OPEC Humiliates President Biden On A Global Stage
The oil producing nations basically told the U.S. to "shove it", furthering the case that the BRIC nations are moving away from the U.S. dollar and separating economically from the West.
This morning, you get a two-fer. Since my dear friend Kenny Polcari has released new thoughts on the OPEC debacle - and since that was also the topic of my latest podcast, published yesterday, which you can listen to here - I am bringing you both his thoughts and mine, together.
In short, yesterday OPEC humiliated President Biden on a global stage by cutting oil production after he specifically lobbied them not to. There’s no “nice” way of putting it - they straight-up snubbed the U.S. and have now, in my opinion, made it officially clear that they 1) are not our friends, 2) do not care what we want, 3) do not take us seriously and 4) are not here to help us and/or Biden get re-elected by lowering prices.
To use Biden’s parlance, “Let me tell you something, Jack - we’re not in bed with the Saudis anymore. They are more allied with China and Russia than they have ever been, at arguably the most crucial moment in recent history for our global economy.”
As I pointed out last night on my podcast, there was nothing quite like the “fist bump heard round the world” a couple months ago when President Biden - who spends his time here domestically fighting for “equality” and human rights - decided to embrace the Saudis, and their track record of disapproving of gay rights, murdering journalists and multiple other human rights violations - instead of simply ramping up domestic oil production here in the U.S.
Biden probably went into the meeting he had with MBS months ago thinking we had some type of leverage, like we have had decades ago. The sad reality is that we simply don’t anymore: the Saudis have the oil, they have gold, and now they have allies just as big and powerful as the U.S. when combined. And those allies provide financial and military support at a crucial juncture for geopolitics.
Meanwhile, our President remains tone deaf and while his supporters remain immune to what can only be described as blatantly obvious double standards.
While the left hand, Biden was vilifying Exxon and Chevron here in the U.S., basically encouraging them to not bring more supply online, whilst blaming “gas station owners” and other people who don’t set the price of refined fuels.
With the right hand, he was fist bumping a man who publicly disapproves of gay rights and ordered the murder of a critical journalist, in order to try and get him to unleash more oil on the global stage.
And instead of him taking us seriously, he did the exact opposite of what Biden wanted yesterday - cut oil production, raising prices - and humiliated Biden on the global stage.
What must the world be thinking watching Biden shut down the Keystone Pipeline project and lobbying for the end of fossil fuels in the midst of a global energy crisis? I explored (screamed about) those questions, and many others, on my latest podcast rant.
If you haven’t yet, you must listen to this August podcast with Andy Schectman, where we talk about how the global economic is changing profoundly, with the BRIC nations purposefully pulling away from the West. We also discuss what implications this could have for the U.S., and specifically how it could decimate the U.S. dollar:
Meanwhile, Friend of Fringe Finance and well known financial news contributor - as well as 38 year veteran of markets - Kenny Polcari has been kind enough to share his most recent thoughts on the saga with my readers as well.
I’ve been lucky enough to be friendly with Kenny for about a decade now, and he was the first guy to ever take me on what I can only describe as an unauthorized tour of the NYSE trading floor, where I got to personally tell several confused specialists and market makers that the Chinese names they were trading were frauds that didn’t even exist.
I’ve always appreciated Kenny’s willingness to welcome people into his busy world for nothing in exchange, and his decades of experience, which gives you a pulse on markets that only time can help you recognize.
For those who aren’t familiar with Kenny or don’t recognize him from TV, he is Managing Partner of Kace Capital Advisors and Chief Market Strategist at SlateStone Wealth. He started his career on the floor of the New York Stock Exchange (NYSE) as an institutional broker back in the early eighties when the march of electronic trading was already taking its first steps, and the great bull was first learning to run.
Kenny’s thoughts have been lightly edited for punctuation and grammar.
In true Kenny Polcari fashion, his note this morning came with an Italian food recipe and was titled:
OPEC Tells Joey To Shove It…Try The Pasta Carbonara
Earlier in the day we found out what the Saudi’s and OPEC have decided to do to prop up the price of oil. While the expectation was for them to cut production by 1 mil bpd, they surprised the markets and the White House and cut production by 2 mil bdp - that sent oil markets higher and it sent Biden into a rage. It left him wondering why his now infamous ‘fist bump’ with the Saudi’s wasn’t helping the conversation.
