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Energy News Beat

It’s premature to think rate cuts are right around the corner, we haven’t decided anything yet, it’s meeting by meeting, but in March no way Jose, I mean, that’s not my base case.

By Wolf Richter for WOLF STREET.

Powell’s press conferences that follow the FOMC meetings are somewhere between a hoot and a mess, because the reporters are trying by hook or crook, with often inane questions and speculative scenarios, to get Powell to say something that, when read in between the lines, could be twisted into “Powell was dovish,” which has been standard operating procedure for the past 18 months.

So, while we wait for the “Powell was dovish” commentary to come out of the woodwork, I have created a cocktail that consists of quotes of what Powell said, and summaries of what he said, at today’s post-meeting press conference concerning inflation and rate cuts, all mixed together, stirred, not shaken, and served with a smile.

Here’s the Powell cocktail, not quite in his own words:

We’ve jacked up our policy rates by 525 basis points over the past two years and moved it well into restrictive territory, and we’ve done nearly $1.3 trillion in QT, we’ve significantly tightened monetary policy, and we have been seeing the effects on inflation.

Inflation has eased over the past six months, and that’s very good, so I’d say our policy rate is likely at its peak for this tightening cycle, but we will need to see continuing evidence to build confidence that inflation is moving down sustainably toward our goal before we cut rates.

But this cooling inflation could be a head fake, the decline in prices of durable goods might not last, and rent inflation might not play along with it, and other services might not play along with it, so we’re not rushing to cut rates, we’re going to watch this carefully.

The economy is good, it has expanded faster in 2023 than we expected despite the tightened policy. And the labor market is rebalancing well, it’s still tight, and the pay increases are still strong, but it’s not out of whack like it was.

We’re not trying to slow the economy, but we need to make sure that inflation actually stays on track to 2% core PCE, and we need to make sure that we don’t fall for a head fake. We want to take advantage of this situation and finish the job on inflation while keeping the labor market strong.

So you ask, a rate cut in March? It’s premature to think rate cuts are right around the corner, we haven’t decided anything yet, it’s meeting by meeting, but no way Jose, I mean, that’s not my base case.

That’s why we included that rate-cut mania push-back language in the statement, to signal clearly that, with strong growth, strong labor market, inflation coming down, the committee intends to move carefully as we consider when to dial back the restrictive stance.

We will be data-dependent as we approach that question of when to begin to dial back restrictions. We will be looking at this meeting by meeting. But based on the meeting today, I would tell you that I don’t think it’s likely that we’ll reach a level of confidence by the time of the March meeting to identify March as the time to cut rates.

But that doesn’t mean we wait around to see the economy tank, because it’ll be too late. We are really in risk-management mode – of managing the risk that we move too soon or move too late.

So there is a risk that inflation will re-accelerate. When we look back, what will we see? Will inflation have dipped then come back up? Are the last six months flattered by factors that won’t repeat themselves?

Of course, if inflation were to surprise by moving back up, we would have to respond, and that would be a surprise at this point, but that’s why we are keeping our options open here, and why we are not rushing.

But I think the greater risk is that inflation will stabilize at a level meaningfully above 2%. That is more likely to me.

Both of those are risks, but I think the more likely risk is that inflation will stabilize at a level meaningfully above 2%.

If we see inflation being stickier, or higher, or those sorts of things, we would argue for cutting rates later.

If we see an unexpected weakening in the labor market that would certainly weigh on cutting sooner.

So you ask, what good reason is there to keep policy rates above 5%? As you know, almost every participant on the Committee believes it will be appropriate to reduce rates. We feel like inflation is coming down. What we are trying to do is identify a place where we’re really confident about inflation getting back down to 2% so we can then begin the process of dialing back the restrictive level.

The median participant wrote down three rate cuts this year. But I think to get to that place where we feel comfortable starting the process, we need confirmation that inflation is in fact coming down sustainably to 2%.

So you ask, will this rate cut when it finally comes, be just a one-off? You know, that will really depend on how the economy evolves. We’ll be looking at the economic data, and we’ll make our decisions based on that. There are risks that would cause us to go slower, for example, stronger inflation. And there are risks that would cause us to go faster or sooner, for example, a weakening in the labor market or very persuasive lower inflation. So we will just be reacting to the data. That is the only way we can really do this.

