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German Power Prices Soar As Arctic Blast To Bring “Significant Snow” 

German Power Prices Soar As Arctic Blast To Bring "Significant Snow" 

Europe’s first cold spell of the heating season has arrived, pressuring…

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This article was originally published by Zero Hedge

German Power Prices Soar As Arctic Blast To Bring “Significant Snow” 

Europe’s first cold spell of the heating season has arrived, pressuring power prices higher as freezing temperatures ushers in increased power demand to heat building structures across the central-west region. 

German day-ahead power prices jumped to the second-highest level ever, 273.89 euros per megawatt-hour. Day-ahead power prices are also higher in France and Netherlands. 

The Deutscher Wetterdienst (DWD), the German Meteorological Service, released a weather note on Tuesday warning of frigid and snowy weather. 

“Right on time for the first weekend in Advent and shortly before the start of the meteorological winter on Dec. 1, there is the first significant snow in Germany, at least in the middle and higher altitudes,” DWD said. 

Weather models for Germany show between Nov. 24 – Dec. 4. — the average temperature will hover well below the 30-year norm or around 30-35 degrees. Low temps will dip into the mid 20 degrees Fahrenheit. 

The cold blast has boosted the heating degree day forecast well above the 30-year norm through Dec. 4. This means power demand will surge as people turn up their thermostats. 

The cold snap will test Germany and the other parts of Europe’s energy systems already under stress due to the lowest natural gas stockpiles since 2013. There appears to be no relief in dwindling gas flows into the continent as German energy regulators decided to suspend the Nord Stream 2 pipeline certification process last week. With every hiccup the Russian to German pipeline faces, natural gas prices increase, forcing power prices higher. There’s also the issue that more power generation has to be diverted from alternative energy sources to fossil fuels due to unreliability: 

“Wind generation and temperatures below the seasonal norm are increasing gas-for-power and heating demand; this provides bullish pressure to day-ahead contract,” Inspired Energy said in a report.

Europe is staring into a perfect storm of forces that could spark a winter of discontent and continue socio-economic chaos on the continent. EU politicians won’t publicly say, but they need Putin’s gas to avert an energy crisis this coming winter that could sweep many politicians out of power due to uncontrollable energy inflation. 

Tyler Durden
Thu, 11/25/2021 – 06:55

Author: Tyler Durden

Economics

The Fed Says the U.S. Is Now Officially In A Real Estate Bubble

For the first time since 2007 the Fed’s Exuberance Index is warning that U.S. real estate prices are in a bubble. Did the Fed even notice? 
The post The…

…For the first time since 2007 the Fed’s Exuberance Index is warning that U.S. real estate prices are in a bubble. Did the Fed even notice? 

This post by Lorimer Wilson, Managing Editor of munKNEE.com, is an edited ([ ]) and abridged (…) excerpt from an article from Stephen Punwasi of betterdwelling.com for the sake of clarity and brevity to provide you with a fast and easy read. Please note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

…If asset buyers are said to be exuberant, they’re excitedly paying emotional premiums, premiums that are above fundamentals, paid because people think prices will always rise. If buyers are exuberant for an extended period, the whole market can become exuberant…[and the Fed’s] exuberance indicator was designed to help identify [such] bubbles.

…American real estate buyers are displaying obvious signs of exuberance. The exuberance index read 2.8 in Q2 2021, more than double the 1.37 threshold needed to seem bubbly. The most recent quarter was the fifth above the threshold, making it officially a bubble…

Declaring a bubble after just five quarters might seem early, but that’s the point. The indicators help central banks and policymakers identify them early. By alerting policy makers early, they can act and contain the issue before it gets out of control.

The current bubble will be the first time in history that the U.S. has a system in place for an early warning but the question is, will they ignore the warning sign? Central banks have become increasingly political, dismissing even their own research. It wouldn’t be surprising to see them gloss over existing warning systems as they did with inflation…

Related Articles From the munKNEE Vault:

1. Fed’s Exuberance Index Shows Canada’s Real Estate To Be A “Bubble On A Bubble”

The U.S. Federal Reserve’s latest Exuberance Index (Q2), considered a “smoking gun” for bubbles, shows Canada is well into a real estate bubble – a bubble on a bubble.

