(08-10-21) Climate-Friendly: The Gas Wars

Strong corrections in the indices. Asia with energy supply problems, and a Japanese market with a good economic outlook. The strong dollar continues to affect all currencies. China-US Phase 1 negotiations have started this week. Gold is erratic in its movements for another week. Cryptos, strong, causing incredible volatility and opportunities.

Index week with a very choppy week for the markets in which until Wednesday the markets have been marked by sharp corrections, but end the week positive on prices of two or three weeks ago, despite having a month that for now is in negative for most major indices. Energy takes to profit from inflation when stocks suffer losses due to inflation. European indices have performed well at the end of the week, with bullish sentiment due to falling energy costs and signs that Washington may anticipate a government default if they do not reach a deal. The sectoral overview in the US only indicates the financial and energy sectors, in particular Oil and Gas, are the two sectors pushing higher, the rest are either in balance or mostly lower.

DOW JONES finished at 34,746.25 at 96.37 highs. NASDAQ finished at 14,579.5 at 120.4 highs. SP500 finished at 4,391.36 at 20.66 highs. It seems that we are witnessing the exhaustion of the uptrend that had been pushing upwards since the March correction without stops. The non-farm payrolls results on Friday are noted for worse than expected results in September, yet investors are waiting for the Fed's capital purchases. A very hesitant weekly close, despite making gains. Then the criticism of Tesla's overvaluation, which this week moved its headquarters to Texas, did not help the big tech companies. Nor did Wells Fargo's re-rating of Comcast Corp to overvalued and Charter Communications Inc (NASDAQ: CHTR) labeled it underweight help. And crude oil extractives companies like Chevron (NYSE: CVX) and Exxon Mobil (NYSE: XOM) have staged a 2% rally to the upside. Banking brings next week with JPMorgan Chase (NYSE: JPM) and other banks reporting their results. Investors so far are focusing more on the distribution and supply chain problem and the shortage of jobs. Companies like Walmart (NYSE: WNT), forced by the shortage of freight transportation, have been forced to hire their ships, something uncommon in the sector, but which shows the desperation caused by the logistical problems.

Berkshire Hathaway (NYSE: BRK.A) partner Charlie Munger has made a masterful move in China, increasing his position in Alibaba (NYSE: BABA) by 83%, because he considers it cheap on fundamentals, and the 40% plunge experienced this year should not be sustained. According to Charlie, "Learn to pull back early when the odds are against you. But go all-in when the odds are in your favor.

(investing) China this week pressed the U.S. government to remove some of the trade tariffs and try to enter a phase 1 agreement with Trump's plan. The talks between Ambassador Katherine Tai and Vice Premier Liu He, seek on the part of China to cancel tariffs and sanctions, clarifying the position on the model of economic development and industrial policies of China, according to the state news agency Xinhua on Friday, Washington time. According to the U.S. president, the United States will not seek phase 2 trade negotiations with Beijing on state subsidies and other structural problems and will await the fulfillment of phase 1 agreements.

China's logistical and energy problems have affected the paper, agriculture, and tech sectors.

?The DAX, BEL 20, and AEX ended Thursday with a devaluation of 0.81%, 0.40%, and 0.34% respectively. This decline was corrected on the last day of the week ending with the DAX at 15,206.13 points, the BEL 20 at 4,145.07 points, AEX at 772.05 points, and the CAC 40, IBEX 35, PSI20 ended Thursday up 0.82%, 1.47%, and 1.11% and ended the week at 6,559.99 points, 8955 points, and 5,514.79 points respectively correcting the previous day's rise.?Europe has a great concern with the electricity tariffs in most countries, due to its increase in the tariff price. Mainly the German and Dutch results are due to the economic performance of exports that have not been as expected. Largely because of the distribution problem. (investing) The ECB on Friday celebrated its interest rate decision by announcing a "moderately lower pace" of asset purchases, keeping at 0%, the deposit facility rate unchanged at -0.5%, and the marginal lending rate at 0.25%.

