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  • Tesla to unveil home, utility batteries in rollout next week [View news story]

    Interesting point on utilities installing them themselves; Also, works either way for me as my primary interest is in lithium (and will continue to be as long as that is integral to the most popular battery technologies).
    Apr 22, 2015. 01:36 PM | 2 Likes Like |Link to Comment
  • Crude inventory builds more than expected [View news story]
    How is it not true when it's already in the data?

    US shale has already displaced ~2m barrels of Nigerian product already. And post elections the new Nigerian government is very favorable to expansion in the industry. That's just one producer.

    3m barrels is nothing in this environment.

    In the meantime the volume of temporarily shut down and drilled but not pumping wells just keeps increasing in the US.
    Apr 22, 2015. 01:31 PM | Likes Like |Link to Comment
  • Crude inventory builds more than expected [View news story]
    Decreasing production has primarily been concentrated in US, Mexico and LatAm, and Sub Saharan Africa, with almost no loss of market from other producers.

    I've been making the comment that any slack in US will immediately be filled by other producers and that US production alone doesn't make the bullish case for a while, but people just keep staring at the US rig count looking for clarity.

    Also, the same day SA declared it was done intervening in Yemen, ships picked up crude cargos.
    Apr 22, 2015. 11:25 AM | 1 Like Like |Link to Comment
  • Sinopec sells $6.4B in bonds, Asia's third-largest on record [View news story]
    Everyone is borrowing in Europe these days.
    Apr 22, 2015. 10:51 AM | Likes Like |Link to Comment
  • Greece reform list gets delayed again [View news story]
    Free ride? Really?

    First, on the fiscal side, Greece has made an adjustment of close to 20 percent of potential GDP, or the U.S. equivalent of about $3 trillion per year (not our usual 10-year calculation) in spending cuts and tax hikes.

    Second, Greece has accepted roughly a 25 percent cut in nominal private-sector labor costs, or more than 30 percent relative to the euro average, far more than anyone else.

    From nyt a couple days ago

    Next up, you will tell me the numbers are lies, and the source is making things up, and you will go about your life continuing to believe whatever you choose to believe.
    Apr 22, 2015. 10:40 AM | 1 Like Like |Link to Comment
  • Tesla to unveil home, utility batteries in rollout next week [View news story]
    "Long term, no utility will leave that kind of arbitrage for the little guy to play."

    The reason there is such an arbitrage is because of the way power generation works. Baseload production is both hard to raise as well as hard to decrease. Baseload is usually nuclear, coal, hydro, wind. Peak generation used to be covered in large part by diesel but diesel has been so badly overpriced for so long a lot of that has been eclipsed by other options, notably natural gas.

    The nice thing about natural gas is that its cheap enough and plentiful enough for baseload now, but the important thing to note is that because of fluctuations in the grid peak load production is still important and 'overproduction' does indeed occur and frequently. Utilities want that over production absorbed, and during night time when overall use is lower so they can reduce the variance between peak and base.

    Batteries are a fantastic buffer for real deal current scenarios and will be so for the forseeable future.
    Apr 22, 2015. 10:32 AM | 2 Likes Like |Link to Comment
  • Tesla to unveil home, utility batteries in rollout next week [View news story]
    Lithium producer investors do care.
    Apr 22, 2015. 10:26 AM | 4 Likes Like |Link to Comment
  • EU debt levels surge to records [View news story]
    People need to stop repeating that creditors will be left holding the bag. I don't agree with most of your comment 11146471 because it presents the fiction that Greece in a *unilateral* default could proceed without issue. A banking collapse is nothing to scoff at, and, even though Greece's economy was very insular pre-2001, it most certainly no longer is. Interbank lending would most certainly collapse in the scenario you describe and the economy would revert to cash only. Since there simply cannot be enough cash on hand at any given moment to transact in any meaningful way it is simply not a scenario that has any reason to be discussed.

    Further, although the entities hurt by the default would indeed primarily be institutions, and not private sector investors, because Greece debt was reissued in 2012 under English law and not under Greek law, the chances of Argentina style problems would emerge (a long, laborious, drawn out process of renegotiating the debt and most likely.... holdout creditors). It would be extremely onerous and painful. Creditors would not walk away with nothing, it just can't happen.

    The point in Greece's favor is that the amount of money already invested in Greece is significant and that the collateral damage from its default would be just dramatic on its EMU partners (massive losses on the private sector from fixed investments for one).

    This is why a unilateral default on one hand, or a push and ejection by the Eurozone partners on the other, is just so far fetched and unlikely, and why a new Greek credit event is most frequently being described by informed observers as a potential 'accident'.

    The only likely real hard default possible would be Greece missing a payment after running out of cash and misreading its bank account, while at the same time the EMU restrains its access to emergency funding. Realistic scenarios all revolve around a soft default or a rolling default with capital controls.
    Apr 22, 2015. 08:14 AM | Likes Like |Link to Comment
  • EU debt levels surge to records [View news story]
    Fair enough but the distinction is meaningful in that the two types of events lead to significantly different endings.

    Had Greece indeed defaulted in 2012 it is arguable that it would have exited said default with a significantly better debt-gdp ratio than it ended up with when it exited the restructuring. Official sector holders of Greek debt took no losses on their actual principal since they were the ones providing the new financing and they could dictate terms.

    Greece would be in a completely different place today had a real default occurred, although I have no idea if that would be a better place or worse considering I am a big proponent of regulatory environment reform in Greece.
    Apr 21, 2015. 06:12 PM | 3 Likes Like |Link to Comment
  • EU debt levels surge to records [View news story]
    "a unilateral default would only be feasible if Greece first introduces an alternate currency."

