AT LEAST FOR NOW

 
Badlands NGL LLC is a California start up company. At least for now.

According to the North Dakota Governor Jack Dalrymple, the firm plans to move to Colorado and build a $4billion plastic manufacturing plant in Dalrymple's state. Gov. Dalrympled made the announcement today at a new conference with the CEO of Badlands, William Jeffery Gilliam.

The fracking boom in North Dakota no doubt has something to do with the location choice of Badlands.

The plant will convert ethane, a byproduct of natural gas processing, into polyethylene, which is used to make a wide variety of plastic consumer and industrial products, according to the governor’s office.

The project will be the largest private investment in North Dakota’s history, according to the office.

Badlands, which currently has fewer than 10 employees, is establishing its headquarters in Denver, as well as offices in Bismarck, North Dakota, according to The Associated Press.
Badlands’ plastic plant, along with two proposed fertilizer plants, would help soak up the abundant supply of natural gas in North Dakota.

Currently, about a third of North Dakota’s natural gas is burned off in a process called “flaring” because there are no pipelines nearby to carry the natural gas to market.


Manufacturing plants in North Dakota’s Bakken oil field, such as the Badlands’ proposal, would be good news for Colorado-based oil and gas companies with operations in the state because North Dakota officials have enacted policies that will restrict oil production if flaring is not reduced.

“This project is fully aligned with our goals to reduce flaring, add value to our energy resources right here in North Dakota and create diverse job opportunities across the state,” Dalrymple said. “By advancing the responsible development of our energy resources and by adding value to all of our resources, the opportunities in North Dakota are boundless.”

The facility will be able to produce 1.5 million metric tons of polyethylene, or 3.3 billion pounds annually, and will employ 500 highly trained people in manufacturing, marketing, administrative, safety, financial and executive positions. The project will take at least three years for full development, the office said.

Meanwhile, California considers a hold on fracking in its state.

But a recent report from the Bureau of Land Management apparently cleared the way for new leasing agreements in 2015.

The Bureau of Land Management has announced plans to resume oil and gas leasing for fracking in California at the same time it has released an independently produced report finding that current fracking methods aren’t fouling air and water and don’t raise the risk of earthquakes in the state.

The California Council on Science and Technology, with researchers from the Lawrence Berkeley National Laboratory and the Pacific Institute, drafted the independent technical study for the BLM after a lawsuit filed by environmental groups alleged the agency did not know the risks of fracking in the state. 

The suit was filed in 2012 by the Center for Biological Diversity and the Sierra Club.
Last year, the BLM suspended auctions for oil and gas leases. The CCST’s report moves the federal government closer to reopening lease auctions in California; the next step is an environmental review, which will incorporate the report’s findings.

Expect the turmoil to continue at least for now.

NOT SO FAST

Much of the shale oil boom has taken place in North Dakota at what's known as the Bakken site.

The uplift to the state's coffers comes in more ways than one. In 2013 North Dakota took in more than half of its tax revenues from oil and gas. Anyone who's followed the boom there knows the state is short on pipelines, an important factor in the cost of production and shipping.

Oil and gas pipelines are hardly on the invited guest list of most environmentalists. 

What’s troubling for North Dakota is that not only does the state have one of the highest oil production taxes in the nation at 11.5 percent, but thanks to the state’s extreme weather conditions and lagging infrastructure (we need pipelines!), the state is also one of the most expensive oil plays in the nation.
Meaning that if oil prices drop, one of the first places in the nation it’s going to become unprofitable to pump oil is North Dakota.

That makes the Keystone/Sandpiper pipeline delays loom large, as well as the Legislature’s decision to not only refuse reform for the state’s taxes on oil production but to actually raise them last year.
The oil markets being what they are, who knows what will happen, but suffice it to say that while dropping oil prices might be good for the rest of the country, they’re potentially devastating for North Dakota.

My guess is that these fears probably won’t put much of a damper on spending (naturally), but you can bet that those looking to abolish the state income tax (of which there are a growing number) will have to overcome this obstacle.

http://bakken.com/news/id/223068/bad-falling-oil-prices-hurt-nd/ 

When you factor in things like population, housing, industry and commerce, the state, as the chart shows, is one of the ones that has been most rewarded by rising oil prices.