?The FTSE100 fell 0.07% to close at 7,070.5 points. (Reuters) The governor of the Bank of England, Andrew Bailey, has communicated the challenge of maintaining the inflation target of 2% which for now is going to be higher than established. And financial markets have priced in an estimated 90% chance of a rate hike before the end of the year. This leads to a very high and unwanted price hike because of the pandemic.

Of note the NIKKEI225 this week ended at 28,048.94 points a 1.34% upward movement. Due to the results of the Paper & Pulp, Rail & Bus, and Real Estate sectors, which pushed the index higher in Tokyo. Mitsubitsi Motors Corp (T : 7211), Inpex Corp. (T : 1605), Konica Minolta Inc. (T : 4902), Mitsui O.S.K. Lines Ltd (T: 9104), Nippon Yusen K.K. (T: 9101), Kawasaki Kisen Kaisha Ltd. (T: 9107) have provided earnings.

?

The most affected Currencies this week have been led by the Dollar in the lead. EURJPY, USDJPY, USDMXN, EURGBP, NZDUSD, and GBPUSD have moved higher with GBPUSD, AUDUSD, USDBRL, and USDCAD moving lower most prominently. Especially the Euro and Dollar against the Yen have moved the most to the upside, and the Dollar against the Canadian Colar have moved the most to the downside.

?

Gold (XAUUSD) this week started on Tuesday making a drop to $1,745.52 and recovering the price from the sideways range. Friday saw a bullish spike to $1,782.35 on the back of poor employment data, closing the week at $1,757.25. Silver (XAGUSD) has closed at $22.68 being a 0.1% change. The key is that these false breaks don't determine very well whether the price will break lower or higher. Hopefully, the US banks, especially, will push the price of gold up to the $2,000 mark but the issue is when, because as long as tapering happens the value of gold is not going to be what it needs to be as the experts at JP Morgan determined at the end of the summer.

?

Cryptocurrencies this week have seen a bullish continuation. Friday's session saw the price of Bitcoin (BTCUSD) soar to $55,980 has closed Friday at $53,818. Ethereum (ETHUSD) has started the week down at $3,273.60 but has closed the week topping out at $3,667.29, closing Friday in a large bearish candle that has ended at $3,539.38.

The upward movement cannot go unnoticed because of the huge upside potential it warns us of, it is possible that there will be rises well above the highs of this year and that to be concrete can be located around $124,000. Following the Fibonacci retracements, there may be a retracement to $40,000 to push the price in the direction of this. If we follow the JPMorgan gold study manual I was cataloging the price at around 14-20 times price. If we go with this company's theory that we multiply the price around the price target of about 50 times, it may reach $88,000 with some ease. This week's drop came on the sale of 3000 BTC and the subsequent rise came on the subsequent purchase of 1800 BTC. Soros has made the news that he is involving a portion of his capital in the crypto-sphere, so it is not surprising that between now and the end of the year cryptocurrency prices will rise to historic highs. Another added factor is the difficulty of mining Bitcoins, largely due to the unfavorable situation in China, which has forced many miners to move their operations.

On Tuesday, the Fed chairmen and the SEC chairmen agreed. Powell and Gensler, have said that "There will be no Crypto Ban", but the opposite, this has also made the sector "bullish".

The Forbes Billionaires list of the 40th Anniversary special edition has shown that there are 660 new billionaires out of the total of 2,755, and they are 86% richer than a year ago. Something that may have to do with the excess liquidity in the market. The said list mentions 400 of the richest in America among which 7 crypto billionaires are included. The list includes FTX's Sam Bankman-Fried ($22.5B), Coinbase's Brian Amstrong ($11.5B) and Fred Ehrsam($3.5B), Ripple's Chris Larsen ($6B), Gemini's Cameron and Tyler Winklevoss ($4.3B) and Stellar and Ripple co-founder Jeb McCaleb ($3B).

