Wide ranging letter from Howard Marks / Oaktree Capital on markets broadly, touching on inflation, government spending, and congressional politics.
I saw a great cartoon the other day that consisted of a drawing of the Capitol dome and the caption “What comes after trillions?” If we live long enough, I’m sure we’ll find out.
Read the whole first article.
Is the US a net importer?
The United States was a net importer of 2.9 million b/d of crude oil in the first half of 2021. Net imports of crude oil have decreased in the first half of every year since 2017, primarily reflecting increasing U.S. exports of crude oil since the end of the U.S. crude oil export ban in 2015.
Even after the exports, the United States is a net importer in 2021. The second article headline is propaganda from a government agency.
No you’re the one who can’t read the whole article. Importer of crude. Net exporter of petroleum (which includes refined).
Isnt that like including plastic toys that are exported as part of the “net” calculation? Refining the crude is using the crude, not exporting it. It was never claimed we were a net importer of anything and everything remotely derived from crude oil.
I may regret this, but what do you mean by total energy? I would think the sweatshop countries would lead in that category, unless you under count their contribution.
oil, gas, coal, wind, solar, hydro, thermo, bio, nuka, etc. I could be totally wrong tho, so take it with a grain of lithium.
Just filled up my gas tank. $84, but I actually think that the gasoline price went down a couple pennies. I’m now paying $4.98 for premium.
Last time I checked out my local gas station prices $5.04. I imagine @scripta LA area gasoline probably over $5.?
There’s a big range, depending on location and the alignment of the stars. I see ranges from $4.70 to $5.40 for 91 for credit card at “premium” stations (chevron, mobil, 76, shell). Cash is usually 10-15 cents cheaper, and cheaper yet at other brands. I see arco and costco starting around $4.10 for 87, $4.30 for 91.
You can get the GasBuddy app for your phone to do this yourself. Google Maps also has gas prices, but they’re less precise in my experience.
There was a sudden drop in crude oil and gasoline futures on Friday. This, in theory, should cause gasoline prices to also decrease. I noticed that increases in futures lead to almost instantaneous price increases at the pump, while decreases in futures don’t have as quick of an effect.
Costco or Sam’s nearby? It’s only a dime or two per gallon, but every little bit helps.
Your supply chain transitory cheer leading has been postponed a couple days in light of virus concerns.
The system was 23 years old… so it doesn’t make sense to replace it… especially with a blown compressor, there is probably shrapnel in the AC line set. I also replaced the furnace because the heat exchanger is rusted out and 23 years as well. So the 5k is for a 100k BTU furnace, 4 ton AC condenser, and a new AC evaporator coil.
Another inflation anecdote… I went to buy tires for our SUV. 4 x 225 55 R18 tires. 2019 price was $98 a tire and $398 total.
Now… almost all of the tires are out of stock for my car. I can’t buy the same tire, there is almost no selection because the shelves are empty, and can’t buy the tire I actually want. The cheapest option is $126 per tire.
Doing the math that works out to about 9% inflation per year over 3 years.
Come say good things about the Brandon administration or we’ll investigate you further.
Federal Trade Commission (FTC), announced the launch of an inquiry into the supply-chain disruptions that are causing harm to consumers and harming competition in the US economy, and it ordered nine major retailers, including Amazon, Walmart, and Kroger, for their internal documents regarding strategies for supply issues and pricing of goods.
For those unaware, the head of the FTC is a young academic and partisan hack with no litigation or industry experience and who’s been screwing up lots of things during her short time in charge. Mergers for example are being challenged solely on political grounds, which destines those lawsuits to often fail but waste both taxpayer and shareholder money in the meanwhile, while impeding free markets.
Here’s one of the Republican FTC commissioners being refused the FTCs own documents on an ongoing case and having to get them from the company being investigating since her Democratic peers refused.
a sitting FTC commissioner shocked observers and antitrust practitioners by posting copies on Twitter of letters she had sent to counsel for merging parties, asking for information she could not get from staff within the commission. Commissioner Christine Wilson wrote: “Regrettable but true: I’ve had to ask merging parties for Second Requests issued by my agency because I have been unable to obtain them internally.”
“It is a circus over there,” a former government official now in private practice on about the current state of affairs at the FTC. “There is a great deal of staff confusion going on at the FTC,” an attorney familiar with movements at the agency added. “Folks from anticompetitive practices have moved over to do merger reviews, and investigations are going painfully slow everywhere because staff is looking over their shoulders at bosses who do not know what Khan and [Commissioner Rohit] Chopra will say.” “It’s nuts,” the attorney close to the FTC said. “That is no way to run a federal agency — or even the local lemonade stand.“ A prominent antitrust attorney said that Khan’s early supporters may now be rethinking their support. “Be careful what you wish for.”
Basically, the goal is to have the federal reserve print a bunch of money and then blame “greedy capitalists” when they raise their prices due to all the inflation being created.
That move seems confusing to me. If CEOs report supply chain issues getting better, what’s the angle of the FTC to argue that they’re wrong? I doubt the FTC is better positioned than these giant retailers to know what’s actually going on with their own supply chains, the size of their inventories, etc.
And it’s not obvious to me that these CEOs would have much to gain by purposely claiming things are getting better if they are not. If anything, claiming continuing supply chain disruptions could allow them to keep prices high even as their supply costs are dropping and inventories are increasing thus boosting profits temporarily. Or they could request more assistance from the government to help with remaining issues.
And politically, I’m sure Biden could have used any news that things are improving. I could almost hear Kahn’s phone ringing… " Hey Lina, this is Joe. WTF are you raining on my parade by torpedoing my supply chain pep rally? " 
Overall, I gotta agree, this does not look like competence in action…
Of course not. They’re look for evidence these big retailers are making a profit in spite of the supply chain issues, so they can be blamed for the inflation instead of the trillions of bailouts, handouts, and infrastructure spending.
But if they believed that these retailers were artificially milking moderate supply chain issues to raise profits, why would the retailers go and tell Biden that the issues are getting better, thus sabotaging their whole scheme? It’s almost like someone did not think this through carefully (or at all) at the FTC. Shocker!
Btw, you can make the point for inflation being caused by COVID stimuli from both administration, Fed QE policies, etc… but infrastructure spending is most certainly not the reason for the inflation spike in the year to date considering the bill just passed. Inflation is not something like the stock market that can anticipate economic changes and monetary policies. If anything it often lags them instead.
Infrastructure spending is highly inflationary… the Federal Reserve is going to print a bunch of money, give it to the US government to borrow, and then they are going to use that money to bid up the prices of raw materials, goods, and labor which are already in short supply.
Sadly, competence, and lack thereof, is irrelevant. If you can get the media to back you, an accusation against “BIG” anything (except labor and media) is going to play well with a lot of people.
Sadly, many people feel better just by denigrating someone else. That doesn’t make sense, but it certainly seems true.
