1) The technology known as carbon capture and storage, a concept that has been around for at least a quarter century to reduce the climate damaging emissions from factories, is being pursued by major international oil companies. The idea sounds deceptively simple, just divert pollutants before they can escape into the air, and bury them deep in the ground where they are harmless. But the technology has proved to be hugely expensive, and so has not caught on as quickly as advocates hoped. Exxon Mobil, BP and Royal Dutch Shell plus lesser known Norway’s Equinor, France’s Total, and Italy’s Eni are investors in capture and storage projects.
2) Reports are, that amid all the trillion dollar spending, the White House is now starting to consider how to pay for the programs meant to bolster long term economic growth with investments in infrastructure, clean energy and education. The challenges are twofold: 1) how much of the bill is paid for with tax increases and 2) which policies to finance with more borrowing. The administration hasn’t decided whether to pursue a wealth tax. With interest rates so low, U.S. borrowing costs are manageable right now. The federal government currently collects the biggest chunk of its revenue, about half in 2019, from individual income taxes, which now tops out at 37% of income above $518,000 per year. For now, there are few signs of inflationary spiral or fiscal crisis that policy makers thought would accompany debt levels like today’s. The Congressional Budget Office this month projected that the national debt would double as a proportion of gross domestic product over the next 30 years. But the cost of borrowing is rising for the government and across the economy so the large debt could mean trouble in the future.
3) India’s foreign-exchange reserves has surpassed Russia’s to become the world’s fourth largest, as India central bank continues to hoard dollars to cushion the economy against any sudden outflows. Reserves for both countries have mostly flattened this year after months of rapid increase. India’s reserves, enough to cover roughly 18 months of imports, have been bolstered by a rare current-account surplus, raising inflows into the local stock market and foreign direct investment. India’s foreign currency holdings fell by $4.3 billion to $580.3 billion as of March 5, edging out Russia’s $580.1 billion pile. China has the largest reserves, followed by Japan and Switzerland on the International Monetary Fund table.
4) Stock market closings for – 15 MAR 21:
Dow 32,953.46 up by 174.82 Nasdaq 3,459.71 up by 139.84 S&P 500 3,968.94 up by 25.60
1) There is an insatiable global appetite for sand, one of the world’s most important but least appreciated commodities. The problem, however, is this resource is slipping away. It is the world’s most consumed raw material after water and an essential ingredient to our everyday lives. Sand is the primary substance used in construction when using concrete. Sand, is used to make the glass found in every window, computer screen and smart phone. Even the production of silicon chips uses sand. The world consumes roughly 40 to 50 billion tons of sand on an annual basis, which has tripled over the last two decades, far exceeding the natural rate at which sand is being replenished. Desert sand grains are too smooth and rounded to bind together for construction purposes, instead sand from rivers and ocean shores is needed.
2) The oil giant Exxon is looking to enter the carbon-capture technology business, and Exxon says it’s ready to go all-in. This is a business of capturing carbon dioxide and storing it underground, which is far easier for a company like Exxon than building out renewable energy capabilities, as its European competitors are doing. The main use of captured CO2 is to extract more oil out of the ground, anyway. Exxon’s strategy is to cut emissions but pared back capital spending and a low breakeven price for oil. Experts have raised questions about the economics of carbon capture technology. Exxon has had to slash its operations budget last year to stay afloat, which resulted in job cuts that several employees described as haphazard. Morale inside the company has suffered as a result.
3) Fears are growing that the national average cost of gasoline could hit $3 a gallon by Memorial Day. With OPEC’s decision not to meaningfully boost oil production despite rising demand, the price at the pumps will soon breach $3 a gallon. Early in the coronavirus pandemic, OPEC slashed its oil production as demand for gasoline fell sharply. Presently, the national average price of gasoline is $2.76, up 30 cents from $2.46 a month ago. Last week gasoline demand reached the highest level in nearly a year, rising 15% from the prior week and now close to pre-pandemic demand. President Biden’s recent decisions to cancel the Keystone XL oil pipeline while also halting new drilling on federal land are playing no role in rising gas prices. There is no shortage of pipeline capacity and U.S. producers have little incentive to install new rigs on federal land since some existing wells remain shut down. With the economy improving, demand for gasoline has been rising, so with oil production not increasing, gasoline prices must rise.
4) Stock market closings for – 9 MAR 21:
Dow 31,832.74 up by 30.30 Nasdaq 13,073.82 up by 464.66 S&P 500 3,875.44 up by 54.09
1) Kelley Aerospace has officially launched the world’s first supersonic unmanned combat aerial vehicle (UCAV), called the ‘Arrow’. The drone is designed with a single shell of lightweight carbon fiber that allows it to reach speeds up to Mach 2.1. The UCAV has reduced radar cross-section and infra-red signatures, and is designed for multiple combat or reconnaissance roles. Kelley has 100 pre-orders for the war machine, which costs between $9 to $16 million dollars each. It’s designed to complement manned aircraft making it a force multiplier in the aerial battlefield. A manned combat aircraft would control multiple Arrow UAVs, tasking each with a different missions.