As a tip on the cake, Bank of America has brought out its crypto-asset service.

The issue of corruption has again made a splash with the Paradise Papers, and celebrities like David Z Morris (CoinDesk) point out that even though it is 15 times the value of all cryptocurrencies is being evaded in offshore tax havens, some are looking to strike to try and curb this emerging technology rather than fight the legalized corruption of the fiat banking system.

?

US crude oil futures USOIL had corrective moves this week due to the increase in US inventories on Thursday, it has moved to the middle zone of the bullish channel in the $76 range following the daily outlook you can visualize what looks to be a pullback to continue to move higher next week. It ended the week at $79.58 on the back of the US employment results. Brent crude oil (UKOIL) closed at $82.54. The rising operating costs of shale extraction, the financing problems of the big oil firms, and increases in global demand may be affecting the upside.

?

Since the times of Al-Gore, the well-known environmentalist and 45th vice-president of the United States in the Clinton era, they began to launch "environmental, social and governance" investment projects. This politician began to prepare society for the so-called "Climate Change" and its impact on society. Corporate Social Responsibility (CSR) began to turn not only to the social aspect but also to the environmental aspect, and in the investments, it is called ESG investing or "Environmental, Social and Governance Investing". These types of projects nowadays instead of focusing on what an investor earns, at the most basic level, rating companies also rate companies based on their environmental impact, quality or fairness of internal governance, and their social impact. It's kind of like bringing together the desire to make money without feeling bad about it and the desire to benefit people with this desire. (NewRepublic(2021), TheAtlantic (2015)) Already in 2015, James Fallows highlighted how Al Gore's enterprise to save the planet was looking for highly lucrative methods of investment, all supported by publications on climate change such as"An Inconvenient Truth", "The Assault on Reason", which helped him to obtain the Nobel Peace Prize in 2007 thanks to the first title. By the time he ran for president, he was a multi-millionaire. Founder and president of the firm Climate Reality Project, and Generation Investment Management. The latter has, over the last decade, generating a "Darwinian" model of international finance were "sustainable" investing has led most fund managers to be driven by direct profit at any environmental or social cost. Shorter time horizons destroy companies and entire economies.?This financial smoke bomb has been propagated by the nice-sounding "sustainable capitalism" strategy of "ESG". Fallows says that the principles of long-term and value investing are expanded to include these concepts in pursuit of the concept of better financial performance.

Bloomberg(21ag,2021) The world's sovereign wealth funds, representing $10 billion in combined assets, and according to Christiana Figueres, former executive secretary of the United Nations Framework Convention on Climate Change, says wealth funds must update their strategies and stop looking only to "leverage" rising global temperatures for financial gain.

"Sovereign wealth funds' concern about climate change has so far been overwhelmingly focused on managing climate risk and taking advantage of the opportunities arising from the low-carbon transition," Figueres told Bloomberg. "Given the severity of the climate crisis, this is no longer sufficient."

?

Hence, a large number of companies have been abandoning the pollution market for years and focusing on green markets. (LaVanguardia,2004) The Rothschild bank gave the starting signal to this movement of capital by abandoning in 2004 the commodities market, the gold and oil markets in which it had been for nearly a century. (BBC,2014) The Rockefellers followed in 2014, abandoning their traditional fossil fuel business to reinvest all this capital in clean energy, divesting more than US$50 billion of assets. They have been followed by traditional oil companies such as BP, Repsol on their way to becoming green energy and service providers, seeking not to remain tied to the past, following this ESG.

