A FEW CHARTS WITH SOME POLITICS - January 07, 2026

The crude inventories are in good shape for this time of year...

It should be noted that the total inventory of Petroleum and Petroleum products are at the highest since April, 2022.

Consumption is near year ago levels, with pricing slightly down. 

Am I the only one noticing that Venezuela crude and Urals crude is similar?

Am I the only one noticing how the same people saying Trump does nothing but lie, lie, lie, are in a rush to treat his every utterance as the Gospel? I guess irrational behavior would create such opposing views. 

I periodically watch a certain UK news station. It was a constant bombardment of the U.S. seizing an oil tanker in the North Atlantic... until is was announced the UK had participated. The is was all rah-rah for the UK military. 

Then is was all about whether the UK was now undertaking a more active role. Yet, it came out the UK vessel was not crewed by Royal Navy, but rather by merchant marines. So who will become more active.

Of course, internation law is bandied about, but there has been literally dozens, if not hundreds of violations of "international law" over the previous decades. 

If there is no one to enforce the law... is there really a law??

Producer Price Index and some other opinions

The Producer Price Index was released this morning and indicated an upturn.

Note that I did not revise the December, 2024 final demand, as did the BLS. Yes, December was revised upward to 3.5%. https://www.bls.gov/news.release/archives/ppi_01142025.htm

The nervous nellies will scream inflation is roaring back. Maybe so, but it will not repeat the horrors of 2021~2022. How can I say that? Once you understand the causes, the answer becomes easy.

• After the covid shutdown and collapse of international trade, the shipping industry was in disarray, with containers to move goods... in all the wrong places.
• Retailers had significantly reduced inventories to meet the slowing demand.
• There was a rather large stimulus paid to American citizens, on top of some previous payouts.
• The covid vaccine was becoming rapidly available.
• The American people were told that it was now safe to resume normal activities.
• An impending west coast port strike for mid 2022, which did not materialize.

Newly freed from fear Americans started immediately spending that stimulus money, which boosted retail sales by 10% in the first month.  The retailers, started ramping up orders significantly to restock the shelves, which exposed the problems with the shipping containers. This was compounded by retailers, pulling orders well ahead to heavily stock up... prior to the threatened west coast port strike. 

The shipping industry has finally recovered, the retail inventories have reached stability, and there are no strike threats on the horizon. There was consideration of a possible port strike on the east coast and gulf, which did increase orders, as well as impending tariff expectations, which also increased orders. 

The port strike is in the rear view mirror and the shipping industry sailed through it easily. The tariff question is still to be answered.

As a further note on retail sales... when adjusted for inflation, they have remained at that March, 2021 level. That will likely be the indicator of future demand... or lack thereof. 

Tariffs would likely weaken demand, so the expectation of massive inflation due to tariffs... not so much.

A Few Reports and some opinions... of course!

The CPI came out today and now that Trump is in office, it has suddenly turned terrible. Nevermind, it is for January, so remarkable for just 11 days in office. /s

The media's memory is a bit wacky, with claims that it has suddenly shifted upward, even though the lowest annual rate since February 2021 was this past September.

A trip down memory lane...

The real earnings report has been ignored and for good reason... weekly wages, when adjusted for inflation have now fallen back to June, 2024 levels. That's seven months, since weekly wages adjusted for inflation have been this low.

Note: The BLS reports both CPI and Real Earnings.

As for the energy report from the EIA, not much in extreme changes. Pump prices will likely rise, but should be noted... still below year ago levels. Of course, the rise will become political, as everything else.

Tariffs... A lot of talk about the damaging effects of tariffs, but the whole matter of FTZ status of dozens of companies have been ignored. A FTZ or "Foreign Trade Zone" status, means a company pays no tariffs, until the end product is sold to the public. There are many large and small companies with FTZs, which include energy companies (refineries, etc.) and automobile companies with their component assemblies. 

Once you understand the magnitude of FTZs, then you should consider that tariffs have long been in existence. 

Another serious argument put forth by many... is the Smoot Hawley act devastated the U.S. Economy during the depression, or at least made it worse. Not sure correlation was causation for this period. It does give the trade aficionados a talking point.

