SEC official says markets ‘functioning well’ despite high trading volume, volatility

Securities and Exchange Commission official Brett Redfearn told CNBC’s Bob Pisani that the U.S. markets are having “very few technical issues” despite extremely high trading volume and elevated volatility.

“Our markets have held up very well. They’ve been orderly, they’re functioning well. We’ve seen very few technical issues, very few system glitches,” Redfearn said on “Squawk Alley.” “And fundamentally I think the verdict is our markets are demonstrating remarkable integrity and resiliency.”

The U.S. stock market had its worst stretch since the financial crisis last week, with the Dow Jones Industrial Average plunging about 12%. Trading volumes were higher across the board, and the Cboe Volatility Index spiked above 40 to hit its highest level in two years.

That turmoil has continued this week, with the volume of the SPDR S&P 500 ETF Trust, a widely traded fund that tracks the broader market, surpassing its 30-day average volume by midday Tuesday.

The activity has led to some issues for online brokers and trading platforms, including Robinhood, but Redfearn, who is the director of the SEC’s division of trading and markets, said the markets themselves have held up. Improvements to the markets have helped them perform better this time than in other turbulent periods, Redfearn said.

“I think the exchanges have made a significant amount of investment in the infrastructure, and I would also say the SEC has put a number of different rules and other procedures in place,” Redfearn said.

The SEC official also said he didn’t see a need to bring back the uptick rule, which was eliminated in 2007. The regulation, which billionaire investor Leon Cooperman called for on Sunday, prevented short sellers from betting against stocks that are already falling.

However, Redfearn said the SEC already has a similar rule in place that kicks in once the market is down 10% or more. The regulator implemented the rule, called Rule 201, in 2010.

“That slows them down, and that’s an initiative that was put in place after the financial crisis to help deal with those concerns about short sellers,” Redfearn said.

3 Billion Years Ago, the World Might Have Been a Waterworld, With No Continents At All

Evidence from an ancient section of the Earth’s crust suggest that Earth was once a water-world, some three billion years ago. If true, it’ll mean scientists need to reconsider some thinking around exoplanets and habitability. They’ll also need to reconsider their understanding of how life began on our planet.

A new paper presents these results in the journal Nature Geoscience. The title of the paper is “Limited Archaean continental emergence reflected in an early Archaean 18O-enriched ocean.” The co-authors are Boswell Wing of the University of Colorado, Boulder, and his former post-doc student, Benjamin Johnson at Iowa State University.

The work is focused on an area in the Australian Outback called the Panorama district. In that region in northwestern Australia there’s a slab of ocean floor 3.2 billion years old, that’s been turned on its side. The chunk of crust holds chemical clues about ancient Earth’s seawater.

“There are no samples of really ancient ocean water lying around, but we do have rocks that interacted with that seawater and remembered that interaction,” Johnson said in a press release.

“The origin and evolution of Earth’s biosphere were shaped by the physical and chemical histories of the oceans.”

From the paper “Limited Archaean continental emergence reflected in an early Archaean 18O-enriched ocean.

The authors wanted to re-boot the debate over what ancient Earth looked like, and to break new ground in the discussion.

In the introduction to their paper, the two authors say “The origin and evolution of Earth’s biosphere were shaped by the physical and chemical histories of the oceans. Marine chemical sediments and altered oceanic crust preserve a geochemical record of these histories. Marine chemical sediments, for example, exhibit an increase in their 18O/16O ratio through time.” 

Marine sediments have been well-studied over time, but the authors of this study looked at the ancient crust instead. The ancient oceans held different types of oxygen that were then deposited into the crust. The scientists gathered over 100 samples of the ancient rock and analyzed it for two oxygen isotopes: oxygen-16 and oxygen 18. They wanted to find the relative amount of each isotope in the ancient crust, to compare it to the amounts in the sediment.

Their results showed more oxygen-18 in the crust when it was formed 3.2 billion years ago, meaning the ocean at that time had more oxygen-18. The pair of researchers say that means that when that crust formed, there were no continents. This is because when continents form, they contain clays, and those clays would have absorbed the heavier oxygen-18. So if there had been continents 3.2 billion years ago, their crust samples would have held less oxygen-18.

The over-arching conclusion of their work is that the Earth’s oceans went through two distinct states: one prior to continents forming, and one after continents formed.