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The post The Fed Says the U.S. Is Now Officially In A Real Estate Bubble appeared first on munKNEE.com.








Author: Lorimer Wilson

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Economics

A Fake Story Tanks Eric Fry’s Stock

There’s been major drama going on with one of Eric Fry’s recommendations in recent weeks.
In short, a vicious attack by a short-seller resulted in…

There’s been major drama going on with one of Eric Fry’s recommendations in recent weeks.

In short, a vicious attack by a short-seller resulted in a massive selloff. Eric’s pick was down 35% seemingly overnight.

But that’s not the whole story…

In today’s Digest, Eric pulls back the curtain on what actually happened, how the situation has played out since, and what we can learn from it.

It’s a cautionary tale that illustrates two things…

One, it’s incredibly important to do your due diligence before investing your hard-earned money into a stock. And two, you have to be careful whom you trust for accurate information.

I’ll let Eric take it from here.

Have a good weekend,

Jeff Remsburg

Beware Fake News

By Eric Fry

Soren Kierkegaard, the Danish existentialist philosopher once remarked, “Geniuses are like thunderstorms. They go against the wind, terrify people, clean the air.”

Short-sellers often perform a similar function. Although they certainly are not all geniuses, their incisive analyses can swirl through the financial markets and terrify investors for a spell, while cleansing the air of misinformation and/or fraudulent behavior.

Because these financial thunderstorms can strike an individual stock like a thunderbolt, they usually singe every investor who happens to be in the vicinity.

Not surprisingly, therefore, short-sellers are about as welcome on Wall Street as a thunderstorm at a garden wedding. To put it bluntly, most folks hate short-sellers.

I don’t. I hate the misinformation and/or deception that causes investors to make ill-informed decisions…

Steel Yourself Against the Misinformation

Generally speaking, short-sellers are a fringy community of forensic analysts and truth-seekers. As a group, they expose the sort of misinformation that deceives investors. That’s a public service to all of us investors.

But sometimes, short-sellers themselves, are a source of misinformation — fonts of fake news.

In other words, not all short-sellers are created equal… neither are any other sources of investment information and “analysis” equally reliable.

This fact has never been timelier and more relevant than it is today, when social media sites funnel most of the minute-by-minute investment narrative that we consume.

Because of social media’s scope and dominance, deceptions can magnify quickly and “go viral,” often with mind-numbing speed and destructive power.

In such circumstances, getting to the truth can be challenging.

But a couple of simple steps can facilitate the process of fact-finding. Both of these steps are so ancient (and timeless) that they predate the internet itself:

  • Consider the source. Whenever you encounter a story that seems implausible or that conflicts with widespread opinion, check the source. Find the source of that story from the original source documents, if possible. Once you locate that source, check its history for honesty and accuracy. For example, a scientific observation from a Johns Hopkins University study is probably more reliable than one from National Enquirer.
  • Look for signs of intellectual honesty. Does the source of the story thoughtfully consider the “other side”? For example, does the source solicit information from third parties to corroborate its findings? Does the source present its findings matter-of-factly, while acknowledging portions that may be inconclusive or incomplete?
  • These two simple steps, by themselves, can usually help investors navigate deception and/or discover truth… like they did during the last two weeks when a short-selling firm attacked Standard Lithium (NYSEAMERICAN:SLI), a stock I have recommended in my investment services.

    On November 18, a short-selling outfit called Blue Orca Capital issued a negative report about the company.

    The report’s most damaging assertion was that Standard Lithium’s direct extraction technology could recover only 13% of the lithium that is contained in the brines it is processing — not the 90% recovery rate the company had been reporting.

    The stock plummeted 35% after Blue Orca’s report crossed the wires.