There are a couple of issues here like those looking to get rid of the state income state tax as more and more around the nation realize that they're getting less and less for their trouble.

Bureaucratic greed is another issue, but we'll leave that for later. In any upcoming slowdown or recession these issues will only get larger.

Sure there are concerns about a global slowdown. But to those   who hail the U.S. oil glut as the second coming of cheaper energy as far as the eye can see, we have three words: Not so fast.
t. man hatter

SCALING TIME?

Good news is like yin and yang, almost always good for some and bad for others.

The International Energy Agency's latest report released today is a case in point. Crude oil prices hover near four year lows as demand seems to be drying up faster than the Los Angeles River in  mid-July.

The debate rages whether the price of oil has to hit $80 or even $70 a barrel to crimp U.S. shale producers enough to cut production. Much of the concern centers on a slowing global economy from China to Europe to Russia 

Of recent concern is OPEC members cutting prices rather than the expected move of cutting back production. Two days ago Iraq joined Saudi Arabia and Iran in cutting prices as other OPEC members like Venezuela are feeling the pain.

Meanwhile, stories like these,"Growth Fears Pushing Fund Managers From Risky Positions, Survey Finds," "Growth Jitters Topple Stocks Again" and "What Can Be Done To Revive Global Economic Growth?" abound.

Germany's announcement today about expected growth weakness for the rest of this year and into 2015 didn't help the situation. Officials there cut forecasts to 1.2% for this year down from a previous 1.8% and only 1.3% for 2015 off from a previously expected 2%.

One can depend on MSM doing what they do best, spreading gloom disguised as their brand of truth. Are these troubling times? Yes. Could things possibly get worse? Always a posibility. But it's just that possibility that creates opportunity.

Risk and opportunity go together like Siamese twins despite regulators' best efforts to outlaw any and all risk.

What this situation ought to be saying to you is what if these dire predictions are incorrect? Even the IEA report suggested demand will increase and might already be underway.

“Recent data suggest that may already have started to happen. Record-high refinery throughputs in August and improved margins worldwide suggest demand is perhaps not as dismal as it might appear,” citing big changes in trade flow were masking demand perception as oil producers descend on Asian markets.

As the U.S. imports less oil producers like Nigeria, Angola and others look elsewhere. The cost of producing oil in the U.S. ranges between $76-$77 a barrel, according to some observers.

Another headline we spotted today went something like this: The global recovery is a long way off. Maybe so. But our mood smells a scaling into position opportunity here. With the risk-reward figures growing in our favor daily with each nasty headline.

Like we said, good news is like yin and yang. Lower energy prices up to a point may help the economy, but what they ultimately bring with them may turned into one of those be careful what you wish for situations.

In the interim we will be going scaling. 
t. man hatter

NAYSAYING GROWS

One of the things one learns when the market turns nasty as it has people start jumping on the we-knew-it bandwagon. Here's a quote from one site.

Monday was the third straight day of losses for the major stock indexes, and the second time in three days that the Dow fell more than 200 points while the S&P 500 just had its worst three-day plunge since November 2011. 

Those for sure are facts, but the implied message is look out below. Now we're not suggesting "look out below" is incorrect. It might be spot on. But our sense is a rally is coming that will sooth some nerves, especially those of the Fed, because a weak stock market coupled with a disappointing housing market can't be good news for those folks.

After all, they've put so much into creating this paper asset charade what would such a double whammy do to their already questionable reputation? Despite all the MSM Fed worshipers, a declining set of believers is not what they seek. And you can bet with an upcoming election there are some nervous politicos also out there.

A declining equities market raising fears of another recession isn't what incumbents running for re-election want to see on the November menu. It would also deal a huge blow to all the Keynesian worshipers who love to publish chats like this one from Business Insiders, a leftist outfit masquerading as a pro-business publication.
http://www.businessinsider.com/brookings-fiscal-impact-on-the-economy-2014-10?

The implication here and the reference to the Yellen speeches is that more government spending is necessary to bring back the past good times and make them more permanent. But here's another look that puts the lie to this Keynesian myth most economists spread around today.

http://theeconomiccollapseblog.com/archives/12-charts-that-show-the-permanent-damage-that-has-been-done-to-the-u-s-economy
A brief disclaimer. Because we singled out Business Insider for what it is doesn't mean we think their opposition is any better when it comes to the truth.

