Author: Consultant

Fed raises interest rates half a point to highest level in 15 years

• The Federal Reserve continued its battle against inflation by raising its benchmark interest rate to the highest level in 15 years.
• The Federal Open Market Committee voted to boost the overnight borrowing rate half a percentage point, taking it to a targeted range between 4.25% and 4.5%.
• Along with the increase came an indication that officials expect to keep rates higher through next year, with no reductions until 2024.

https://www.cnbc.com/2022/12/14/fed-rate-decision-december-2022.html

Nuclear fusion just passed a major milestone: Generating more energy than used to create the reaction

• On Tuesday, the head of the Department of Energy and other federal scientific leaders announced that a fusion reaction they ran at the Lawrence Livermore National Laboratory in California achieved net energy, meaning the reaction generated more energy than was put in to initiate the reaction. It’s the first time humankind has achieved this landmark.
• Fusion is the way the sun makes energy, but generating energy with fusion here on earth has been beguiling scientists for decades.
• In recent years, private investors have put almost $5 billion into fusion startups as the increased urgency in addressing climate change has made clean energy solutions particularly attractive.

https://www.cnbc.com/2022/12/13/nuclear-fusion-passes-major-milestone-net-energy.html

Consumer prices rose less than expected in November, up 7.1% from a year ago

• The consumer price index rose just 0.1% from the previous month, and increased 7.1% from a year ago, compared with respective estimates of 0.3% and 7.3%.
• Core CPI rose 0.2% on the month and 6% on an annual basis, compared with respective estimates of 0.3% and 6.1%.
• Stocks roared higher following the report as investors look for signs that runaway inflation is ebbing.
• Inflation-adjusted average hourly earnings for workers rose 0.5% for the month, though they were still down 1.9% from a year ago.

https://www.cnbc.com/2022/12/13/cpi-inflation-november-2022-.html

Tourmaline is the largest producer of gas in Canada. That is important because in a commodity business size is everything. Along with size comes scale, and that is the secret to not only being the biggest producer, but grinding cost out of the operation.

Another contrast between Tourmaline and their American counterparts is growth of the revenue basis QoQ and YoY. TRMLF’s exposure to the premium plays in the WCSB makes this possible.

Investors are often asked for patience in return of capital. TRMLF has adopted the fixed plus variable dividend policy that sends a big chunk of free cash back to shareholders. Growth to $1.00 per share on an annual basis is programmed to for 2023 for the fixed dividend. As you can see, the variable dividend forecast for next year is simply prodigious.

UK approves first coal mine in decades, sparking anger among environmentalists as energy costs soar

The United Kingdom this week approved its first new coal mine in 30 years, provoking anger among environmentalists who said the move is a step back for the country’s ambitions toward clean renewable energy. 

The decision on the mine in the Cumbria area of northwest England came hours after the Conservative-led government reversed a ban on building new onshore wind farms in Britain. That was viewed by some opponents as a cynical attempt to offset criticism of the mine decision.  

https://www.foxbusiness.com/politics/uk-approves-first-coal-mine-decades-sparking-anger-among-environmentalists-energy-costs-soar

US scientists make major breakthrough in ‘limitless, zero-carbon’ fusion energy: report

Scientists have been struggling since the 1950s to harness the fusion reaction that powers the sun. But no group has been able to produce more energy from the reaction than it consumes. 

Though developing fusion power stations at scale is still decades away, the breakthrough has significant implications as the world seeks to ween itself off of fossil fuels. Fusion reactions emit zero carbon and do not produce any long-lasting radioactive waste. Per The Times, a small cup of hydrogen fuel could potentially power a house for hundreds of years. 

“If this is confirmed, we are witnessing a moment of history,” said Dr Arthur Turrell, a plasma physicist, told the paper. “Scientists have struggled to show that fusion can release more energy than is put in since the 1950s, and the researchers at Lawrence Livermore seem to have finally and absolutely smashed this decades-old goal.” 

https://www.foxbusiness.com/energy/us-scientists-make-major-breakthrough-limitless-zero-carbon-fusion-energy-report

SpaceX launches lunar lander for Japanese venture ispace, which aims to create an economy around the moon

• Japanese lunar exploration company ispace began its long-anticipated first mission on Sunday, with a SpaceX Falcon 9 rocket launching the venture’s lunar lander.
• “This is the very, very beginning of a new era,” ispace founder and CEO Takeshi Hakamada told CNBC.
• If successful, ispace would be the first private company to land on the moon – a feat previously accomplished by global superpowers.

https://www.cnbc.com/2022/12/11/spacex-launches-japanese-ispace-lunar-lander-first-mission.html

Economic Calendar: Dec 12 – Dec 16

Monday December 12

China aggregate yuan financing and new loans

Japan machine tool orders

(8:30 a.m. ET) Canada’s national balance sheet and financial flow accounts for Q3.