Yes, tariffs will cause inflation. However, off shoring of goods was a primary reason for the erosion of the middle class in the U.S. We basically beat inflation, by utilizing cheap foreign labor. We cannot hope to restore the middle class, without reshoring. 

It really is that simple. 

1-31-2025 Week In Review

Energy

Crude inventory up a bit, with distillates down, and gasoline up. SPR up a bit. Price at the pump has barely budged and should continue in a narrow band.

Politics

It is the same old, same old. It was funny, but is now getting boring. Example: When there is a school shooting, we know what is said immediately by both sides. A plane crash provides us with the same dynamics, but in opposite polarization. 

Unfortunately, there is a history regarding this issue, dating back to the Obama presidency, which is in the courts since 2014 and is still not resolved, as of 1-29-2025.

BRIGIDA v. UNITED STATES DEPARTMENT OF TRANSPORTATION

GDP

Annualized at 2.3%. Personal Consumption Expenditures were up dramatically.

While the 4th quarter jump in personal consumption expenditures is not entirely unheard of... I do wonder about the enormous jump in this past quarter and whether I am able to believe it... which I consider a bit shady. 

One possible explanation of this large jump is people buying ahead of potential tariffs. This is solely based on social media posts, which have people talking about buying stuff now, rather than later. Of course, these are social media posts, which are about as believable as... the GDP numbers.

Of course, if those posts are indicative, then the later buying will not take place and personal consumption expenditures will slow considerably in 1Q2025. Of course, politics will come into sharp view. Or rather sharper view.

PCE Report

Considering the target is 2.0%, The FED is okay with a number above that, as they left rates unchanged. Clearly there is concern for inflation, but there are some troubling signs... regarding the economy.

The Snow has almost melted.

Almost, as it has been 27 days and the temps are expected to be near 60 for a couple of days, and above freezing til the 9th.

End of the line

I am getting so bored with the current news cycle. I think it is time to simply blog, when there is something of interest.

Also, I have had adsense running and think it is time to remove adsense from this blog. I am the only person interested, so it makes more sense to cut adsense. My reasons for adsense were mostly to understand the audience, but since there isn't any... there you go. Besides, there never was any meaningful knowledge to gain, that was not already present under stats. 

Also, I always checked from my home screen and never really looked at the end product on line. I recently checked and clearly, I do not know how to properly place ads. It is rather embarrassing.

Adios!

Changing direction on blogging

A new year is upon us, and just some thoughts.

I am changing direction, as I will restrict my blog entries on a variety of topics. I still track those areas, but find it a bit time consuming to post. Besides, it seems to have cluttered up the site, with no meaningful outside interest.

Thus returning to my thoughts and opinions. Which could be about anything. 

The presidential election is over, but politics is never over, so there is that.

The economy is something of interest, which includes several items and becomes political.

International events might arise, which are also political in nature. 

Frankly, about everything that happens anymore... becomes political, whether immigration, crime, etc.

I could summarize what transpired in 2024, but you should already know. What none of us know... is what impact it will have on 2025.

We have the debt ceiling, a new congress, a new president, wars cropping up everywhere, and the list goes on and on. 

After the past few years of revisions to various previous month's economic numbers, which resulted in more positive news on date of release... we will likely start to see the truth going forward. I am suggesting the results have not been as positive as the media has proclaimed. 

Energy Prices

Futures indicate that gasoline pump prices ranging from -4.2¢~+4.4¢ over the near term. 

Port Strike

It strongly appears that the ILA v USMX strike will be postponed for 3 1/2 months, as that would be the most beneficial for both sides. 

Tariffs

Has anyone been watching the foreign exchange market? The Yen and Yuan have been weakening against the dollar. So have a host of other currencies. 

Woohoo! The strong dollar fans are overlooking what caused offshoring and will inhibit reshoring. Our trading partners are not converting all those sales in dollars... back to their native currencies. No, they are purchasing Dollarized assets, such as bonds, financials, properties, etc. 

Basically... propping up the dollar. We have not learned a darn thing over the past 40 years, as to why the early 80s inflation was brought down so low, until the great covid shipping snafu. 

That's it for this week.