    But I issued an alert to my subscribers that stated the following:

    “If that assertion is true, it would be a truly damaging data point, perhaps even fatal to Standard Lithium. However, as recently as November 12, Standard Lithium submitted a detailed filing with the SEC that stated the following:

    “The final product lithium recovery is about 90%.

    “In other words, six days ago, the company informed a federal agency that its lithium extraction process recovers 90% of the lithium contained in the Arkansas brine it is processing.

    “Not 13%.

    “If the actual number is 13%, as Blue Orca Capital asserts, then the entire management team of Standard Lithium and its Board of Directors has committed a large-scale fraud…

    “A conspiracy and fraud of this scale and complexity seems unlikely…

    “More likely is that an ill-intentioned, or ill-informed, short seller has conspired to hammer the share price of a stock its firm has sold short.”

    In other words, I considered the source of the surprising story and deemed it to be untrustworthy. Furthermore, previous reports by Blue Orca about other companies revealed a consistent pattern of unreliable, one-sided analysis.

    Hours later, Standard Lithium issued a rebuttal to Blue Orca that confirmed my assumptions. You can view the entire release here: Standard Lithium Response.

    But the most important detail from the company’s response was that its direct extraction technology does, in fact, recover about 90% of the lithium that’s contained in the brine it is processing.

    The company stated flatly:

    “Blue Orca Capital’s interpretation of lithium recovery rates is incorrect and underestimates lithium extraction efficiencies.”

    Despite this comprehensive rebuttal, Blue Orca did not issue a mea culpa or concede defeat in any way. Instead, it simply doubled down on the identical claims Standard Lithium had debunked.

    The new attack from Blue Orca triggered another wave of selling that pushed the stock lower again on Nov. 22. But the selling pressure abruptly reversed on the day before Thanksgiving.

    That’s when the company announced a $100 million investment by Koch Strategic Platforms (KSP), a subsidiary of Koch Investments Group.

    Importantly, the press release that announced this investment included the following line:

    “[KSP’s] Direct Investment follows extensive due diligence into Standard Lithium’s LiSTR DLE technology, Demonstration Plant and project objectives…”

    Presumably, therefore, KSP possesses a more intimate and sophisticated understanding of Standard Lithium’s extraction technology than do the short-sellers at Blue Orca.

    The stock has been rallying ever since.

    An Early Warning

    To be sure, the short-seller’s attack on Standard Lithium was a frightening event. But ultimately, misinformation lost this battle.

    Furthermore, the company has emerged from that attack with its credibility intact and its investment potential greatly enhanced by a major new investment from what could become a major strategic partner.

    The stock remains what it was when I first recommended it to my subscribers: a speculative, unproven play on a “home-grown” battery-metals supply chain. But the stock has become somewhat less speculative in the wake of KSP’s $100 million buy-in.

    Now, before I let you go…

    2022 is on our heels, and we’re perhaps facing more apprehension than ever.

    With the new Omicron variant of the Covid-19 virus potentially bringing about city-, state- and country-wide restrictions, economic uncertainty, inflation and more, the end of 2021 is starting to feel quite a bit like the end of 2020.

    As such, it is critical that you hear what my colleagues, Louis Navellier and Luke Lango, and I see for the next year.

    And on Tuesday, December 7, at 7:00 p.m. EST, the three of us will give you our investing game plan for 2022.

    Click here now to reserve your spot — I’ll tell you more about it this week.

    Regards,

    Eric Fry

    The post A Fake Story Tanks Eric Fry’s Stock appeared first on InvestorPlace.




    Author: Jeff Remsburg

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    Economics

    Formulating some thoughts about 2022

    Light yellow line is the 10-year Government of Canada bond yield, orange line is the 2-year bond yield: Over the past week, Omicron fears have triggered…

    Light yellow line is the 10-year Government of Canada bond yield, orange line is the 2-year bond yield:

    Over the past week, Omicron fears have triggered a huge demand for long-dated government debt, while central bank talks of tapering have pushed the front end of the yield up.

