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South Korea October core inflation data the highest since December 2015

  
Analysis, Economy

CPI data out of South Korea a few minutes ago.

Headline +3.2% y/y
  • prior +2.6%
  • highest since January 2012
  • +0.1% m/m (prior 0.5%)
Core inflation +2.4% y/y
  • prior +1.5%
  • highest since December 2015
SK’s central bank has a 2% CPI target, October’s rate is the 7th consecutive month above target
  • oil product prices, fresh foods and housing rentals continued to rise

$120 oil may be only seven months away

  
Analysis, Crude

Bank of American and Goldman Sachs with some bullish comments

Bank of American and Goldman Sachs with some bullish comments
The OPEC+ decision is on Thursday and another 400k/bpd is expected to be added as OPEC sticks to the script. There’s some tail risk they could add more as the US and others lean on them.
WTI is up 51-cents to $84.08 and rose as high as $84.88.
One note that’s getting some attention today is from Bank of America, where analysts say $120 oil could arrive by June.
They cite a potential for surging gasoline demand along with jet fuel.
Goldman Sachs also highlights an increasingly bullish backdrop.
“We estimate that oil demand is nearing 100 million b/d, its pre-COVID level, with winter seasonality and the recovery in international jet demand set to bring demand to record highs by early next year,” they wrote today.
The biggest tell might be the increasing backwardation in the crude market. That’s a sign that oil is being rapidly pulled from inventories.
On another commodity front, European wheat is challenging the 2008 all-time high.

One day this might be tradable data

  
  Analysis

Global warming is still an abstraction for markets

At some point, maps like this could matter to markets. Warming is universal for the globe but how it impacts different countries is widely varied.

 

Looking at the big picture, leaders were trying to lean on India to do more at the climate conference with little success. It seems the stakes are pretty high there though, while much of the developed world would be spared. Of course, none of this takes into account things like sea levels or extreme weather.

New records for the 3 major indices (again)

  
Analysis, US Market

39th record close for the Nasdaq, 40th for the Dow and 60th for the S&P

The three major indices closed at record levels once again.  For the year, the

  • NASDAQ closed at a record level for the 39th time
  • Dow industrial average closed at a record level for the 40th time
  • S&P index closed at a record level for the 60th time
  • Sector leaders were energy, and consumer discretionary
  • Sector laggards were communication services and healthcare
The final numbers are showing:
  • Dow industrial average rose 94.26 points or 0.26% at 35913.83
  • S&P index rose .29 points or 0.18% at 4613.68
  • NASDAQ index rose 97.54 points or 0.63% at 15595.93

The biggest winner was the small-cap Russell 2000. It rose 60.93 points or 2.65% at 2358.12. The Russell 2000 is up 5.2% over the last month

A sobering look at the shipping crisis

  
  Analysis

No easy solutions and the problem may last for a long time

No easy solutions and the problem may last for a long time
One of the best things I read this weekend was a Medium post from a trucker describing what’s happening in US shipping on the ground and why it won’t be fixed any time soon.
  • Crushing wait times at ports
  • Shortage of shipping container chassis
  • Containers are being stored wherever they can find space, just so they can unload the next ship
  • Warehouse unloading is also a snag due to poor worker pay and shortages
  • Consumers will be hit next with delays
He highlights how it’s a problem right from the port through trucking incentives and at warehouses.
This is the scary part:

“What is going to compel the shippers and carriers to invest in the needed infrastructure? The owners of these companies can theoretically not change anything and their business will still be at full capacity because of the backlog of containers. The backlog of containers doesn’t hurt them. It hurts anyone paying shipping costs – that is, manufacturers selling products and consumers buying products. But it doesn’t hurt the owners of the transportation business.”

Oil creeps higher to start the new week

  
Analysis, Crude

WTI trades back up to above $84 on the day

There has been some exhaustion to the upside momentum but buyers are not exactly letting up either, keeping a defense at the recent lows around $80.79 last week before seizing back near-term control now on a push above its key hourly moving averages:

WTI
The $85 mark still poses a modest resistance point on the daily chart but the fundamentals continue to look solid for oil as we look towards next year.
A Bloomberg report highlighted that China’s stockpiles are down to their lowest since February 2020 and that creates more headaches for local authorities who are already needing to deal with the power crunch amid shortages of coal and natural gas.
As such, that could see state enterprises come in to replenish inventories even as prices are at elevated levels i.e. underscoring added demand for crude stocks.
OPEC+ will also be meeting later this week so there’s that to factor into consideration but I doubt the bloc will do much to shake up the status quo for the time being.

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