(new republic,2021) The scandal at DWS Group, a firm owned by Deutsche Bank, misled clients and investors about the scope and quality of ESG efforts. They claimed that more than half of the assets under management went through a process called "ESG integration," which, according to an internal assessment, "only a small fraction of the investment platform" went through any ESG rating analysis. As an example Wirecard got a B in ethics the same month it collapsed in a fraud scandal. The "G" in ESG is supposed to signal governance. Another example was given with Amazon giving it an "F" which meant that their company had behaved so badly that their very existence was at risk because regulators could impose large fines and consumers could stay away, something that is completely wrong and untrue. MSCI upgraded Amazon's ESG score from BB to BBB, and the information is only included in ESG ratings from a financial risk perspective. This only glaringly points out the uselessness of these scores. It only evidences that the "negative screen" is only an acknowledgment that wealthy people with a conscience have to think about these things and sacrifice. "given that the economy is not aligned with climate change goals, it is highly unlikely that markets will be," according to FT, co-author of Edhec's article on supposedly climate-friendly ETFs succinctly exposing a problem. By then in 2015 Generation Investment Management was outperforming the S&P500 by a wide margin.

It might seem that Oil and Gas are no longer necessary in our society, but far from that reality, we are facing a new crisis that is not yet being given the importance it has. The crisis of raw materials, and in particular that of Gas and Oil.

(Reuters,2021) Asian buyers are winning a bidding and bidding war for U.S. natural gas (the spot market), which is Europe's great hope for a quick solution to the low levels of gas inventories the Old Continent is hoarding as winter approaches. Asian importers are upping the ante and increasing the price they pay for gas to obtain all the American cargoes, which leaves Europe in a critical state. This war for American Liquefied Natural Gas is directing tankers to Asia and sometimes South America according to the Financial Times.

"Every time the TTF (European gas price) goes up, the JKM (Asian gas price) goes up too" according to FT, "it's a race to secure supplies."

Especially India, China, and Japan, which have no alternatives, are the ones that are bidding the hardest. Europe, on the other hand, has the option of gas pipelines and the current indecision is whether it will be enough to cover the need through them. In the UK in 2013 already agreed with the British company Centrica that assures the British a new long-term, secure and affordable source of fuel. And today, these statements are called into question and there is talk of energy bankruptcy in the UK.

(BBC,2017) Trump's policies on fracking, made in his administration that the price of oil and gas were kept in check by domestic overproduction. This has affected Venezuela and Bolivia as members of the FPEG during all this time, looking for gas to recover its price in global markets. For Bolivia and Venezuela the weight of LNG in their GDP is tremendous, the former providing countries such as Chile with its raw material via pipeline. The US boom affected market conditions. The policies of that time of overexploitation that were halted with the pandemic are now going to be insufficient to cover all the needs of this winter.

(Economist) Amber McCullagh, director of Enverus, the shipments of spot transactions that are bought and sold freely represent between 10% and 20% of the 10,000 million cubic feet per day of US LNG shipments and can help to close gaps and balance the markets where Europe is losing the game.

With these Asian and European purchases, companies such as Trafigura, Shell, BP, TotalEnergies, Repsol, etc. seem to be making a killing by benefiting from global price discrepancies.

Europe has spent a decade practically reconverting its dependence on oil to the gas model, with Germany as the head of this model have developed their nordstream and nordstream 2 channels to prepare Europe for the aforementioned green model. Poland, on the other hand, has been looking for solutions to eliminate its dependence on Russia's Gazprom since 2015, buying part of its production from Qatar. However, this whole energy scenario already in (elconfidencial) 2018 with the former president Trump, the echo of the cold war between Russia and the US for influence in Eastern Europe was perceived. Poland was opposed to the second Nordstream 2 pipeline as was the US, as they felt it undermined the energy security and stability of Europe as a whole, based on an opposition of mutual strategic interests. Uniper and Wintershall, OMV, Engie, and Shell participated in this macro-project. Germany, led by Angela Merkel, was already claiming at the time that the United States was pursuing its economic interests since this meant a reduction of American sovereignty in the European energy sector. And in retrospect, this even seems to be insufficient for the current winter. And it looks as if Poland will have to continue using coal this winter.

