that led to WW1 and WW2, all point to WW3 having already started." Therefore, "inflation will become much higher than central banks predict." ~ David Murrin War Cycles Intensify [url]https://www.davidmurrin.co.uk/has-ww3-started[/url]

[ajl]

Pump gas locally 1.04. Natural gas for home heating $1.50/GJ. Bought some fertilizer yesterday Urea: $750 vs paid $900 last spring. That may go lower yet by Feb so will wait and see on the rest. Worried about canola in bin. $16 off combine vs 14.50 after 3 months of storage. Has the market ever been that bearish? Just checked the price of silver $24USD. Has been there for more than a decade despite predictions of it soaring for longer than that. Carbon tax will be 2x the cost of the nat gas on home heating in Jan. Taxes are actually deflationary in the economy as they make discretionary income disappear. Used combine prices down but not having as much luck in the used tractor market yet.

[biglentil]

I agree we have seen a pull back in things like energy and fert but cpi is a sticky thing. Nothing has been fixed and volatility in the middle east can change energy prices in a hurry. Yes Errol M2 has shrunk, but the Fed stopped reporting the broader measure of money supply M3 years ago so the truth is opaque.

By my calculations true cpi has averaged 6% compounding yearly since 1990 to account for the home alone basket of groceries price change. Gold price 1990 was around $400usd an ounce today its at an all time high of $2070usd.

[Old Cowzilla]

How does consumer credit card debt from 10 years ago compare to now using inflation adjustments ?

[shtferbrains]

I can't comprehend the reasoning for Diesel price.
There also seems to be a huge discount for large volume?
This was yesterday and by coincidence both the same volume.
$17 difference for less than 10 gallons?

[helmsdale]

I can't comprehend the reasoning for Diesel price.
There also seems to be a huge discount for large volume?
This was yesterday and by coincidence both the same volume.
$17 difference for less than 10 gallons?

The TL/DR of the below is: all of this adds up to diesel trading long term (IMHO) at a significant premium to gasoline. LONG GONE are the days where diesel used to trade at a discount to gasoline.

You can thank government regulation via ULSD for that price difference. Also, the more car/LT/UV electrics that enter the market, i suspect the higher the differential will become. Diesel moves products, gas generally moves people. The more gas that gets offset by EV's the less in demand light sweet will be, and the higher demand will be for heavy (traditionally sour) crude blends.

To unpack that:
1) ULSD is more complicated to make in that it requires copious amounts of Hydrogen in the distillation process to pull Sulphur off of the diesel component of the crack. The price and availability of hydrogen, as well as its now more complex nature to refine mean it no longer is a discount to gasoline, but rather a premium. Remember some of the most recent diesel shortages? They weren't a function of inability to refine diesel, but rather an inability to source Hydrogen. Now... add in increased demand for hydrogen and that feedstock for diesel could become more expensive if efficiencies of scale cannot be attained.

2a) There's only so much of each product that you can pull out of a barrel of oil. You can't simply decide to make 100% of a barrel of oil into diesel fuel if the market is demanding more diesel, but you can switch to heavy oil which gives a larger % of "heavies" than a light barrel of crude. Heavy oil, is naturally a higher percentage of sulphur however than light, so the demand for hydrogen to make ULSD would also increase as refiners push more heavy rather than light through their system. Remember also, that one cannot generally just go from light to heavy feedstock easily. There are refineries that are distinctly for light feedstock, and those that are distinctly for heavy feedstock. They aren't interchangable.

2b) Being that there's only so many things that you can do with a barrel of oil, If we switch gasoline out to EV's, it'll only switch production towards the refining of heavy oil, which is more intensive thereby more expensive. If the EV trend moves as "experts" indicate it *will*, then heavy will likely trade at a premium to light. What is one supposed to do with the high percentage gasoline cut that comes off of light crude if nobody's using it? The largest cost for EV adoption will be with the movement of "product". you can move a 2ton car/truck/SUV down the highway rather easily, but Electric commercial vehicles are going to be retarded expensive! Stateside it's one thing to convert the 80,000lb fleet to electric, but now move the western canadian 140,000lb fleet to electric.

3) diesel is "dirtier" by comparison to gasoline. If C02 is our primary concern, then diesel being more energy dense would be preferrable, but as far as other pollutants S02, N0x, and Pm10/Pm2.5, diesel is compartively filthy! If you want to eliminate/reduce S02 you have to eliminate/reduce S02 in the fuel stream (enter ULSD). If you want to eliminate/reduce Pm2.5 you have to elevate the combustion temperature, but in order to eliminate/reduce N0x you have to reduce the combustion temperature. Enter the tradeoff between DPF's (which use higher fuel burn rates in the form of inefficiencies from lower temperatures of combustion as well as fuel consumption required to burn off particulate filters), and SCR which uses urea to react with N0x and render it inert. There's a basic trade off between the two. Create an engine that efficiently uses diesel to produce power and you have to depend heavily on UREA which is dead weight and difficult to keep in a usable state (non-frozen) in northern climes, or choke the engine (EGR) and create a pile of Pm2.5/Pm10 which requires further fuel injection to purge the particulate matter from DPF's.

Considering the environmental zealotry of the various administrations currently in place, there is little doubt that this is only going to get worse!

[fjlip]

Isn't there a surplus of gasoline which is huge percentage from a barrel of crude?