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Gary Cohn's Exit From Team Trump Would Be a Major Blow to Wall Street

Published: 08:41 18 Aug 2017 BST

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Gary Cohn's Exit From Team Trump Would Be a Major Blow to Wall Street

This article by Emily Stewart may be of interest to subscribers. Here is a section:

The New York Times reported that Cohn, who is Jewish, was "disgusted" and "deeply upset" by the president's remarks at Trump Tower on Tuesday. Top Trump adviser Steve Bannon also took a swipe at Cohn in a surprising interview with The American Prospect, referring to him as beholden to "Goldman Sachs lobbying."

Cohn is viewed as a major ally to the business community in the Trump administration and a steadying voice of reason. He is one of the "Big Six" leading the way on tax reform efforts and is also helming the search for the next chairman of the Federal Reserve. Cohn himself is among the top contenders for the spot, alongside current chair Janet Yellen.

In other words, Cohn dropping Trump would be a big deal.

 

Eoin Treacy's view

I moved to the USA because my family has never felt so welcomed anywhere and I truly believe this is one of the best places in the world to raise my children. They have blossomed academically, emotionally and physically since we moved here and we couldn’t be happier. Politics notwithstanding. 

The internet is a unifier but that applies to all groupings and it has certainly helped fringe groups to find common cause. However, it is worth highlighting that the KKK, white supremacists and other extremists are fringe movements likely now relishing the increased media attention they are receiving. Populism, reactionism and extremism all tap into emotional cues that can exaggerate the emotional quotient of the crowd. They need to be met head on with rational argument but the broader question is whether the root cause of the disaffection, being given voice by the resurgence of these movements can be dealt with effectively.

Like many people I have strong political opinions but I try my best to avoid political commentary. However sometimes it is unavoidable when it intersects with markets. As emotional and charged as the Charlottesville attack is the much bigger question is can the Trump administration get tax reform through?
 

 

Musings from the Oil Patch August 15th 2017

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. Here is a section:

In total, between 2010 and 2040, the EIA expects energy demand to grow by 54.4%.  Liquids fuels are projected to grow over this period by 37.7%, while natural gas growth will soar 78.7%.  In physical terms, natural gas (93 QBtus increase) consumption will grow by nearly a third more than oil’s use (68 QBtus), while coal consumption (34 QBtus) will increase by barely over half of the growth in liquids’ consumption.  Nuclear power increases the least of all the fuels (19 QBtus), but posted one of the largest percentage gains (+67.9%) due to its small base in 2010.  Most interestingly, the Other category, which includes renewables, is predicted to increase consumption by 74 QBtus, or an impressive 128.5% gain.  

A consideration that should not be overlooked is where this growth is happening.  Exhibit 3 (next page) shows energy consumption divided between the developed countries of the world (OECD) and the developing ones (non-OPEC).  The difference in energy demand growth between these two groups is astounding.  The OECD economies will increase their energy use by 15.8% compared to the 87.5% growth projected for non-OECD economies.  For a domestic exploration and production company, this may seem to be a worthless consideration, but now that the United States has become an oil exporter, the health of the global oil market should be of increased interest to the executives of these E&P companies.  

What the EIA forecast demonstrates is that the portfolio shifts underway at several major integrated oil companies – BP, Royal Dutch Shell (RDS.A-NYSE) and TOTAL S.A. (TOTF.PA) – from crude oil to natural gas resource exploitation, are founded on the expectation that the world’s energy market has entered a new era that will be dominated by natural gas.

The quest for cleaner fossil fuels, in response to global pressure to reduce carbon emissions, has focused on increased use of natural gas, which has considerably fewer carbon emissions than either crude oil or coal.  That explains why natural gas was initially embraced by environmentalists as the “bridge fuel” to a cleaner energy mix until renewable fuels could mature sufficiently to become the “carbonless fuel” for the future.  The double-digit price at that time may explain why the environmentalists loved natural gas as it provided a price umbrella over expensive renewables.  

 

Eoin Treacy's view

A link to the full report is posted in the Subscriber's Area.

The major oil companies have been reporting reserves on an energy equivalent basis for more than a decade which tends to paper over the transition that has been made from oil to gas production. It’s no exaggeration to state that companies like Royal Dutch Shell, Total and Exxon Mobil might better be described as major gas companies rather than major oil companies.