INTUITION

We are not recommending anything here, just suggesting there is some wisdom here often overlooked when it comes to markets specifically and life in general.

We do not personally know or have any association with anyone mentioned here. Here are the words of a popular George Michael's song from some years back.

I feel so unsure
As I take your hand and lead you to the dance floor
As the music dies something in your eyes
Calls to mind a silver screen and all its sad goodbyes

I'm never gonna dance again
Guilty feet have got no rhythm
Though it's easy to pretend
I know you're not a fool

I should have known better than to cheat a friend
And waste a chance that I'd been given
So I'm never gonna dance again
The way I danced with you

Time can never mend
The careless whispers of a good friend
To the heart and mind ignorance is kind

There's no comfort in the truth, pain is that all you'll find

I'm never gonna dance again
Guilty feet have got no rhythm
Though it's easy to pretend

Market Music, from Patrick Schotanus

October 10, 2014
Good morning Mr. Niederhoffer:

In your bestseller, The Education of a Speculator, you wrote:

I need to know what is happening in the markets…I hooked up a music synthesizer to the computer, linked it to the interface between the computer and quote screen, and generated a program that would give a musical summary of the markets. I used piano tones for stocks, strings for interest rates, the cello for short-term rates, and the violin for the 30-year bond. The Japanese yen was registered with the high flute, corresponding to the favorite instrument in Japan, the shakuhachi. The English horn, the French horn, and the Alpenhorn stood in for the other currencies.

A lot has changed since then, particularly in terms of software tools becoming available to achieve this. In that spirit, the "music" in this video has been created by turning market data (prices, returns, volatility, and other time series) into MIDI-format (via our software tool) which subsequently was imported into what is called a Digitial Audio Workstation (DAW). The latter allows users to assign instruments (from a single guitar to a whole orchestra) to those data-sets and turn them into sound.

I created this video as part of my PhD research. The fact that it does, indeed, sound like music with a certain rhythm and timbre (rather than random audio-signals) is exactly what distinguishes my approach from earlier attempts at sonification of market data. In the final step, the resulting "composition" is linked to software which allows the creation of visuals that dynamically respond to the sounds (e.g. the small coloured spectra you see appearing against a backdrop of coloured fog).

The video captures a specific period in finance history. Usually I then ask watchers how they would allocate percentage wise a hypothetical portfolio across stocks, bonds, and cash based purely on this video (i.e. "Don't analyse the video but focus on how it makes you feel; what did it convey?").
What's the purpose of all this? Please allow me to share another quote, this time from Jack Schwager's The New Market Wizards:

"Every market has a rhythm, and our job . . . is to get in sync with that rhythm . . . There's no sense of self at all. There's just an awareness of what will happen. The trick is to differentiate between what you want to happen and what you know will happen. The intuition knows what will happen." 

Although some investors/traders have a natural ability to intuitively get a sense for market rhythms, others may need a little help. The investment research method I'm developing is aimed at that: offering a structured, disciplined approach (including advanced software) to train investors' intuitive abilities to sense the market mood in general and its rhythms (i.e. swings) in particular. Massive amounts of data can be efficiently transformed this way to benefit from the whole spectrum of the human-computer bandwidth. Perhaps you're familiar with the behavioural finance concept of System 1 and System 2 of the human mind (e.g. Kahneman, 2011)? Audiovisuals are particularly suited to appeal to System 1 abilities.

Why is this important? Because I believe we have gone way too far in quantifying markets, inspired by the flawed premise of the "market as machine". As a result, what we casually refer to as "the market's mind" has become imbalanced (at multiple levels). Apart from the obvious suspects like HFT, VAR, and flash crashes, monetary policy is also misinformed by this bias. Moreover, we try to understand market sentiment and moods purely analytically (e.g. put/call ratio, bulls/bears spread, etc.) while increasingly repressing our emotions by outsourcing decision-making to algorithms. By distorting the delicate process of discovery it is no wonder we're facing secular stagnation, for example.

Admittedly, this is just my opinion, but should you be interested in the background to all of this I would be happy to send you a short introduction (derived from my thesis + draft paper).
Happy to discuss and clarify.
Warm wishes,
Patrick
http://www.dailyspeculations.com/wordpress/?p=9719

The friend betrayed here is you when you fail to discover and listen intuitively to the market's rhythm, fail to honor your intuitive side.