    Indeed, when looking at the BAX futures, we have the following curve (for those that are unfamiliar, these are 3-month bankers’ acceptance futures, of which you derive the rate by going 100 minus the anticipated yield percentage, so a 98 would be equal to 2.00%):

    BAX – Three-Month Canadian Bankers’ Acceptance Futures

    Last update: December 5, 2021

    Month Bid price Ask price Settl. price Net change Open int. Vol.
    Open interest: 1,173,941
    Volume: 145,981
    December 2021 99.455 99.460 99.460 -0.005 136,604 34,223
    January 2022 0 0 99.380 0 0 0
    February 2022 0 0 99.220 0 0 0
    March 2022 99.080 99.095 99.105 -0.015 242,041 25,545
    June 2022 98.660 98.665 98.690 -0.030 185,438 16,971
    September 2022 98.335 98.340 98.360 -0.025 167,920 15,778
    December 2022 98.125 98.140 98.150 -0.015 144,759 17,816
    March 2023 97.985 97.995 98.010 -0.020 107,855 13,145
    June 2023 97.865 0 97.890 -0.020 62,554 10,228
    September 2023 97.795 97.840 97.820 -0.025 69,061 6,586
    December 2023 97.510 97.820 97.805 -0.020 38,357 4,960
    March 2024 0 0 97.780 -0.005 12,729 386
    June 2024 0 0 97.775 -0.010 4,613 181
    September 2024 0 0 97.790 -0.005 2,010 162

    The spot price is at 0.54%, while the December 2022 future is at 1.85%, which implies that in the next 12 months we will have a rate increase of about 125bps the way things are going.

    The 2-year government bond is yielding 0.95% as of last Friday.  Using expectations theory, this is roughly in-line, but functionally speaking, the inversion of the yield curve is going to signal some ominous signs going forward.

    Central banks are engaging in the tightening direction because of fairly obvious circumstances – there are leading indicator signs of inflation everywhere (labour market tightness AND the inability to find quality labour both count; the first is easily quantified, while the second one is not, and is a very relevant factor for many businesses), input costs rising or even being completely unavailable, energy costs spiking, etc.  With governments flooding the economy with deficit-financed stimulus, it is creating an environment where no realistic amount of money thrown at a problem can stimulate productive output.

    My guess at present is that tapering and rate increases will go until the economy blows up once again – the evaporation of demand will be mammoth – when these supply chain issues are resolved, the drop-off in demand will commence very quickly.  It will likely happen far sooner than what happened in the 4th quarter of 2018 (the US Federal Reserve started shrinking its balance sheet of treasuries at the end of 2017 and the vomit started occurring around October 2018).  Indeed, you even saw hints of this economic dislocation occur in late 2019 – there was likely going to be an economic recession in 2020 even if Covid-19 did not occur.  Covid instead just masked the underlying conditions, and stimulative monetary policy coupled with shutdowns of global logistics and labour disruptions was the subsequent excuse when fundamentally things were already in awful shape to begin with.

    This means that portfolio concentration (other than not being leveraged up the hilt) should be focused on non-discretionary elements of demand.

    These are not serious suggestions, but Beer (TAP), Smokes (MO) and Popcorn (AMC…  just kidding!) will probably be the last industries standing among the carnage.  Even McDonalds (MCD) will not be spared as less and less will be able to afford the $10 “extra value” meals as central banks continue to drain the excess, but Dollarama (TSE: DOL) will thrive.

    The conventional playbook would suggest that commodities would fare poorly with a precipitous decline in demand, but this is one of those strange interactions between the financial economy and real economy where hard assets will initially lose value in the face of interest rate increases (this has already happened), but the moment the central banks have stretched the rubber band too hard and it snaps, commodities likewise will be receiving a huge tailwind.

    2022 is surely to be a worse year for most broad market investors and the public in general.  Returns are going to be very constrained and P/E expansion will be non-existent (other than by reduced earnings expectations!).  Watch out, and hold onto your wallets.  There will be few that will be spared.







    Author: Sacha Peter

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