(2 p.m. ET) U.S. budget balance for November.

(3:25 p.m. ET) Bank of Canada governor Tiff Macklem holds a fireside chat in Vancouver at the Business Council of British Columbia

Earnings include: Mainstreet Equity Corp.

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Tuesday December 13

Germany CPI

(8:30 a.m. ET) Canada’s new motor vehicle sales for October. Estimate is a year-over-year decline of 5.0 per cent.

(8:30 a.m. ET) U.S. CPI for November. The Street is projecting a rise of 0.3 per cent from October and 7.3 per cent year-over-year. That would be down from 0.4 per cent and 7.7 per cent, respectively, in the last monthly report.

Also: U.S. Fed meeting begins.

Earnings include: Transcontinental Inc.

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Wednesday December 14

Japan core machine orders and industrial production

Euro zone industrial production

(8:30 a.m. ET) Canadian construction investment for October.

(8:30 a.m. ET) Canada’s manufacturing sales and new orders for October.

(8:30 a.m. ET) U.S. import prices for November. The Street expects a decline of 0.5 per cent from October but up 3.0 per cent year-over-year.

(2 p.m. ET) U.S. Fed announcement with chair Jerome Powell’s press briefing to follow.

Earnings include: Lennar Corp.

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Thursday December 15

China industrial production, retail sales and fixed asset investment

Japan trade balance

Bank of England monetary policy announcement

(8:15 a.m. ET) Canadian housing starts for November. The Street is forecasting an annualized rate decline of 4.5 per cent.

(8:30 a.m. ET) U.S. initial jobless claims for week of Dec. 10. Estimate is 234,000, up 4,000 from the previous week.

(8:30 a.m. ET) U.S. retail sales for November. The Street expects a decline of 0.1 per cent from October.

(8:30 a.m. ET) U.S. Philadelphia Fed Index for December.

(9 a.m. ET) Canada’s existing home sales and average prices for November. Estimates are year-over-year declines of 39.0 per cent and 11.5 per cent, respectively.

(9 a.m. ET) Canada’s MLS Home Price Index for November. Estimate is a decline of 4.0 per cent year-over-year.

(9:15 a.m. ET) U.S. industrial production for November. Consensus is a rise of 0.1 per cent month-over-month with capacity utilization rising 0.1 per cent to 79.9 per cent.

(10 a.m. ET) U.S. business inventories for October.

Earnings include: Adobe Systems Inc.; Empire Co. Ltd.; Enghouse Systems Ltd.; Oracle Corp.

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Friday December 16

Japan manufacturing and services PMI

Euro zone PMI and CPI

(8:30 a.m. ET) Canadian wholesale trade for October. Estimate is a month-over-month increase of 1.3 per cent.

(8:30 a.m. ET) Canada’s new housing price index for November. Estimate is a decline of 0.3 per cent from October but up 4.0 per cent year-over-year.

(8:30 a.m. ET) Canada’s international securities transactions for October.

Earnings include: Accenture PLC

Oil rebounds from 2022 lows on Chinese demand hopes, tanker delays

Oil rebounded on Thursday after four sessions of decline, boosted by hopes that easing anti-COVID measures in China will revive demand and by signs that some tankers carrying Russian oil have been delayed after a G7 price cap came into effect.

China on Wednesday announced the most sweeping changes to its resolute anti-COVID regime since the pandemic began, while at least 20 oil tankers faced delays in crossing to the Mediterranean from Russia’s Black Sea ports.

Brent crude rose 29 cents, or 0.4 per cent, to $77.46 a barrel by 0905 GMT, while U.S. West Texas Intermediate (WTI) crude gained 73 cents, or 1 per cent, to $72.74.

“Today, we do see some green price action,” said Naeem Aslam, analyst at Avatrade. “Prices are oversold due to the intense sell-off for the past few days. However, the price action still doesn’t show a strong bullish bias.”

Both Brent and U.S. crude hit 2022 lows on Wednesday, unwinding all the gains made after Russia’s invasion of Ukraine exacerbated the worst global energy supply crisis in decades and sent oil close to its all-time high of $147.

Western officials were in talks with Turkish counterparts to resolve the tanker queues, a British Treasury official said on Wednesday, after the G7 and European Union rolled out new the restrictions on Dec. 5 aimed at Russian oil exports.

The queues suggest that “available supply from the Black Sea is already affected by the punitive measure,” said Tamas Varga of oil broker PVM.

“In a healthy economic climate, such a development would be the equivalent of firing the starting gun in the race back to $100.”

Concerns of economic slowdown, weakening fuel demand and the prospect of more interest rate hikes in the United States weighed. The Federal Reserve is widely expected to raise interest rates by 50 basis points next week.

While U.S. crude inventories fell last week, gasoline and distillate inventories surged, adding to concern about easing demand.