Comment of the Day
European Gas (ASX:EPG) Falls After Netherlands Says It May Boost Output
This article from Bloomberg may be of interest to subscribers. Here it is in full:
European natural gas erased earlier gains, after the Netherlands said it may boost production at its biggest field this year.
The announcement halted a rally that’s seen prices jump about 30% this week, topping 100 euros a megawatt-hour earlier Friday. It brings some relief to a market where benchmark contracts are still almost three times higher than they were just six months ago, with Russia continuing to limit flows to Europe.
Output from the Dutch Groningen field may total 7.6 billion cubic meters in the 12 months through September, up from an earlier forecast of 3.9 billion cubic meters, according to data from grid operator Gasunie. The deposit is still due to be shut down later this year, after decades of extraction triggered earthquakes. Separately, booked capacity for Norwegian gas to Europe rose for a second day.
Benchmark European gas futures declined 6.4% to 90.285 euros a megawatt-hour by 3:33 p.m. in Amsterdam, after earlier climbing as much as 6.7%. The equivalent U.K. contract for February was down 6.5% at 220 pence a therm.
Extra supply would be welcome news for the region, where prices had rebounded this week after easing in late December. The recent price surge has been underpinned by a lack of sufficient supply from Russia, whose Yamal-Europe pipeline has been flowing in a reverse direction for more than two weeks -- sending gas east instead of west. Russian flows via a key route through Ukraine also remain low.
Europe is drawing on depleted gas storage, raising concerns of a repeat of the current supply crunch next winter, consultant Inspired Energy said in a research note.
The continent has sought increased shipments of liquefied natural gas to ease the pressure. Regasified LNG entering the grid from European import terminals has jumped during the first week of January, network data show.
My view - Europe is scrabbling for gas supplies and is praying for a mild winter. That has boosted the appeal of the region for LNG shipments. It is also forcing efforts to temporarily boost supply; like the Dutch announcement today. The high price of energy in central Asia was the catalyst for protests in Kazakhstan and that’s for a country which is a major energy exporter.
Mike Novogratz Sees Bitcoin Finding Bottom at $38,000-$40,000
This article from Bloomberg may be of interest to subscriber’s Area.
Bitcoin could slide even lower before finding support, according to crypto billionaire Mike Novogratz.
The chief executive officer and founder of Galaxy Digital (TSX-V:GLXY) Holdings told CNBC that the digital asset could find a bottom at the $38,000-$40,000 level. That prediction is more bearish than just a few weeks ago, when he said Bitcoin could hold at about $42,000.
Novogratz now says he’s waiting a little longer to buy crypto. Bitcoin prices -- which have slumped more than 35% from a record high in early November -- were at about $42,900 at 11:25 a.m. in New York.
‘Goes to Hell’
Novogratz told CNBC that crypto’s latest move down has been on low volume, adding that there is a “tremendous amount of institutional demand on the sidelines.” He himself hasn’t lost his enthusiasm for digital assets -- he got a tattoo inspired by the coin Terra ($LUNA) just a few days ago, after having gotten a Bitcoin one in December 2020.
Mike Novogratz @novogratz
I’m officially a Lunatic!!! Thanks @stablekwon And thank you my friends at Smith Street Tattoos.
Sent via Twitter for iPhone.
The market’s going to be volatile over the next few weeks, but he isn’t nervous in the medium term about the cryptocurrency, Novogratz told CNBC. Part of the bullish story around Bitcoin was the debasement of fiat currencies, and as the U.S. Federal Reserve becomes hawkish, “some of it comes off,” the long-time crypto bull said.
Additionally, Bitcoin is still correlated to the Nasdaq which has come off from the highest levels, Novogratz said. Minutes from the Fed’s December meeting showed officials’ increasing preference for a faster path of rate hikes and a shrinking of the bank’s $8.8 trillion balance sheet. Speculation about tighter monetary policy has taken the shine off risk assets like crypto and richly valued technology stocks in recent days, dragging down the Nasdaq 100 index.
My view - Bitcoin is a risk asset. The reason people buy it is because they want quick returns. There are lots of other arguments about its position as a store of value or the value of its network and the future of digital payments. All those arguments can be weighed on their individual merits, but it does not escape the fact that almost everyone I talk to is primarily interested in making quick money.
India on Track to Post World-Beating Growth as Spending Revives
This article from Bloomberg may be of interest to subscribers. Here is a section:
“We do have pockets of revenge demand coming in spurts but consumption still needs some hand-holding,” said Shubhada Rao, founder at QuantEco Research in Mumbai, who reckons that the impact of India’s ongoing third virus wave may have been factored in these estimates. “We are looking at 7.5% growth next year.”
Digging Deeper
• Gross value added, a key input of GDP that strips out the impact of taxes on products, is seen increasing 8.6%. Manufacturing output is estimated to rise 12.5%, while mining sector is seen expanding 14.3%. Agriculture, which provided some cushion to the economy last year, is projected to grow 3.9%
• Gross fixed capital formation, a proxy for investment, is forecast to increase 15%, whereas government spending is seen increasing 7.6%. The ministry sees a 6.9% jump in consumption as pent-up demand drove sales
• The growth numbers, which benefit from last year’s sharp contraction, will serve as a key input to Finance Minister Nirmala Sitharaman’s annual federal budget, due to be presented next month
• India’s growth is seen moderating to 8.5% next year, according to a forecast by the International Monetary Fund released in October
My view - Everyone is dealing with inflationary pressures at present but countries like India have the potential to grow faster for longer than developed markets. That’s the primary appeal of emerging markets enjoying their demographic dividend. The productive capacity of hundreds of millions of young people in their prime, striving for better living conditions and aided by technology is a powerful secular bull market theme. Even in an inflationary environment, positive real growth is possible.
Next Week’s Travel Plans
I have accepted the gracious invitation of the Saudi Arabian government to attend the Future Metals Summit January 11th - 13th.
It seems like the omicron variant is going through the Dallas population like a proverbial dose of salts. Subject to getting a negative result to a PCR test, I’ll be leaving Sunday night and arriving extremely early on Tuesday morning local time.
I expect to be updating most days, but Thursday will be the most challenging because I will be flying home very early and on the plane all day.
The Chart Seminar 2022
With global vaccination rates rising, the prospect of anti-COVID pills on the horizon and the promise of travel restrictions being dropped, it is time to start thinking about venues for The Chart Seminar in 2022.
Please drop sarah@fullertreacymoney.com a line if you would be interested in attending an event next year, as well as your preferred location.
At present I am looking at a late May date for a London seminar and I am open to other times and locations subject to demand.
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