(Bnamericas,2021) Brazil is betting on voluntary energy rationing in the face of the water crisis. The damage from deforestation of the Amazon rainforest has been felt since 2014. (Reuters, 2021) In May this year, Brazil is facing the driest period in 91 years. Brazil is 65% dependent on hydroelectric dams. This country has made every effort to diversify its energy generation distributions, but this is not enough and it is largely understandable its increased demand for liquefied gas from this country which is one of the largest generators in the region. These droughts have affected the Argentine pampas and Paraguay. This may be one of the problems that affect Argentina the most. The drought of the Paraná River may affect not only these three in the energy aspect but also economically and ecologically.

(EFE,2021) the Mexican government has been criticized by the environmental organization Greenpeace for its proposed electricity reform, stating that Andres Manuel Lopez Obrador, seeks the possibility of returning to state monopoly in the sector, calling this a "serious mistake and setback", since this implies that the possibility of developing community generation projects in which to generate, conduct, transform, distribute and supply electricity, causing an absolute state monopoly, something that had been used to combat inequality in populations suffering from energy poverty, will be definitively canceled. The Business Coordinating Council (CCE) asked Congress to stop the reform.

(RT,2021) All this comes along with the war of LP gas (known as "gaschicol") in Mexico, and how the gaschicol mafias operate to besiege the population and put the government against the wall. To put it in a nutshell, crime and organized crime have been found in the theft of this resource a new refuge after the state's fight against "huachicoleo" of fuel. Huachicol is an alcoholic beverage adulterated with cane alcohol and other compounds, and also serves as a name for stolen fuel, which can be adulterated.

??According to Lopez Obrador in April of this year, "From the theft of gasoline they moved on to the theft of gas, but we are already confronting this type of crime and also the smuggling of gasoline. All this presidential strategy seems to be part of controlling the abuse and losses caused by the looting of proximity, organized to which he tries to put a stop, avoiding that Pemex suffers so many losses. From 2012 to 2018, during Pe?a Nieto's administration, there was an 800% increase in the number of takeovers of the main Pemex pipeline, something unprecedented. The clandestine takeovers throughout the previous six-year term are estimated at least in 44,000 million pesos with millionaire losses for the state-owned company. In 2019, a loss of 13 billion pesos (about 650 million dollars) is estimated. In 2020, they reached a new record, reaching 1.5 billion dollars, with an increase of 130% according to the Mexican Association of Distributors of Liquefied Gas and Related Companies (Amexgas). LPG theft is concentrated in 10 states: Hidalgo, Puebla, Tlaxcala, Guanajuato, Queretaro, Veracruz, Mexico City, State of Mexico, Jalisco and Tamaulipas.

The "milking" of pipelines is one side of the coin of this crime, the other is the establishment of mafias that are dedicated to selling the stolen gas throughout the length and breadth of the country. They imposed their law based on threats, extortion, and violence. They have the government's back against the wall in the so-called "Fourth Transformation". The mafias impose a quota on companies engaged in the sale of LP gas. This fact is similar to the drug cartels, which at gunpoint demand certain payments as organized crime syndicates.

The Gas Bienestar project faces tremendous challenges in the face of such corruption forcing the federal government to guard the hydrocarbon trucks. While organized crime syndicates do not affect the international price, they do affect supply and demand and offer lower prices than the officially established companies. This type of gas is a resource on which almost all Mexican households throughout the country depend. Of the six hundred supplying companies it is not that the clients have a great variety, the client must face monopolistic practices on the part of the permit holders in the distribution and sale of LP gas, which results in that the cost fixed to the fuel is the one that is convenient to the businessman and not to the client. All these entities are grouped around five distribution associations. In addition to this, 80% of the vehicle fleet is leased by third parties (universal,2019).