2) There are about a thousand restaurant closures a month in Texas, a result of the coronavirus pandemic. About 11,000 restaurants have closed in Texas since the start of the pandemic. This is about a fifth of all Texas restaurants with about 150,000 Texans who have lost their jobs. Nine out of 10 of these restaurants are small businesses employing less than 50 people. Restaurants in downtown city centers have been hit particularly hard because business lunches and conventions were suspended almost immediately. Surprisingly, the more expensive restaurants have not fared as well as family dining locations.
3) The American Petroleum Institute is considering throwing its weight behind a government imposed price on carbon dioxide emissions as a way to slow global warming, making for a major policy shift by the oil industry’s top trade group. Supporters of a tax argue that a carbon tax increases the cost of energy derived from oil, natural gas and coal so it would be more effective than regulations at paring U.S. greenhouse gas emissions. Exxon Mobil Corp., ConocoPhillips, BP and Royal Dutch Shell already support a carbon tax-and-rebate plan. The tax has gained momentum as international energy companies make investment decisions based on the assumption that emission limits will be imposed by regulation, tax or other mechanisms. The companies are seeking regulatory certainty on the issue, instead of environmental policies that whipsaw with every presidential election. A carbon tax could benefit producers of natural gas over coal and spur investment in renewables and nuclear power. Some environmentalists who oppose fossil-fuel development criticized the possible move, calling it little more than a public relations ploy by letting producers buy their way out of climate accountability. Several utilities have lobbied Biden administration officials to support a nationwide carbon price.
4) Stock market closings for – 3 MAR 21:
Dow 31,270.09 down by 121.43 Nasdaq 12,997.75 down by 361.03 S&P 500 3,819.72 down by 50.57
1) The pandemic has been especially hard on small business, who don’t have the cash reserves of large corporations. They face a number of challenges they need to meet in order to survive. Here is a brief list of challenges they face- 1) The Ability to Transition to a Digital First World 2) Lack of In-Person Networking Events 3) Forward Planning is Difficult 4) Leaving Brick and Mortar Stores. 5) Lacking Work Life Balance 6) Increased Shipping Costs 7) Lacking Creativity 8) Blips in Production 9) Pressure to Perform 10) Long Term vs. Short Term Content
2) More than 4 million barrels of daily oil output, which is almost 40% of the nation’s crude production, is now offline because of the deep freeze weather. One of the world’s biggest oil refining centers has seen its output drastically cut back. Experts say the market is underestimating the amount of oil production lost in Texas due to the bad weather. Crude oil briefly surged above $65 a barrel, a level not seen since last January. Supply tightness has also soared, where just ten months ago, the price slumped below $16 because of a demand shock caused by Covid-19. Estimates for how long the outages may last have gotten progressively longer as analysts try to figure out the time span involved in thawing out infrastructure, especially in those areas where freezing weather isn’t the norm. That means ever more barrels are being removed from the global market, resulting in a surge in price of crude in other parts of the world.
3) Another long time retailer chain has filed for bankruptcy, as the Covid-19 pandemic makes the retail industry the site of regular closures and financial woes. Now, regional department store Belk, the nation’s largest privately owned department store, can be added to the ‘dead’ list, with the closing of all its stores. The bankruptcy filing for the 133 year old retailer comes about half a decade after the founding Belk family sold the company to its current owners for $3 billion dollars. The pandemic directly resulted in the drastic declines in the retailer’s sales, revenue, and liquidity. Unfortunately, Belk is far from the only shopping mainstay to struggle under the pressures of the pandemic. The company’s bankruptcy plan was filed in a Houston courtroom on Feb. 23, which relieves Belk of $450 million worth of debt and create an infusion of capital for the business.
4) Stock market closings for – 25 FEB 21:
Dow 31,402.01 down by 559.85 Nasdaq 13,119.43 down by 478.53 S&P 500 3,829.34 down by 96.09
1) The employees at Boeing Commercial Airplanes headquarters have been told to clear out their belongings as the coronavirus pandemic has increased the viability of working remotely. The aerospace giant has its Commercial Airplanes headquarters there and has hinted it could sell the facility as a cost cutting measure, although the company hasn’t unveiled its plans publicly. Boeing continually assesses the company’s entire portfolio of real estate property assets and adjusts the company’s footprint as the business environment evolves. Boeing Commercial Airplanes leadership will remain in the Puget Sound region. As Boeing adapt to new market realities and position for the future, they are taking action across the company in five key categories: infrastructure; overhead and organizational structure; portfolio and investment mix; supply chain health; and operational excellence. That involves a look at the costs of maintaining some office space. Boeing can offer more flexibility for their teammates with a combination of virtual and on-site workspace, while also ensuring that leaders and teams are closer to where the work is being done to support customers.