    I agree in a unilateral default that would be the case.

    There have been, however, multiple suggestions as to how Greece would survive an "accidental", say, default, including the pharma IOUs of 2009 or other similar IOU type products.

    Further, it is conceivable that Greece could 'soft default' by starting with capital controls and go from there.

    It is however rather unlikely as it is far more likely that Greece can survive to June 20 as described in this Bloomberg article

    and subsequently make it all the way through 2015. That article is in interesting take.
    Apr 21, 2015. 05:52 PM | Likes Like |Link to Comment
  • EU debt levels surge to records [View news story]
    ""effectively," they have already "defaulted" and "negotiated" new arrangements, more than once... Money sent to Greece is "foreign aid," not loans, no matter what they call it."

    How do you reconcile that with the fact that the reforms have been dictated by its lenders? Or the fact that the official sector ignored its own advisors and didn't participate in the debt restructuring?

    Also, Greece didn't default. In Greece's 2012 credit event what occurred was Greece enforcing a retroactively inserted collective action clause in order to restructure its debt:

    "The EMEA DC resolved that a Restructuring Credit Event has occurred under Section 4.7 of the ISDA 2003 Credit
    Derivatives Definitions (as amended by the July 2009 Supplement) (the 2003 Definitions) following the exercise by
    The Hellenic Republic of collective action clauses to amend the terms of Greek law governed bonds issued by The
    Hellenic Republic (the Affected Bonds) such that the right of all holders of the Affected Bonds to receive payments
    has been reduced."
    Apr 21, 2015. 05:45 PM | 2 Likes Like |Link to Comment
  • JPMorgan: Worst is over for oil [View news story]
    Oh wow. The run-up has been on pure speculative buying. There's huge momentum pumping oil up and it can hold it up for a while - and probably will. There's some increase in fundamental demand but the slack on the supply side is still growing.

    Someone's setting up some T-Ball.
    Apr 21, 2015. 12:46 PM | 3 Likes Like |Link to Comment
  • Iran looks to OPEC to clear way for more production [View news story]
    A lot of Iranian crude hasn't been all that steeply discounted - S. Korea, India, and China among others had all received waivers that allowed them to continue purchasing Iranian crude throughout the sanctions.

    But Iran is pumping at a rate of about 1m barrels when it could do easily more than twice that. Also, a lot of the refineries that were purchasing Iranian crude were doing so in addition to sourcing crude from other areas, not exclusively. And many had even reduced imports over time since sanctions began. Not to mention that the amount of ships available to transport the cargo was limited.

    When sanctions are lifted many countries that previous to sanctions purchased Iranian crude may choose to import it - especially if it's priced right. Greece is one country that imported most of its crude from Iran pre sanctions that currently sources it instead from Libya and Russia for example, which would absolutely be looking to restart imports if a good price is offered.

    My opinion being, Iranian crude will absolutely have a market impact. And Iran can easily ramp up production should it so choose. Iran is also interesting because more sales and more volume is just awesome for them even at these prices considering how long they've been crimped by the sanctions.

    Meanwhile both Kuwaiti and Canadian oil industry people have been on the record last couple of days reiterating commitments to continue producing at these levels or greater....
    Apr 21, 2015. 11:22 AM | Likes Like |Link to Comment
  • Draghi: Euro is irrevocable despite Greek problems [View news story]
    To be more fair to your comment because you aren't wrong, Greece's restructuring could have gone a completely different way because of its peculiar situation in that most of its debt was written under its own law. But because of the amount of its external debt acquired / controlled by the official sector participants who were also funding the restructuring, it could not reduce its actual obligations meaningfully (or default) and was forced to primarily push out duration and reduce yields.

    The point I was making when I said 'not a true default' was that Greece didn't miss any payments and exited the restructuring owing a lot more money than it should have because of the way the restructuring was handled and because of the participants in it.

    Greece has had that burden repeatedly. The reforms imposed from the fundings starting in 2010 although effective to some degree in reforming its regulatory environment have consistently been of the 'austerity' type which reduced the size of the economy necessitating further bailouts. Over and over. And Greeks get blamed for not performing while the austerity packages are dictated by its lenders and the official sector doesn't participate in debt writedowns to enable Greece to perform.

    The difference now is that Syriza has decided that austerity doesn't work and that future reforms should be pro-growth in order for the debt/gdp ratio to improve and not necessitate further 'bailouts'.

    And if indeed the creditors were to now bail, as you say, the problem Greece primarily faces is that the restructuring of 2012 altered its debt to bonds written under its own law to English law. So it wouldn't be able to pay its creditors, and it would hard default. It is -highly- unlikely that Greece could merely walk away from that burden, although it could presumably let it sit for some time.

    Btw--Greek business interests are already and have been for some time experiencing default-type issues such as complete lack of currency insurance. So a default would definitely hurt domestic business interests but it wouldn't be as bad as one would expect since this is such a slow motion catastrophe.
    Apr 21, 2015. 08:09 AM | 1 Like Like |Link to Comment
  • Draghi: Euro is irrevocable despite Greek problems [View news story]
    The 'bailout' losses by creditors were -mostly- in duration extensions, not losses in actual principal. And, if I remember correctly, some very very small percentage chose to cash out rather than have their their duration extended and a bunch of foreign-law bondholders were paid full face so that Greece wouldn't have a Argentina style holdout situation.
    Apr 20, 2015. 07:48 AM | Likes Like |Link to Comment