Marine chemical sediments have been studied extensively to try to piece together continent formation on ancient Earth. As the study says, those ancient sediments include “carbonates, phosphates, microcrystalline silica and iron oxides. As these minerals form directly from aqueous species, they can reflect the ?18O of the water with which they coexist.” The sediments are like an archival record of Earth at the time, and the older sediments show oxygen-18 values increasing steadily through time, all the way up to today. But this work contrasts with that, and the authors suggest that seawater oxygen-18 decreased through time.

The pair of scientists constructed a model for ancient Earth, showing that “the initiation of continental weathering in the late Archaean, between 3 and 2.5 billion years ago, would have drawn down an 18O-enriched early Archaean ocean to ?18O values similar to those of modern seawater.” So only after continents formed, could the oxygen-18 values begin to look like modern values.

Although this study points to the possibility of ancient Earth as a water-world, it doesn’t mean that the planet was without any land-forms. Island-size areas of land, or even micro-continents, may have existed at the time, volcanic in nature, and very rocky. But the types of vast land-forms that cover the Earth today, rich in soil and with tall mountain ranges, may not have existed. If they had, the oxygen-18 content would have more closely resembled today’s.

“There’s nothing in what we’ve done that says you can’t have teeny, micro-continents sticking out of the oceans,” Wing said in a press release. “We just don’t think that there were global-scale formation of continental soils like we have today.”

The authors aren’t suggesting that their work is the definitive piece of evidence in the ongoing discussion around early Earth. They note that their are other possible reasons for their results.

If the ancient continents formed much more slowly than modern continents, that could explain the the discrepancy in oxygen-18. It’s also possible that the clays that absorb oxygen-18 formed in the ocean itself, rather than on the continents.

That points to an enduring mystery in Earth science: when exactly did continents form?

It’s likely, according to some evidence, that the continents could only form as the Earth’s core shed heat and cooled down. In any case, modern continents didn’t take shape until after the Jurassic. Prior to that, the single super-continent of Gondwana covered about one-fifth of the Earth’s surface. Wing wants to examine younger areas of the Earth’s crust to try to determine more clearly when the modern continents formed.

This study also touches on early life on Earth, and how and when it formed. Earth’s early oceans, much like modern oceans, acted as a buffer, which “mediated climatic feedbacks between the biosphere, atmosphere and geosphere through deep time, helping to ensure long-term planetary habitability.”

Science has painted a picture of what the early Earth may have looked like, and what the nature of the oceans was. But it’s far from complete. The evidence is all buried, in rock and in time. And as we seek to understand climate change here on Earth, and as we get better and better looks at exoplanets, all these questions about ancient Earth, the oceans, and the biosphere, take on new importance.

As the authors say in their paper, “An early Earth without emergent continents may have resembled a ‘water world’, providing an important environmental constraint on the origin and evolution of life on Earth as well as its possible existence elsewhere.“

“The history of life on Earth tracks available niches,” said Wing. “If you’ve got a waterworld, a world covered by ocean, then dry niches are just not going to be available.”

Always wanted to be an astronaut? NASA is now hiring

This job opportunity is out of this world — literally. For the first time in over four years, NASA is accepting applications for its next crop of astronauts, the agency announced Monday.

Not every space hopeful will get to don the iconic astronaut suit, however. Applicants must be U.S. citizens and meet one of the stringent education requirements, which include having either a master’s degree in a STEM field, a medical degree, or a combination of a STEM degree and test pilot training.

Potential astronauts must also have at least two years of related professional experience — or have completed at least 1,000 hours of “pilot-in-command time” in jet aircraft. Then they still have to pass NASA’s long-duration spaceflight physical.

Applicants are required to complete an online assessment that can take up to two hours to finish. The deadline to apply is March 31.

The agency announced last month that it would begin hiring new astronauts, but just began accepting applications Monday.

The opportunity comes as NASA moves ahead with plans to send the first woman and next man to the moon by 2024 with its Artemis program.

The Artemis mission seeks to “demonstrate new technological advancements and lay the foundation for private companies to build a lunar economy.” The goal is to have humans explore the moon’s South Pole surface for the first time ever and lay the groundwork for human missions to Mars later this century.

“America is closer than any other time in history since the Apollo program to returning astronauts to the Moon,” NASA Administrator Jim Bridenstine said in a press release. “We’re looking for talented men and women from diverse backgrounds and every walk of life to join us in this new era of human exploration that begins with the Artemis program to the Moon. If you have always dreamed of being an astronaut, apply now.”

The final astronaut candidates are expected to be selected by the middle of next year and would then begin training as the next class of Artemis Generation astronauts, according to NASA.

