October 16, 2013
- We’re No. 1? The craziest U.S. energy stat you’ve seen yet
- Hedge fund whiz sees a glass “half empty”… The 5 smells money-tripling opportunity
- Hail a debt ceiling deal? The real crisis the politicians ignore
- Strange effects of the shutdown: German ravers bummed, radio pirates thrive
- Reader tells us to shut up about China… the incumbent advantage… beyond Obamacare… and more!
“These are amazing numbers,” says Lynn Helms. “These are major, major milestones.”
No, Mr. Helms is not talking about the national debt, and thank goodness for that. As director of North Dakota’s Department of Natural Resources, he’s talking about his state’s oil and gas production.
Forgive us, dear reader, if you think we’re giving short shrift to the debt ceiling 24 hours before the Treasury’s drop-dead date. We know the cable news channels went, er, shall we say, “simian-defecation” yesterday after the close, when Fitch threatened to downgrade Uncle Sam’s debt. As if the rating agencies have any credibility left.
Whatever happens in the coming days, we doubt the drill bits in North Dakota will stop turning.
The August numbers came in yesterday: North Dakota oil production has surpassed 900,000 barrels a day, still second only to Texas. Natural gas production is now north of 1 billion cubic feet per day.
Meanwhile, the United States is about to leap over Saudi Arabia to become the world’s biggest oil supplier before year-end.
According the PIRA Energy Group, if you add up conventional crude with biofuels and natural gas liquids, you get 12.1 million barrels a day in the U.S. — more than Saudi Arabia’s 11.8 million.
“The combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies in shale formations in the central part of the country,” Bloomberg reports by way of background, which is now old hat for regular 5 readers. “Shale liquids output has climbed 3.2 million barrels a day in the last four years, the biggest gain since Saudi Arabia raised production between 1970-74.”
PIRA estimates the United States will retain its new lead from now all the way until 2030.
Legendary short-seller Jim Chanos says he’s a “glass half-empty kind of guy” when it comes to the boom in U.S. natural gas.
Fracking has created a gas glut — making it hard for some players to compete. “For some of the guys who paid too much acreage,” Chanos tells CNBC, “clearly, it’s been a struggle.
“It’s an area you have to do fundamental work on. You can’t just say, ‘Oh, this is bullish. I’m going to buy natural gas producers.’ They all have different capital structures and lease obligations.”
So how do you play it? Identify the players poised to ship more gas abroad. As we noted yesterday, U.S. natgas sells for under $4 per thousand cubic feet. But Europeans pay north of $10, and Asians more than $15.
That’s a rich export market for U.S. players, no? Five weeks ago, on Sept. 11, 2013, Dominion Resources won approval from the feds to export natgas. The share price jumped maybe 5%. But there was another way to play the move — adding up to 193% gains in only 48 hours. Every $5,000 invested generated $9,650 in pure profit.
Dominion is one of four companies that have won federal approval since May. Those are the red dots on this map below. A well-connected energy industry insider informs us that two or three more approvals are likely by December. (The agency in charge of these approvals is up and running despite the shutdown.) That’s out of 21 players seeking approval. Those are the blue dots on the map.
Who will emerge the winners and generate another instant 193% gain? Or more? We’ve been conducting feverish analysis in conjunction with our connected insider, who says, “It could be a once-in-a-lifetime situation.”
We’ll present our findings during an Agora Financial first — an online live event in which we spell out how you could triple your money in a 48-hour span anytime between now and December. It’s tomorrow night at 6:00 p.m. EDT. If you can’t join us live, we’ll replay it at 9:00 p.m. EDT. There will be ample time for both a full briefing and reader Q&A. It costs nothing to eavesdrop on this briefing; all you need to do is sign up to reserve your spot.
Rumors of a debt-ceiling deal in Washington have erased all of yesterday’s losses in the major U.S. stock indexes, and then some.
All the major indexes are up at least 1%. At 1,722, the S&P 500 is within five points of its all-time closing high three weeks ago.
Gold sits at $1,274. In the last 24 hours, there’ve been no peculiar “not-for-profit” trades of the variety that hit the tape Friday morning and early yesterday.
The greenback is drifting up. The dollar index sits at 80.7.
The rumors are now confirmed: As we write, Senate leaders have pulled some chewing gum out of their mouths, which they’re proceeding to add to the baling wire that holds the federal budget together.
We’re sure there will be more thrills’n’chills once the House votes on the Senate’s handiwork. Meanwhile, we’ve had a devil of a time getting anyone interested in a debt debacle far worse than the manufactured crisis we’ve witnessed this month.
Hey, it’s not for lack of trying — witness our episode last Thursday in which we showed at least three ways the government’s even more broke than you thought.
But because we’re gluttons for punishment, we’re taking one more crack at it. We even commissioned outside video producers to make us a really slick introduction. If this doesn’t grab you by the lapels, we’re not sure what will…
Seriously, check it out. Even if your life savings didn’t depend on it — and they do — the video’s pretty cool. It’s got explosions and everything. Give it a look.