Much of our lives is spent developing what is revered in society today, the intellectual side. This is not to play the importance of that down, just raise the question how much time have you spent developing the intuitive. In most cases the answer to that is clear--very little.

The rule is what one focuses on expands. This is not just some feely-touchy goodie from the world of self-help or improvement. It's part of the universal law like water seeking its own level. In medicine there's a parallel construct: If you listen to the patient he will tell you what's wrong.

One of the major criticisms of modern medicine is that there's very little listening going on. 

Learning to listen to the market is as much of part of it all as the palaver about stochastic oscillators, MACD, new highs versus new lows and so on.

t.man hatter

DISCRETION: WHO GETS TO DEFINE IT?

 
 Here's quote from a story today about the impact of falling gasoline--i. e.--energy prices. The real important part of this quote is it shows how much energy prices affect consumer purchasing power, yet energy is not a part of the Consumer Price Index's gauge of inflation.

If you're starting to feel officially BS-ed to, you're on to something.

Gasoline is no minor expense for U.S. households. Indeed, it accounts for around 11% of discretionary U.S. household spending (that’s money spent outside of essentials like food, housing and health care) annually, said Thomas Lee, the former J.P. Morgan chief equity strategist who co-founded independent research firm Fundstrat Global Advisors this year.

Note that gas is listed as discretionary household spending. So here's a question: How discretionary is getting to work every day? Like it's not essential to get to work daily. This is just one of many reasons to view these economic numbers with, shall we say, for want of a better term, discretion.
t.man hatter

 http://www.marketwatch.com/story/stock-market-bulls-are-celebrating-oil-price-crash-2014-10-13

THE BIG PICTURE

Well, if you read much of the financial media today, their rolling out all the negative numbers in high style.

For weeks negative news rolled into the stock market without roiling it much or ruffling many feathers.

In today's Financial Times citing concerns about slow growth and "the new normal,"we read this:

Growth in emerging markets is at its lowest ebb since the aftermath of the financial crisis due to a combination of China's fading dynamism, a sputtering of performance in eastern Europe and Latin America.

Now as most investors by now know that the IMF brought it's dog and pony circus to Washington last week where Christine Lagarde made her belly dance statement with her greedy hand out for more U.S. money for the International Monetary Fund.

Lagarde and a few of her comrades leveled some comments about a landscape change in emerging markets that spells slower and lower growth for emerging markets.

Though the GDP numbers for the third quarter are not out yet, here are some of this projected hand wringing concerns. China's GDP expected to fall to 6.8 percent from 7.5. Brazil's growth is expected to be a measly 0.3 percent for the year, off from 2.5 percent last year.

And then there is Russia and Germany and the spill over to eastern  European countries, not to mention the Federal Reserve's over-announced end of QE. As a kid growing up there was this well-known guy in the neighborhood who went around for months telling everyone he was leaving until one day there wasn't anyone left to tell and, to save face, he had to leave.

The whole idea behind the so-called new normal is its scary threat of permanence.

But as one economic wag in the Times' piece points out, the IMF's track record of accuracy is not one you want to bet the farm on, saying,"the IMF had revised downward it forecasts for EM growth on six occasions since late 2011."

But here's our view and it's not anything about "new normal" nonsense and everything about cycles. Broaden your horizon a bit and place some money on these geniuses being wrong. Take what the market is giving you. Nearsighted, short-term folks never see the big picture.  
t. man hatter

BORDERING ON THE CRIMINAL

Now that we have International Monetary Fund leader Christine Lagarde threatening to belly dance if Congress tosses more money to the IMF, you can pretty much rest assured the bottom is near.

"Efforts to pass IMF reform, MarketWatch writes, "have floundered in Congress since they were adopted by the international agency in 2010."

You have to love the arrogance of European bureaucrats who privately despise the United States yet come here with their hands out. Lagarde reportedly called this boondoggle at a news conference "an absolute must."

Giving any more taxpayer money to these bureaucratic scoundrels is akin to leaving a two-year old poolside in the backyard unattended, bordering on the criminal.














http://www.marketwatch.com/story/lagarde-says-shell-belly-dance-if-congress-passes-imf-reform-2014-10-09?dist=countdown