In 2015, when the agency was last looking for new astronauts, more than 18,000 people applied. Following over two years of “intensive training,” 11 new astronauts made the cut and graduated in a public ceremony in January. A member of that class, Jonny Kim, notably became NASA’s first Korean-American astronaut.

“Becoming an astronaut is no easy task, because being an astronaut is no easy task,” said Steve Koerner, NASA’s director of flight operations and chair of the Astronaut Selection Board. “Those who apply will likely be competing against thousands who have dreamed of and worked toward going to space for as long as they can remember. But somewhere among those applicants are our next astronauts, and we look forward to meeting you.”

NASA has chosen 350 people to train as astronaut candidates since the 1960’s and currently has 48 astronauts in its “active astronaut corps.”

Australian Associated Press closing after 85 years

CANBERRA, Australia (AP) — National news agency Australian Associated Press said Tuesday it was closing after 85 years, blaming a decline in subscribers and free distribution of news content on digital platforms.

“The saddest day: AAP closes after 85 years of excellence in journalism. The AAP family will be sorely missed,” AAP Editor-in-Chief Tony Gillies said in a tweet.

AAP’s more than 170 journalists will cease operations by June 26. Its Pagemasters editorial production service will also close at the end of August, the company said.

“The unprecedented impact of the digital platforms that take other people’s content and distribute it for free has led to too many companies choosing to no longer use AAP’s professional service,” the company said in a statement. “We have reached the point where it is no longer viable to continue.”

Sydney-based AAP is renowned for its fair and impartial reporting as well as its extraordinary reach across rural and urban Australia.

The Australian Parliament applauded AAP for its contributions an hour after its demise was made public .

“When you have such an important institution such as AAP coming to an end, … that is a matter of real concern,” Prime Minister Scott Morrison told Parliament.

Opposition leader Anthony Albanese said, “Today is a tragedy for our democracy.”

“You will leave a massive void in terms of information coverage,” he added.

AAP Chairman Campbell Reid said the organization had been for generations “journalism’s first responder.”

“It is a great loss that professional and researched information provided by AAP is being substituted with the un-researched and often inaccurate information that masquerades as real news on the digital platforms,” Reid said.

AAP’s domestic nationwide news coverage with bureaus in every state and territory is complemented by alliances with major international news agencies including The Associated Press.

The AP licenses its news text and photo services to AAP for redistribution into the Australian media market and its customers. AP is also contracted to use AAP text and photos.

AAP was started in 1935 by newspaper publisher Keith Murdoch, father of News Corp. founder Rupert Murdoch.

AAP is owned by Australian news organizations News Corp. Australia, Nine Entertainment Co., Seven West Media and Australian Community Media.

The first inkling that most AAP staff had that their jobs were in danger came on Monday with a Nine newspapers’ report that noted the weakest advertising market since the global financial crisis in 2008.

AAP made a modest 929,000 Australian dollar ($608,000) profit last year on AU$65,674,000 ($43 million) revenue.

AAP management broke the news of the closure to staff on Tuesday afternoon.

“We are obviously devastated by the news,” AAP Canberra Bureau Chief Paul Osborne said.

“But we are proud of AAP’s achievements over 85 years and know that everyone who worked on the wire gave it their all, in the name of fair, balanced and accurate reporting, ” the 20-year AAP veteran said.

AAP Melbourne reporter Benita Kolovos described as “heartwarming” the sight of #saveAAP trending on Twitter on Tuesday afternoon.

“I work with the best women and men and hope I will continue to be able to,” Kolovos tweeted. “Impartial journalism is vital to our democracy. Without it, the public will be worse off.”

Her Melbourne colleague Karen Sweeney noted that AAP’s top 10 sports stories on Monday were published 1,595 times and top 10 news stories were published 2,514 times.

“That’s 4109 blank spaces on websites and newspapers, dead air on radio that would need to be filled without us,” Sweeney tweeted.

AAP Brisbane reporter Christine Flatley described her workplace since 2006 as “hands down the best news organization I have worked for.”

Australian media organizations are under mounting financial pressure with global digital giants Google and Facebook taking a growing chunk of advertising revenue.

Media Entertainment and Arts Alliance, the journalists’ union, described the decision to shut down AAP as a “gross abandonment of responsibility by its shareholders — Australia’s major media outlets.”

“Bean-counters at the top of media organizations might think they can soldier on without AAP, but the reality is it will leave a huge hole in news coverage,” the union’s federal president, Marcus Strom, said in a statement.

“Filling those holes will fall to already overburdened newsroom journalists. Or coverage will simply cease to occur,” he said.