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Energy News Beat

Daily Standup Top Stories

Stuart Turley: [00:00:14] Hello, everybody. Welcome to the Energy News Beat podcast. My name’s Stu Turley, president of the sandstone Group. And today is February 1st, 2024. And I mean we’ve got some stories. Let’s go through them. First story coming around a corner is America. Enemies are hoping we go green. That’s a we can have some seriously high priced energy. Let’s go to the next story with green crime and electric car wind. Solar crime wave. I mean, this is nuts are AI surges catches the US grid off guard. Keeps coal plants in business. There’s a lot to this story. Hey, let’s come around the corner and go over to Ponda, Saudi Arabia. And it orders Aramco to lower the capacity target. I talked to David Blackman about this story. Let’s also go over to Norway. Norway defends deep sea mining, says it may help break China and Russia as rare earth strongholds. I tell you, this story brings up a lot of, ESG questions. And, I want to give a shout out some of our Substack folks. So, with that, let me get started here. As always, go ahead and please subscribe, like and subscribe to our newsletter, Substack. We want you and I’m telling you what our website is going nuts. EnergyNewsBeat.co Yesterday we had 35,000 people on the site from all over the world. And today I think we’re going to go over to 40,000 today. So people love our new stories there. So reach out and if you want on the podcast we will be at late next week. [00:02:05][111.4]

Stuart Turley: [00:02:06] Here’s a great story in this one is America’s enemies are hoping we go green. And let’s see. This one is from M.S in, BC. So, when we sit here and take a look, the white House holds enormous natural gas project in victory for environmental issues. That is a gigantic mistake. Based on this, administration, the world is unbelievably tied to Russia natural gas. And we stood up and told our natural gas folks, our allies around the world, Biden said, we will support you and supply all the natural gas. And then, they go and do this so that they can win back their green gas and winning out of our ban, on the natural gas delays and other things that they’re considering right now. They’re banned for any new, contracts or any other LNG. And that is China, Qatar And you’re taking a look at several others as well, too. And Russia couldn’t be happier. So the world is leaving the United States because of our current administration’s global economic policies. In order to pacify their global Green New Deal. Folks, you have to remember that the EIA put out the reason the U.S lowered their emissions by 20%. Remember, China in last year raised theirs by 220% because of their coal plants going in. And we lowered ours because of natural gas. So we gotta think about this here guys. [00:04:14][127.7]

Stuart Turley: [00:04:15] Let’s go ahead and go over the next one here. This is pretty crazy. Just when you thought it was safe to go to an EV, a green crime, an electric car, wind and solar crime wave. This article is really pretty. Pretty sad. The Inflation Reduction Act, intends to spend 7.5 billion taxpayer money to build charging stations for electric car owners. Two years later, no EV chargers were built, and that’s good. And part of the problem is Seattle began installing dozens of Eevee chargers and only to have thieves show up and raid at least eight of the charging cables for copper, requiring thousands of dollars worth of repairs. They’re also going over. Copper is toppling. Radio tower in Oklahoma and it is just nuts. So you take a look at the copper and rare earth minerals that are being needed to help go into the grid. Thieves. And the price for. You know, copper is just going nuts. So, buckle up. And if you are driving an RV, more power to you. In Fresno, there was $100,000 in copper wire stolen from a solar farm. So, they’re the top of the food chain for theft because they’re usually away from folks. So copper thieves cut into a turbine and hauled out cables and then drive away, causing millions of dollars in theft. So in the UK, there’s a 48% increase in solar and cable green copper theft and 5000 major solar thefts around, Europe. Got to give a shout out to Tammy Nemeth on this. She found this story, and, she is a very much a worldwide industry thought leader. [00:06:28][132.9]

Stuart Turley: [00:06:29] Okay, let’s roll over to eye on this one. AI surge catches us grid off guard and keeps coal plants in business. You know, it’s kind of sad that the thieves are keeping, you know, every the poor grid folks from trying to keep it going, but I and the number of data centers that are going on had a great interview, about AI and the increase of security that we needed. And, it is just crazy. Bloomberg reports that a patch of Northern Virginia, which is called the data center alley, which has seen explosive growth. Well, that happens to also be coal country. And so, the power problem is not limited to Virginia has been seen going across the United States. And so you take a look at Amazon and you take a look at Google, and you take a look at the other folks that are looking to put in, big, data farms. They need low cost energy and they need to put them actually in the geothermal areas of the country. So geothermal is about the cheapest that you’re going to get in many ways. And I would put my I would park my data center right next to a nuclear facility. Love me some nuclear. [00:07:55][86.4]

Stuart Turley: [00:07:57] Let’s go over the pond here to Saudi Arabia. Orders Aramco to a lower capacity target. You know, I thought that this was a way, when I first heard this, that it was going to be a way to manipulate oil prices. But when we take a look at this article, I talked to David Blackman about this earlier today, and he brought out some fantastic points. And it was because, they in its latest report, OPEC forecast that demand for oil would grow about 1.3 million barrels per day by the end of 2025. The producer, group would only be able to unwind a third of the current OPEC cuts of close to 4 million, barrels per day. So this reduction in cap X really is a smart move by the Saudi Arabia government. And Saudi Aramco shares closed up. Looks like .02 percent and or $8 and 35 cent, 3130 rials. And so this is an absolute wonderful thing for them to protect their cash flow, protect their CapEx. They are doing what’s right. Saudi Arabia is doing Saudi first. They’re also investing in renewables technology using the profits. I call this good management good numbers. So, Aramco in the last two quarters paid its shareholders nearly $10 billion in performance linked dividends. [00:09:39][102.0]