2) In late December, the activist investment firm Engine No. 1 announced that it had the support of the California State Teachers’ Retirement System for the firm’s slate of four candidates for election to the board of directors of Exxon Mobil Corp. Engine No. 1’s stake is less than 0.02%. Like many other oil producers, Exxon cites the role of carbon capture in reducing carbon emissions by the end of the century. Exxon’s stated goal of an 11% to 13% reduction in emissions by 2025 is misleading, according to the firm. That goal does not include what are called Scope 3 emissions, the carbon emitted from burning the oil and gas products a company sells. The investment firm claims that Scope 3 emissions account for about 83% of Exxon’s total emissions.
3) American made solar panels cannot compete with Chinese prices as the demand for green energy increases under the Biden administration. American companies must compete on quality, so must make sure that everything done here is up to a higher standard than anywhere else. Two thirds of all of the world’s solar panels are produced in China, with only a few companies that manufactures panels in the U.S. As it stands now, with America attempts to be self sufficient with energy, we are dependent on to China to supply the bulk of solar panels.
4) Stock market closings for – 23 FEB 21:
Dow 31,537.35 up by 15.66 Nasdaq 13,465.20 down by 67.85 S&P 500 3,881.37 up by 4.87
1) The Ford Motor Co. has ended its joint venture of electric vehicles with China’s auto maker Zotye, a company with financial troubles so severe that it’s fighting for survival. This does not change Ford’s commitment to producing vehicles for the largest electric vehicle market in the world . . . China. Ford and Zotye had agreed to develop joint ventures but had never actually formed the joint venture ship. Ford plans to move forward with its joint venture with Changan, allowing the Dearborn car maker to produce the already developed Mustang Mach-E in the country quickly and with little additional investment. Ford still has ambitions involving electric vehicles overall and specifically in China. Zotye is in deep financial trouble, requiring state intervention to continue, being on the cusp of collapse.
2) Bond yields are surging, but here’s the bigger threat to stock markets. The stock market rally has hardly been derailed as the yield on the 10-year Treasury reached 1.20% on Monday, which makes for a point advance, with the U.S. stock futures pointing to an upbeat start. Charting the earnings and bond yields show the gap between the two isn’t as narrow as it was at the end of 2018, when stocks lurched lower. The current spread suggests equities could absorb Treasury yields above 1.5%, and assuming earnings continue to move in line with analyst expectations, U.S. and European equities markets could absorb another 135 basis points of tightening by the end of the year. Analysts expect the S&P 500 earnings to grow 24% this year and 16% next year.
3) Oil futures moved up on Tuesday, thereby shedding off earlier weakness, as signs of improving energy demand put global benchmark prices on track to tally an eighth consecutive session gain. That rally has been aided by longer term optimism and expectations of broader market strength, but current prices are likely to generate some anxiety that the rally is near overextended territory. Saudi Arabia’s decision to unilaterally cut output by 1 million barrels a day in February and March, helping to keep supplies in check and prices higher. Crude prices in the $55 to $60 range have historically been sufficient to trigger new production activity in parts of major U.S. shale basins. The prospect of an eventual return of Iranian exports and an unwinding of the record deal between the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, offer additional downside price risk.
4) Stock market closings for – 10 FEB 21:
Dow 31,437.80 up by 61.97 Nasdaq 13,972.53 down by 35.16 S&P 500 3,909.88 down by 1.35
1) The 141 year old Chevron Corp. has built a $170 billion dollar fossil fuels empire that has made it synonymous with the oil and gas industry. Chevron, and many other petrochemical companies, may not be ‘oil-first’ companies in 2040. The climate crisis is forcing oil companies, large and small, to rethink their once reliable business models. Facing political and shareholder pressure, BP (British Petroleum), Shell and other European oil majors see the writing on the wall, announcing plans to gradually retreat from fossil fuels. Recently BP released a report forecasting that recoverable oil reserves will be as little as one fifth of today’s levels by 2050. Oil companies are embracing clean energy including electric vehicle charging and renewable energy. But Chevron is not banking on solar and wind energy.
2) The era of gasoline powered automobiles is coming to an end faster than anyone expected. One of the questions that has long plagued automobile executives was whether motorists would be willing to switch to electric vehicles that typically require hours to charge. Automakers are forging ahead with plans to convert the majority of new car and light truck sales to electric by the 2030s. Batteries for power are so much more efficient, and there’s so many less moving parts, that there is less maintenance and repairs of cars. The only thing that holds it back is people are afraid they can’t take long road trips. But once they’ve shorten the charge to minutes and not hours, that’s a game changer. The production costs of electric vehicles are close to those of gasoline powered vehicles, and could go even lower. However, the fast chargers can cost $100,000 each. In addition, upgrading the power grid to handle the increased demand from electric vehicles is likely to be costly.