Strange media effects of the shutdown, Part 1: Germans are missing their nightly fix of a cult-favorite TV show.
Space Night has been running late night on the Bayerisches Fernsehen network for nearly 20 years. It features footage of the Earth as seen from space, accompanied by ambient music. The show is “a favorite among rave goers and insomniacs,” The Associated Press informs us.
Plans were in the works for fresh episodes launching Nov. 1, in high definition, no less. Alas, 97% of NASA is on furlough, including the archivists who supply Space Night with footage.
Munich’s party scene will have to be content with reruns in standard def for now…
Strange media effects of the shutdown, Part 2: Pirates are back!
Unlicensed “pirate” radio stations got a loving tribute in the 2009 Philip Seymour Hoffman movie Pirate Radio — set in the 1960s U.K. But they’ve never gone away, not in North America. And they’re enjoying a huge resurgence this month — the Federal Communications Commission’s enforcement arm is shuttered!
“Pirate radio activity since the shutdown has truly been at a record high,” radio hobbyist Thomas Witherspoon writes at his SWLing.com blog, “with pirates taking to the airwaves throughout the week, and especially on the weekends.”
If you have a shortwave radio, dial around the North American “pirate radio grounds” of 6,920-6,970 kHz in the evening and you’ll hear illegal broadcasters running everything from reggae to original sci-fi radio plays.
Your geeky editor has made a few intriguing finds… and last weekend, Mr. Witherspoon heard three pirates broadcasting at the same time within a tiny chunk of the shortwave bands. “And with pirate radio’s favorite holiday, Halloween (think War of the Worlds), fast approaching,” he writes, “there’s likely to be more such unusual activity.”
“Stop applauding China,” carps a reader in a brief missive this morning, “and Chinese money, ‘new default currency’ and all that. Please.”
The 5: “Default currency”?
We’re not “applauding” China. We’re observing China and drawing out some logical conclusions. Bloomberg has a story only this morning about the U.K. taking part in a program allowing offshore renminbi to be invested in Chinese securities — up to $13 billion worth.
But enough of us talking about it. We turn it over to EverBank’s Chuck Butler commenting on this development in his Daily Pfennig: “I don’t know of any other way I can tell you, other than the way I’ve told you for the last few years. This is just another step China is taking to eventually get to an internationally traded currency. Remember how I told you last month that China had opened the pilot areas where the renminbi/yuan can be converted.
“I think that China has really stepped up the pace of their plans to remove the dollar as the reserve currency of the world and replace it with the renminbi/yuan. China is finally opening up their financial sector. They have removed the dollar’s relevancy in the terms of trade in countries throughout the world. They have become the world’s creditor. They have begun to allow convertibility of their currency. It’s all right there before our eyes, folks.”
“There is a category of ‘federal’ worker that is being forgotten about in all this,” a reader writes of the shutdown. “They are all the ‘contractor’ work force that in many cases works right in the same office with the federal employees.
“There will be no reimbursement for time lost, since you can’t bill for hours that aren’t performed, even if you have the funding. I have employees that work at the FAA headquarters who are not allowed to work and will lose all pay during the shutdown. Of course, their federal associates will be taken care of.”
“If government workers do get paid for the time on furlough,” another reader writes, “then they, essentially, are getting a paid vacation. Don’t seem to hear that they will be docked vacation time!
“I keep thinking,” the reader pivots to a related topic, “that one sure bet to make change in Congress is to have ‘term limits.’ But those in the clubhouse are the ones to make that change, and we know that won’t happen. Is there any real way to get the American public to ‘vote’ their opinions on this item? We, including me, have to assume a lot of the blame for what is happening in Congress! We keep re-electing the idiots!”
The 5: Only yesterday, we ran across a poll indicating 38% of Americans want to turn out their Congressman in the next election — a record for any midterm election cycle going back to at least 1990.
The previous record in this poll was during the 1994 and 2010 election cycles, at 29%. Despite that revulsion, 90% of House incumbents were re-elected in 1994… and 85% in 2010.
So if the poll is to be believed, at least three-quarters of Congress critters will hold on to their jobs next year. Nice gig if you can get it….
The 5 Min. Forecast
P.S. “The so-called ‘health care’ system in Canada and the U.S. cares nothing about the health of the people,” writes one more reader, piling on to our recent Obamacare debate. “Its purpose is to abundantly fill the bank accounts of the elite. They don’t want you healthy — if everybody was healthy they wouldn’t make their billions. They are legalized drug pushers.”
Our reader is onto something. We recall a remark by Dylan Ratigan, the cable news pundit who realized what a ridiculous racket cable news is and took up hydroponic farming (seriously). He said the system wants you healthy enough that you don’t need expensive care… but sick enough to buy lots and lots of drugs.
Obamacare is doing nothing to change that — at least right now. But the failure of the “exchange” websites is a portent of something much worse to come. For the horrifying story — and an action plan to protect yourself — follow this link.
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