ELAM: Moving and working

EDITOR’S NOTE: The Dennis Elam and Ray Perryman columns were incorrectly labeled in Sunday’s paper. We apologize for the mistake.

The presence of widespread positive social mood leads to expansive behavior. People spend money and buy real estate and stocks. Negative mood has the opposite effect with money flowing out of real estate and stocks.

The odd thing is that negative mood is evident in Congress. A second impeachment gets underway next week. Democrats just stripped a new Republican of her committee seats, apparently believing they will be in the majority forever. Maxine Waters wants former President Trump tried for murder, ramping up her call to harass Trump supporters at every opportunity. Harsh words like impeachment, abortion, racism, and murder are tossed about like references to blue skies or green grass. Can such a trend be reversed?

My best explanation is that the lockdown has some 40% of workers doing just that from home. Money that was spent on transportation or going to lunch at work, continues to flow into the stock market. The NYSE advance decline line has accelerated to a new high. It is the most reliable indicator of stock market direction. So despite similarities to the dot.com peak such as the speculation in Gamestop and AMC, the markets are headed higher.

As predicted, Team Biden has declared war on the oil and gas industry. Here is the rundown for year 2020 in Texas.

60,000 exploration jobs are gone.

Employment in exploration fell by 25%.

150,000 upstream jobs remain, the fewest in 15 years.

Texas crude oil production hit a record 5.4 million barrels per day in March and plunged to 4.3 mbpd by May.

The number of operating drilling rigs plunged 60% to 155 by year end, the lowest level since the count began in 1944.

The number of drilling permits issued fell by half, the lowest since the 1960s.

If automakers are going 100% electric by 2035, what will power the new demand for 25% more electricity-no one knows.

Despite all that the price of crude has risen to about $57 a barrel. It seems that lower production and increased travel has firmed prices.

Why are we paying Congress to simply engage in Revenge Politics? Is Congress accomplishing anything positive for anyone?

We remind you that FED Chair Jerome Powell apparently cannot read a graph of bond yields. Since August the 30 year bond yield has risen from 1.2% to 1.943%, a 60% increase. As Team Biden throws around the kind of numbers usually reserved for astronomers, expect this process to accelerate. Granting student loan forgiveness will open a Pandora’s Box that will be hard to close. Those who choose not to attend college and those who paid their loans will surely scream foul. And if one gets $50,000 in loan forgiveness, does one receive a 1099 from the IRS for that much income, apparently not. That has been the rule for loan forgiveness in the past.

2021 is shaping up to be an interesting year.