3) Technological investments has propelled Mexico in another direction giving the country a boost to being a most promising tech scene in Latin America. In turn, the US technology industry is taking advantage of this landscape to solve its shortage of qualified technological labor. Mexico has built a ‘tech hub’ of three cities- Guadalajara, Monterrey, and Mexico City, each having its own specialties and advantages that makes them unique. Mexico has several top tech universities, which is the keystone to being a tech hub. There are a lot of advantages to hiring remote workers in Mexico in addition to the savings U.S. companies will see.
4) Stock market closings for – 8 FEB 21:
Dow 31,385.76 up by 237.52 Nasdaq 13,987.64 up by 131.35 S&P 500 3,915.59 up by 28.76
1) There are growing fears of another stimulus package as the national debt grows. One measure of unemployment suggests Biden’s $1.9 trillion dollar stimulus plan may do more harm than good. The U-6 unemployment rate, a less popular reading than the commonly cited U-3, suggests additional fiscal support could be unnecessary. The gauge (which includes those only partially participating in the labor force) currently is at 11.7%. Five of the past six recessions saw higher readings. The coronavirus pandemic initially pushed the U-6 rate to a record-high of 22.9% in April, but easy monetary conditions and the $2.2 trillion dollar stimulus package brought the rate down in a matter of months. Still, there are serious questions about the long term stability of the world economics as nations struggle to pay off these huge national debts.
2) A new Covid-19 variant has been discovered in Brazil adding to the two newly emerged variants from the United Kingdom and South Africa. Brazil is one of the worst affected countries by the virus, where more people have died of the virus than anywhere else outside the United States. An urgent COVID warning says the worst months are still ahead, and is expected to get more people sicker faster. Infections and deaths are expected to continue increasing.
3) President-elect Joe Biden has an ambitious environmental agenda, with a principle goal of transitioning away from using fossil fuels. There are many questions just how this climate plan could affect the oil and gas industry in America. The new requirements include disclosure of climate risks from public companies, a commitment to end new drilling permits for federal lands, and to eliminate tax subsidies for the oil and gas industry. Tougher methane regulations to give incentives for Americans to buy cars that do not run on gasoline. It’s not just the big oil companies which can be hurt, for there are thousands and thousands of small companies making up the supply chain businesses, as well as the small independent wildcatters who are producing oil. But while oil is slowly recovering with prices above $50 a barrel, it is all in jeopardy if these proposals go into effect. Biden’s proposals could face stiff challenges from Texas officials and the oil and gas industry itself.
4) Stock market closings for – 19 JAN 21:
Dow 30,930.52 up by 116.26 Nasdaq 13,197.18 up by 198.68 S&P 500 3,798.91 up by 30.66
1) The price of oil advanced as shrinking U.S. crude inventories added to expectations of a tighter global supply outlook after Saudi Arabia surprised the markets by pledging to reduce production for the next two months. Gasoline demand is falling to its lowest level since late May, spelling trouble for refining margins as a tighter global crude balance and straggling demand crimp profits for processing a barrel of oil. Saudi Arabia has decided to reduce crude output in February and March as part of an OPEC+ supply agreement. With the outlook for crude oil supply suddenly looking tighter, the oil options markets have grown less bearish.
2) A top scientist explains why a more infectious coronavirus variant is a bigger problem than a deadlier strain, with the deadly coronavirus having now mutated. One variant, called B.1.1.7, is more infectious, and has forced the UK into national lock down, with the variant having also been discovered in several US states, as well as other countries around the world. However, the new variant does not appear to be more deadly, so existing vaccines should also work against it. A really severe disease that one person gets won’t necessarily have as much impact as a lesser disease which a huge number of people get. While not any more deadly the new mutant B.1.1.7 is much more infectious, and is to blame for the surging numbers of people infected, filling up UK hospitals that forced the national lock down. It is estimated to have a 71% higher growth rate than other variants.
3) North Korea’s supreme ruler Kim Jong Un has announced a military expansion, but it is unclear if Pyongyang plans to ramp up its nuclear program too. This could put pressure on the incoming Joe Biden administration just when it is most vulnerable. North Korea plans to boost its military capacities in defiance of international sanctions, as well as a new five-year economic plan, admitting the previous program has failed. It’s unclear just what the military expansion will involve.
4) Stock market closings for – 7 JAN 21:
Dow 31,041.13 up by 211.73 Nasdaq 13,067.48 up by 326.69 S&P 500 3,803.79 up by 55.65