Thursday, July 15, 2021

Thursday Night Links

  • Even as oil prices reached their highest level in six years last week, many drilling rigs remain idle. The U.S. is producing roughly 2 million barrels a day less than it was before the pandemic. The number of active rigs drilling for oil rose by two this week and stands at 378, down from 683 pre-Covid-19, according to oil-field services firm Baker Hughes Co. [WSJ]
  • Democrats on the Senate Budget Committee agreed to roughly $3.5 trillion in spending for their broad healthcare and antipoverty plan, determining the scope of the party’s expected efforts on education, climate change, child care and a host of other issues while it has control of Congress and the White House. [WSJ]
  • The flexible cut of the CPI—a weighted basket of items that change price relatively frequently—increased 37.2 percent (annualized) in June and is up 13.7 percent on a year-over-year basis. [FRB Atlanta]
  • In terms of the overall, or “headline” CPI, we judge that about 70 percent of it is composed of sticky-price goods and 30 percent of fl exible-price goods. About half of the fl exible-price CPI comprises food and energy goods, the remainder being largely autos, apparel, and lodging away from home. The sticky-price CPI includes many service-based categories, including medical services, education, and personal care services, as well as most of the housing categories which, by construction, change only infrequently. [FRB Atlanta]
  • I think research analysts and investors are beginning to understand that mineral companies, and in particular Brigham Minerals, offers a more efficient vehicle to return capital to investors, especially when times are challenging, as we saw at the onset of COVID and the shutting down of the economy during early 2020. If you assume the second quarter of 2020 was the ultimate trough for the energy space, I sincerely hope that that is the case. Remember that we distributed $0.14 per share via our divided for that quarter which when analyzed and assuming a $17 stock price equates to roughly a 3.3% yield. Based on all of those assumptions, with Brigham Minerals you theoretically have a downside floor yield of 3.3% which is higher than the yields of many E&Ps today without exposure to the continuing need to deploy capex. Looking at the first quarter of 2021, we're able to pay out a dividend at roughly 7.5% yield, which represents an incremental yield of 4.2% above the trough level we saw in Q2 2020. Importantly, we're able to deliver that 7.5% yield with over 13,000 gross undeveloped locations in inventory that will be organically developed for shareholders over time, again, free of capex. [MNRL Q1 2021]
  • I had thought "Elon seems exceptional", but he is basically a domain-specific guy who proxies Tesla/SpaceX engineers. Consensus systems have outed him intellectually. I didn't just realize this today; this is just one example of a laundry list of red flags, going all the way back to stupid things he did at PayPal, that indicate his primary mode of operation is a mimic who collaborates with engineers at his companies, then speaks as a proxy. The stages of decline in my view of Elon over the last few years: 1. This guy could be a genius. 2. This guy is just an exceptional technologist. 3. This guy embeds himself with an engineering team, soaks up concepts, then repeats things he wouldn't be able to figure out himself. [@csuwildcat]
  • "It seems like you can always trust bodybuilders and autists to be right about things that they have researched. (Even if market prices can take a long time to reflect this.)" [CBS]
  • It is observed that a B12 deficiency leads to increased uracil misincorporation, leading to impaired DNA synthesis and genomic instability. The deficiency also leads to global hypomethylation of DNA, a hallmark of early carcinogenesis. [NLM]
  • You also need to notice when you find beautiful places. It is not just materials and components that create these places, but patterns and interactions between materials, light, and space that create an atmosphere. Beautiful places do not repeat identically the world over, but they do rhyme. I suggest you start to collect some of these places. [Simon Sarris]
  • As an alternative to floating cities, it has been proposed that a large artificial mountain, dubbed the "Venusian Tower of Babel", could be built on the surface of Venus. It would reach up to 50 kilometres (31 mi) into the atmosphere where the temperature and pressure conditions are similar to Earth's. Such a structure could be built using autonomous robotic bulldozers and excavators that have been hardened against the extreme temperature and pressure of the Venus atmosphere. Robotic machines would be covered in a layer of heat and pressure shielding ceramics, with internal helium-based heat pumps inside of the machines to cool both an internal nuclear power plant and to keep the internal electronics and motor actuators of the machine cooled to within operating temperature. These machines could be designed to operate for years without external intervention for the purpose of building colossal mountains on Venus to serve as islands of colonization in the skies of Venus. [Wiki]
  • The sale of the Wine business and the plan to use proceeds to repurchase shares signal that management now views buybacks as "the best use of capital". We believe the same logic also applies on the ABI stake. Altria's ABI stake is currently worth $11.8bn, or 13.4% of its market capitalization - even if we assume just $10.0bn of deployable cash proceeds and a 10% higher Altria share price, selling the ABI stake to repurchase shares would still reduce the share count by 10% - more than offsetting the 4.1% loss in Net Earnings and 1.4% loss in FCF mentioned above; the net EPS gain would be about 6.7% and the dividend would rise correspondingly. [SA]
  • The bear should be, in any proper bestiary, the true king in Europe. The lion was put in place by Christianity looking to undermine pagan symbolism and myths by introducing another creature that could be molded with Christian attributes. The story of how the church replaced the bear is a bit difficult to read because there was plenty of cruelty involved, but I believe the religious aspect should be put aside. The bear IS the most powerful creature in Europe and it does have deep mythological roots for nearly (probably every) European culture. [The American Sun]
  • The realization that North Korea is just as bad or worse than most people think it is, while simultaneously being less of an inhuman, dystopian nightmare than South Korea, is probably the single most depressing blackpill I've had the displeasure of swallowing. North Korea: poor mountainous authoritarian shithole, you're basically living in Asian Albania. South Korea: birthrates are permanently below levels otherwise only seen during acute famines, students work more than interns in soviet labor camps, this is somehow seen as normal. South Korea is basically all the worst parts of the west, except that instead of having a 200 year run-up, the destruction of the old culture and social mores took place within the span of a single generation. It's basically western capitalism's own Soviet Union experiment. The Soviet Union during the tail end of stalinist collectivization (so when peopke started to have some food to eat again) was probably less insane and anti-human than what passes for normality in SK today for students. And that is NOT some sort of defense of stalinism! Japan, which westerners love to gripe about as this basket case of low fertility, has a birth rate of 1.42. South Korea just dropped to 0.98. Norks are at 1.90. Would you rather live in the irl version of children of men and buy funko pops, or have a family in Albania? [Anglo Distruster 40K]

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