 

 

Billionaire hedge fund manager Stanley Druckenmiller is betting big on the Chinese consumer

This article by Katie Kramer for CNBC may be of interest to subscribers. Here is a section:

Stanley Druckenmiller's Duquesne Capital bought Chinese consumer and tech stocks in the second quarter, according to a filing Monday.

The billionaire's hedge fund took a stake in Chinese e-commerce giant Alibaba of 710,000 shares, according to a required 13-F filing with the Securities and Exchange Commission Monday. The hedge fund also took a 597,000-share stake in Yum China.

The firm increased its stake in Alibaba rival JD.com by 721,000 shares to 1.36 million shares, and added 500,000 shares of Chinese travel services company Ctrip for a 1.41 million share stake, the filing showed.

Duquesne also added 1.3 million shares of Comcast for a stake of nearly 2 million shares, according to the filing.

In the second quarter, Druckenmiller's fund increased its stake in Microsoft by 1 million shares and added 677,000 shares of Facebook. The fund bought 74,000 more shares of Google parent Alphabet and bought 49,000 more shares of Amazon.com.

 

Eoin Treacy's view

The lack of a vibrant domestic consumer economy left China heavily exposed to trouble outside its borders, particularly during the global financial crisis. That experience strengthened the resolve of the administration to evolve that particular part of the economy. Following my trip to southern China earlier this month I can attest to the fact they have succeeded.

 

Why Cryptocurrencies Will Never Be Safe Havens

Thanks to a subscriber for this article by Mark Spitznagel for the Mises Institute. Here is a section:

Bitcoins should be regarded as assets, or really equities, not as currencies. They are each little business plans — each perceived to create future value. They are not stores-of-value, but rather volatile expectations on the future success of these business plans. But most ICOs probably don’t have viable business plans; they are truly castles in the sky, relying only on momentum effects among the growing herd of crypto-investors. (The Securities and Exchange Commission is correct in looking at them as equities.) Thus, we should expect their current value to be derived by the same razor-thin equity risk premiums and bubbly growth expectations that we see throughout markets today. And we should expect that value to suffer the same fate as occurs at the end of every speculative bubble.

If you wanted to create your own private country with your own currency, no matter how safe you were from outside invaders, you’d be wise to start with some pre-existing store-of-value, such as a foreign currency, gold, or land. Otherwise, why would anyone trade for your new currency? Arbitrarily assigning a store-of-value component to a cryptocurrency, no matter how secure it, is trying to do the same thing (except much easier than starting a new country). And somehow it’s been working.

Moreover, as competing cryptocurrencies are created, whether for specific applications (such as automating contracts, for instance), these ICOs seem to have the effect of driving up all cryptocurrencies. Clearly, there is the potential for additional cryptocurrencies to bolster the transactional value of each other—perhaps even adding to the fungibility of all cryptocurrencies. But as various cryptocurrencies start competing with each other, they will not be additive in value. The technology, like new innovations, can, in fact, create some value from thin air. But not so any underlying store-of-value component in the cryptocurrencies. As a new cryptocurrency is assigned units of a store-of-value, those units must, by necessity, leave other stores-of-value, whether gold or another cryptocurrency. New depositories of value must siphon off the existing depositories of value. On a global scale, it is very much a zero sum game.

 

 

Eoin Treacy's view

I agree it is more appropriate to think of bitcoin and the other cryptocurrencies as assets rather than currencies which they are not. They are at best a reflection of the economic value of the network they represent.

 

Email of the day on selecting time periods in charts

Thank you again for the excellent service you are providing. Is there a way I can choose a certain period of a chart, such as let’s say 1.1.2007 to 1.1.2012. This way I can see the moves the for that period in a clear way. Please advise. Thanks in advance.

 

 

Eoin Treacy's view

Thank you for your kind words and this question which may be of interest to the Collective. The easiest way to select a custom data range is to use the zoom function.

Select a chart which contains the data range you wish. For example, 20-years if you want from 1.1.2007 to 1.1.2012. Move the cursor over the start point of your date range, hold down the left mouse button and drag the cursor over to your desired endpoint. Here is a video detailing how.

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