And the news caused press Secretary Karine Jean-Pierre to have a stroke, because the administration was not ready for that decision, and so they weren’t ready with an appropriate response. And when things couldn’t get any better, Bernie Sanders had this to say:
“We must end OPEC’s illegal price fixing cartel, eliminate military assistance to Saudi Arabia and move aggressively to renewable energy…”
Yeah – how’s that gonna work? Illegal? By who’s definition? They are a producer, they are in the driver’s seat, we gave it up and left ourselves dependent upon them, much like Angela Merkel left Germany and Europe dependent on Russia. How’s that working out? Eliminate military assistance to the Saudi’s and then what? Watch the middle east implode on top of themselves as they threaten world peace?
Move aggressively to renewable energy? I thought we were already doing that – as fast as we can - and it is not happening anytime soon – certainly not in ‘his’ lifetime and most likely not in mine either. So it seems to me that Bernie is completely out of touch with reality (which shouldn’t be a surprise).
What I find most interesting is that he never once suggested that we pump our own oil and return to being the ‘Swing Producer’ that we were under the prior administration – but let’s not go there right now. It won’t help.
The White House and Biden then announce another release of 10 mil barrels of oil next month from the SPR (it’s draining quickly) while also begging the ‘thug’ who runs Venezuela, yes begging Nicolas Maduro to help out. And by the way, what does the woke left crowd have to say about this? Apparently, nothing - not a chirp from any of them.
Don’t be surprised if Biden suggests that we restart oil contract negotiations with Iran, forgetting the nuclear threat they represent. Oh and how about Russian oil? I’m sure Vlad’s got a few extra barrels hanging around. I mean, it’s ludicrous.
So, energy had another great day yesterday, the XLE adding 2% to its most recent 8% gain over the last 3 days. Healthcare and Tech were up 0.3% while every other sector went red.
Oil, which gained 1.8% yesterday ending the day at $88.03, has been up 15% in the last 2 weeks but is slightly lower this morning. OPEC is defending their position, blaming it on the IEA (Int’l Energy Admin) that predicts a 2 million barrel/day supply surplus, According to OPEC, all they did was “balance it out” by eliminating the 2 mil/bpd. They have now brought supply and demand into balance!
OK - then when should should we see oil trade back to where it was, instead of trading 15% higher? In any event, $100 calls for oil are now the default position because that’s where the Saudis and OPEC want oil to be. And you can bet that’s not where Biden wants it to be heading into mid-terms.
Earnings season is only a week away and this morning, Shell PLC is the just the latest to announce ‘weaker’ 3rd qtr. performance guidance ahead of its report. Shares are down 4% this morning in pre-mkt trading. Analysts are now suggesting that this ‘weak’ guidance means that fiscal year consensus is ‘too ambitious’.
Did you get that? “Too ambitious” - expect to hear more about "too ambitious” estimates in the days ahead by companies that realize they better fess up sooner rather than later [about their ugly numbers] so that analysts can adjust estimates that’ll help them still post a “beat” on earnings day.
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From the very first time I saw that photo with Brandon fist bumping MBS, I thought that the smirk was very telling (on MBS's face that is). And it was telling me that they're gonna treat Brandon like the old fool that he is, tell him what he wants to hear and are gonna punk his stupid ass like a crackhead on Soto St. (East LA). Boy did I call that one. Picture says a thousand words.
In less than 2 years we have become the laughing stock of the world. Putin last week was making fun of the US while was bragging about their Nukes - he said all the US cares about is teenage kids get sex change surgeries.
China is brainwashing our youth to turn them queer or trans or a Furry via Tik Tok - they are going to destroy us if we do not stop this craziness.
The writing has been on the wall since day one of his administration. How the media and half of this country be ok with it is mind blowing.
Watch the show Mr. Robot from 6-7 years ago - it kind of feels like this fucked up world