SpaceX aims to launch 70 missions a year from Florida’s Space Coast by 2023

SpaceX is planning a huge boost to the number of rocket launches from its Florida launch sites in the next few years as the company builds its Starlink satellite megaconstellation while meeting flight demands from its customers, according to a federal environmental report.

The missions for SpaceX’s Falcon 9 and Falcon Heavy rockets will also have more options than in the past, according to the report, which was first reported by SpaceNews. One change will be a new mobile service tower allowing some missions to be assembled vertically, rather than horizontally. Another will be the capability to launch to polar orbits — quite the feat, since Florida is located close to the equator and better optimized for missions that operate close to the equator. SpaceX also plans to test recovering payload fairings as the company pushes for greater mission reusability.

By 2023, the company wants to launch 70 missions a year from its two Florida launch sites at the Kennedy Space Center and nearby Cape Canaveral Air Force Station, using Falcon 9 and Falcon Heavy rockets. This rate is a seven-fold increase from the 11 missions SpaceX put into orbit in 2019, and almost double the 38 planned launches in 2020. That information comes from a draft environmental assessment published Thursday (Feb. 27) by the Federal Aviation Administration’s Office of Commercial Space Transportation.

“This launch schedule is based on SpaceX’s anticipated need to support NASA and DoD [Department of Defense] missions, as well as commercial customers,” the assessment reads in part. “In addition to its typical launch trajectories, SpaceX is proposing … to include a new Falcon 9 southern launch trajectory to support missions with payloads requiring polar orbits. SpaceX estimates approximately 10 percent of its annual Falcon 9 launches would fly this new southern launch trajectory.”

SpaceX has two launch sites in Florida. One is at the historic Launch Complex 39A (LC-39A) of NASA’s Kennedy Space Center and the other is located Space Launch Complex 40 of the Cape Canaveral Air Force Station. The company also has two rocket landing pads at the Air Force Station. Its drone ship “Of Course I Still Love You,” used for rocket landings at sea, is based in Cape Canaveral, as are two payload fairing recovery ships and a Dragon spacecraft recovery ship.

The Hawthorne, California-based company also has a West Coast launchpad at California’s Vandenberg Air Force Base, with a second drone ship available for offshore landings. SpaceX’s first rocket, the Falcon 1, launched from Kwajalein Atoll in the Marshall Islands of the Pacific Ocean.

Polar launches and a Mobile Service Tower

The new polar trajectory would require missions to fly alongside the Florida coast to reach the correct orbit, which could generate sonic booms. The SpaceNews report, citing a March 2019 assessment by Blue Ridge and Consulting included as an appendix to the FAA’s document, says there would be a “low probability of structure damage (to glass, plaster, roofs, and ceilings) for well-maintained structures” in that area, assuming a peak overpressure of 4.6 pounds per square foot under typical flight trajectory and atmospheric conditions.

The mobile service tower would be used for a variety of launches, including security missions from the United States Air Force. The FAA states it will be built on SpaceX’s existing launch pad at LC-39A at the Kennedy Space Center, standing about 284 feet (86 meters) tall and 118 feet (35 meters) wide on its longest side. Any lighting for the tower would be constructed to comply with local environmental regulations concerning sky glow, the FAA added.

SpaceX plans to recover payload fairings, in which satellites are stored during launch, “using power boats to ‘chase and catch’ the chutes and the fairings,” FAA said. SpaceX caught half of a fairing on June 25, 2019 after a Falcon Heavy launch, and it hopes to recover three payload fairings a month between 2020 and 2025. This could lead to an environmental problem.

“During these six years, SpaceX anticipates up to 432 drogue parachutes and up to 432 parafoils would land in the ocean,” the FAA stated. “SpaceX would attempt to recover all parafoils over this time period, but it is possible some of the parafoils would not be recovered due to sea or weather conditions at the time of recovery.” There is a backup available if the power boats fail, which is using a salvage ship that could track down the fairing using GPS data and strobe lights located on the fairing data recorders. That said, recovery could be impossible “if sea or weather conditions are poor,” the FAA said.

SpaceX’s rocket fleet

Of note, the report covers activities from Falcon 9 and Falcon Heavy launches and makes few mentions of Starship, which is SpaceX’s forthcoming larger rocket system that could take on even heavier launches. The FAA noted, however, that “as Starship/Super Heavy launches gradually increase over time to 24 launches per year, the number of Falcon launches would decrease.”