Stuart Turley: [00:09:40] My first thought was this was not necessarily good talking to David Blackman. He really helped turn my corner on how I thought about this Norway defense. Deep sea mining, which says it may break China and Russia’s rare earth, stronghold. This one might be also a either Tammy Nimitz or Irene, slam email that had this one in it. And, no. Norway. I love Norway. From the standpoint that they have a lot of natural gas, they. Several years ago, they had slowed down and were turning off their natural gas fields. They have a lot of hydro that they sell to other countries. But let’s go through the top bullet points in this. In a vote earlier this month that attracted cross-party support in Norway, parliament voted 80 to 20 to approve the government proposal to a vast ocean area for commercial deep sea mining. I honestly do not know the ESG impact of deep sea mining. I’m going to be studying this, and the environmental campaign group say that the approval of, extremely destructive process sends a terrible signal to the rest of the world. The problem that Norway is trying to solve is that they turn back on their natural gas fields. They are now a major supplier through the, their gas pipelines to the UK and the EU. And then when you sit back and take a look, we have China and we have, it’s crushing, it’s crushing blow to the, critical minerals. And so you couldn’t even think about building EVs or the, energy transition. However, I want to give a shout out to Pomerleau Hill on the Crude Truth Substack he put out there in his comment, Was China on book? This was on a different one. I just want to give him out a shout out. This was on actually the China on the, book oil, Pablo Hill on the Crude Truth Substack. I’m not. I had an interview with Captain Current, Kelly, who is such an ocean, defender of the ocean. And I’m going to reach out to him and some of the, issues that were out there were that in the deep, deep coal, like the North Sea, deep sea mining may not have as big of a environmental impact, I don’t know, but on the other hand, we’ve got to figure out ways of not harming the children in the Congo and taking advantage of Africa, and then also getting away from the stranglehold on, China. None of this is easy. And if you have solutions, give me a call. [00:12:57][196.6]

Stuart Turley: [00:12:58] Thank you again to all of our wonderful subscribers. Our team, David, myself and Jay Young will be at Nate. We will be doing live podcast. We’ll have 3 or 4. We have four booths, but we may have 3 or 4 different total sections. We have great guest lined. And we’re going to have a lot of fun. Stay tuned. Buckle up and enjoy the ride, guys. Stay safe out there. [00:12:58][0.0][757.0]

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Energy News Beat

 

Alamos Gold (TSX: AGI; NYSE: AGI) fell victim to a cyberattack this week that saw confidential corporate data get disclosed to the public, according to an exclusive scoop by Toronto-based newspaper The Star.

The security breach involved sensitive information such as social insurance numbers, payroll reports, financial information, and home addresses and cell numbers for senior executives, all of which were published online by the hackers, the report said.

The attack was reportedly carried out by Black Basta, the same ransomware group responsible for prior attacks on Sobeys and Yellow Pages Canada, said Josh Rubin, author of the report, citing a mining industry cybersecurity expert.

The gold miner currently employs more than 1,900 people. It operates three mines in North America: the Young-Davidson and Island gold mines in northern Ontario, Canada, and the Mulatos mine in Sonora state, Mexico.

Alamos Gold closed Wednesday’s session down 0.7% to C$16.28 a share, having traded between C$13.35 and C$20.20 over the past 52 weeks. The intermediate gold producer has a market capitalization of approximately C$6.5 billion ($4.8bn).

Mining’s cyber threat

The latest incidence with Alamos Gold highlights the increased concerns of digital security within the mining industry and the frequency of attacks that can hamper the mineral extraction business.

Last December, global miner Anglo American (LSE: AAL) saw its email distribution channels get compromised, resulting in a crudely worded message and an inappropriate graphic sent to company subscribers. Four months earlier, Freeport-McMoRan (NYSE: FCX) also suffered a cyberattack, albeit a minor one that it said had limited impact on production.

In March of 2023, Rio Tinto (ASX: RIO) reported what was considered the largest cyberattack on miners at the time, which saw personal data of current and former employees being uploaded onto the dark web.

In late 2022, Vancouver-based Copper Mountain Mining — now owned by Hudbay Minerals (TSX: HBM; NYSE: HB) — dealt with a ransomware attack that led to a six-day shutdown of its Canadian treatment plant.

EY Global Information Security survey reported that 54% of mining and metals companies experienced significant cyberattacks, with 55% of executives expressing concern over their ability to manage such threats.

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