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U.S. Glut in Natural-Gas Supply Goes Global

As living standards improve, and infrastructure is laid down, demand for cleaner burning fuels trends higher.

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30 August 2019

 

 

Video commentary for August 29th 2019

 

Eoin Treacy's view

A link to today's video commentary is posted in the Subscriber's Area. 

Some of the topics discussed include: stock markets rebound on improving trade sentiment and relative value versus bonds, gold pauses, Treasuries pause, oil steady, Dollar firm, orange juice firms on hurricane risk. 

 

 

Stock dividends are yielding more than the 30-year Treasury bond for the first time in a decade

This article from CNBC may be of interest to subscribers. Here is a section:

For the first time since 2009, S&P 500′s dividend is yielding more than 30-year Treasury bonds.

The only other similar inversion in the past four decades came in March 2009 — a low point of the financial crisis, according to data from Bespoke Investment Group. But it might bode well for stocks as investors have few other options to find yields.

“For an investor looking to hold something for the long term, it makes equities relatively attractive,” says Bespoke’s Paul Hickey. 

 

Eoin Treacy's view

The contraction in government bond yields, globally, have driven demand for higher yielding assets. It has been one of the primary factors in containing risk in the high yield sector and it is also likely to continue to represent a major factor in the ability of the primary indices to continue to hold in the region of their peaks.

 

 

The Three Big Issues and the 1930s Analogue

This article by Ray Dalio may be of interest to subscribers. Here is a section:

Since then, we have had a mirror-like symmetrical reversal (a dis/deflationary blow-off). Look at the current inflation rates at the current cyclical peaks (i.e. not much inflation despite the world economy and financial markets being near a peak and despite all the central banks’ money printing) and imagine what they will be at the next cyclical lows. That is because there are strong deflationary forces at work as productive capacity has increased greatly. These forces are creating the need for extremely loose monetary policies that are forcing central banks to drive interest rates to such low levels and will lead to enormous deficits that are monetized, which is creating the blow-off in bonds that is the reciprocal of the 1980-82 blow-off in gold. The charts below show the 30-year T-bond returns from that 1980-82 period until now, which highlight the blow-off in bonds.

 

Eoin Treacy's view

Today’s 7-year auction of Treasuries came in well below expectations suggesting at least some reticence to participate at decade-low yields. The effect on yields was minimal but we did see a pause in the run-up in gold.

 

 

U.S. Glut in Natural-Gas Supply Goes Global

This article by Ryan Dezember for the Wall Street Journal may be of interest to subscribers. Here is a section:

Earlier this month Freeport LNG Development LP’s export terminal in a beach town south of Houston began buying and liquefying gas with the expectation of sending out its maiden cargo in September. The Freeport facility, the fifth to begin operating in the lower 48 states since the first opened in early 2016, should help push gas consumption from LNG exporters to a new high. Last week, a record nine LNG vessels left the U.S. carrying cargoes, according to Jefferies Financial Group Inc.

In July, LNG exporters consumed an average of about 6 billion cubic feet of gas per day, according to the U.S. Energy Information Administration. That is the most yet and is equal to roughly 7% of total U.S. gas production. Analysts expect demand from LNG facilities to absorb about 12% of total production by next summer as additional facilities start up and existing terminals boost their capacity.

But if those projects are delayed because of low prices overseas or if existing LNG plants slow down or take advantage of the lull to perform extended maintenance, then the domestic gas market could be swamped, sending prices even lower.

“If that demand goes away even for a couple months, it becomes a real problem for the balance of the market,” said Welles Fitzpatrick, an analyst with SunTrust Robinson Humphrey.

 

Eoin Treacy's view

Natural gas is a commodity widely associated with the rise of the global middle class. As living standards improve, and infrastructure is laid down, demand for cleaner burning fuels trends higher. The big change in the market over the last few years has been the creation of the global market for natural gas. Prior to this it was primarily a regional market because of a lack of transportation options. Significant investment in LNG terminals all over the world is turning the USA, Australia and potentially Canada into natural gas exporting giants to compete with Russia and Qatar. That represents a significant change to the status quo.

 

 

Chinese Military Vehicles Just Entered Hong Kong. Beijing Says There's Nothing to Worry About.

This article from vice.com may be of interest to subscribers. Here is a section:

The official Xinhua News Agency reported that this was the 22nd rotation of the People’s Liberation Army’s garrison in Hong Kong. The previous one was in August 2018.

However, after each of the last two years’ rotations, the PLA stated that the number of troops would remain the same. There was no such statement this year, sparking speculation that China may be planning to increase its military presence on Hong Kong.

Xinhua also reported that the new troops had undergone training “to master military skills and knowledge about the general situation in Hong Kong and relevant laws.”

Experts said the unusually early report from the Xinhua News Agency, which was published at 4 a.m. local time, was designed to allay fears of Chinese military intervention and prevent any further instability in Hong Kong.

 

Eoin Treacy's view

The timeliness of the Xinhua article served the dual purpose of avoiding panic but also sending a none too subtle message that China has resources that can be brought to bear on the civil unrest if it so wishes.

 

 

Eoin's personal portfolio: crypto long increased July 15th 2019

 

Eoin Treacy's view

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided. 

 

 

2019: The 50th year of The Chart Seminar

 

Eoin Treacy's view

The London Philharmonic Orchestra is holding a concert in David’s memory on October 5th October at the Royal Festival Hall. There is a reception between 5.30 and 6.45 in the Foyle Pavilion, Level 3, Green Side and subscribers are well to join David’s family there for light refreshments. Following the reception, we will move to the Beecham Bar, Blue Side, Level 5 for a short talk by Tim Walker, Chairman of the LPO. 

If you wish to attend the concert as well, which includes a performance of Elgar’s Cello Concerto by the Young Musician of the Year, it begins at 7.30 and you may book tickets (£67) by telephone on 020 7840 4242 quoting the code Fuller Concert.

Since this is the 50th year of The Chart Seminar we will be conducting the event on October 3rd and 4th to coincide with the memorial on the Saturday.

In the meantime, if you have any questions, would like to attend, or have a suggestion for another venue please feel to reach out to Sarah at [email protected]  

The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non-EU residents are not liable for VAT). Annual subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.

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