U.S. exports are also moving in the direction of Mexico, largely because of this whole national conflict of corruption and bloodshed. Texas is one of the states that opens or closes the gas tap to the country. (elpaís,2021) In February, after the biggest snowfall in Texas history, gas exports to its southern neighbor were reduced. And both suffered an electrical blackout in the middle of the snowfall, giving an obvious lack of collaboration on both sides of the Rio Grande. These kinds of gaps have caused Amlo's government to fill them with hydroelectric, photovoltaic, and thermoelectric plants that run on fuel oil and diesel sold by PEMEX at favorable prices. Amlo, and the Mexican CFE, are trying to solve the energy conflict on two fronts, covering the excess pollution by buying liquefied gas by sea and fighting crime. Another addition to the fact that the price of gas is going to skyrocket this winter.

?

(Reuters,2021) South Africa's Minister of Mines and Energy argues that it is not yet time to turn its back on coal, as the country cannot yet be considered a developed economy with sustainable alternatives. His goal is to reduce dependence on coal from 75% to less than 60% by 2030 by increasing solar and wind power by 25%. He has also referred to the increase in Chinese coal imports to cover its energy demand due to the lack of renewable energies.

??(Reuters,2021) Countering these phenomena, in the EU, the law firm ClientEarth has warned the European Union that it would violate its laws if it labels gas-fired power investments as "green" in upcoming financial regulations. This includes the EU's legally binding target to reduce its net greenhouse gas emissions by at least 55% by 2030 from 1990 levels, and to zero by 2050. The taxonomy of sustainable finance regulation, a unique regulation of its kind, which aims to divert private capital away from polluting economic activities to those that the EU considers environmentally friendly, goes against the original directive and would make the legislation support gas financing, diverting money that could be spent on renewables. Gas, as such, fails to meet the key point of that regulation since to be considered climate-friendly investments they must: "contribute substantially to the stabilization of greenhouse gas emissions at a level that prevents dangerous anthropogenic climate change." While not as polluting as coal, it produces methane emissions. Some European countries see it as a transition fuel from coal. All this is taking place at a time of heightened tensions caused by European prices soaring to record levels. This has forced some countries to call for a faster switch from fossil fuels to reduce exposure to volatile prices.

It is incomprehensible that Europe has spent almost two decades carrying out experiments with gas by eliminating nuclear and thermal power plants, calling them dangerous and polluting, without first providing an adequate substitute. The apparent aim of combating the desertification that Europe is experiencing is not only caused by greenhouse gases, but also by the overexploitation of land and the expansion of cultivable areas, and the intentional burning of forests. Now, Europe is in a hurry, without sufficient energy resources, and trying to promote things that have no sense at all, such as gas "as a green investment". This will only increase its price further in a price war with Asia. Finally, it does not bring any kind of improvement to the process of green energy transformation since it is particularly polluting, and one of the main causes of the greenhouse effect. This drift towards ESG is presented as false sustainable capitalism, which has more to do with capitalism than with sustainability.

?

Happy Trading and Happy Friday!

#FED #BCE #NASDAQ #DOWJONES #IBEX35 #CAC40 #FTSE_MIB #FTSE_100 #EURUSD #GBPUSD #EURGBP #USDJPY #USDCAD #AUDUSD #NZDUSD #USDUSDCHF #XAUUSD #Chevron #Exxon #CharlieMunger #Climate_Friendly #Jerome_Powell #China #Katherine_Tai #Liu_He #Gensler #No_crypto_ban #GNL #James_Fallows #Al_Gore #Sustainable_Capitalism #Cristiana_Figueres #DWSGroup #DeustcheBank #ClimateRealityProject #GenerationInvestmentManagement #ESG #gaschicol #Huachicol #TTF_JKM_TF #Centrica #Nordstream+ #LopezObrador #AMLO #Mexico #Bolivia #Venezuela #InversionVerde #ESG #Repsol #Trafigura #Shell #BP #TotalEnergies #FPEG #PEMEX #Uniper #Wintershall #OMV #Engie #Shell #CRYPTO #USDBTC #USDETH #USDOIL #UKOIL

This article only expresses my opinion and under no circumstances represents an investment recommendation, but a purely educational document.

?

?