FAA issued the report because “SpaceX’s launch manifest includes more annual Falcon launches and Dragon reentries than were considered in previous … analyses,” the FAA stated in the executive summary. This launch activity could affect both humans and animals in the region — which is relevant since part of the downrange launch zone is a protected area filled with marine mammals, sea turtles, and sharks, the FAA said. That said, the report does not contain a detailed list of which missions would be launched under the accelerated launch schedule.

While few details are available about SpaceX’s plans, in general the company has made announcements that do point to far more launch activity in the coming years. SpaceX is in the midst of building out its Starlink constellation, which could include as many as 42,000 individual satellites. The satellites are being launched into space at a rate of one launch every few weeks.

The company is also planning to launch humans from Florida’s Space Coast for the first time when its Dragon spacecraft is certified under NASA’s Commercial Crew program, which could happen as early as this year. No astronauts have been launched from this area since the end of the space shuttle program in 2011. That said, the normal pace of International Space Station flights from Kazakhstan (the only spot that sends humans to space right now) is about four launches a year, which is an appreciably lower rate than the Starlink lauches.

FAA proposes to modify or issue new launch licenses to SpaceX for Falcon rocket launches, and to issue new licenses for Dragon spacecraft reentry operations. The report is open to public comment until March 20, and the FAA urges all commenters to make their remarks “as specific as possible, and address the analysis of potential environmental impacts and the adequacy of the proposed action or merits of alternatives, and any mitigation being considered.”

New York’s plastic-bag ban frustrates many shoppers

A new ban on single-use plastic bags in New York left shoppers used to their old ways shocked at the new changes Sunday.

“I think it’s ridiculous,” letter-carrier Scott Kimmel, 56, told the New York Post while shopping at a Target in College Point, Queens. “I understand about ‘conserve, take care of the environment,’ but c’mon!”

New York officially prohibited stores from handing out most thin plastic bags starting Sunday.

State environmental officials were encouraging New Yorkers to start using reusable bags often made out of canvas or polyester. They said the state has purchased over a quarter-million reusable bags to give out to food pantries and shelters.

“I was totally shocked,” Target shopper Richie Alvarez, 49, added of the change. “This is what our world is coming to. Yeah, they charged me extra for the bag. That’s why I only took one. It would normally be two or three bags.”

The law, which the state passed last April, barred many types of businesses from using the thin plastic bags that have been clogging up landfills, getting tangled in trees and accumulating in lakes and seas.

Single-use paper bags will still be allowed, but counties had the option of imposing a 5-cent fee.

The state has planned to enforce the ban by issuing a warning to stores that violate the law for the first time. Each store eventually could face a $250 fine for a subsequent violation, and a $500 fine for violations in the same calendar year.

New York’s ban exempted bags used for restaurant takeout food, plastic bags used to wrap meat and bags used for prepared food.

“Plastic bags are officially banned,” the city posted on Twitter. “Together, we can create a cleaner future for our city and planet.”

The change seemed to affect residents who are elderly or of lesser means.

“This is nonsense,” said Constance Tripoli, 53, in Brooklyn. “I ain’t got no SUV like the mayor to take my groceries home. I told them I needed bags, and they snuck me a few.”

McDonald’s giving away free Egg McMuffins Monday

McDonald’s has blessed March 2 as National Egg McMuffin Day, which is good news for breakfast enthusiasts.

The fast food giant took to Twitter Friday to announce that customers can get a free Egg McMuffin Monday.

“What’s better than breakfast? A FREE Egg McMuffin for breakfast,” the restaurant tweeted.

You can get yours by ordering on the McDonald’s app. It’s free on the App Store and Google Play.

To take advantage, order between 6 a.m. and 10:30 a.m.

After ‘refreshing’ month, Tesla bear predicts ‘biggest single stock bubble in this whole bubble market’ will hit zero

While the bulls pick up the pieces of a nasty February for the market, the long-suffering band of Tesla TSLA, -1.62% haters finally has cause for celebration.

Count Mark Spiegel of Stanphyl Capital among the latter.

“In a refreshing change, our Tesla short position (despite an early-month spike higher) worked well for us this month,” Spiegel told investors in his monthly letter, which was posted over the weekend on Value Walk.

The first month of the year was an absolutely brutal one for Spiegel and the Tesla shorts. In fact, through January, mark-to-market losses on the short side came to $8.31 billion, after losses of $2.89 billion in 2019, according to S3 Analytics.

Spiegel admitted to NPR in January that his fund has lost a lot of money shorting Tesla, which it began doing in 2014. “I am the world’s worst predictor of Tesla’s stock price,” he said, adding that he cut back on his short position during the rally.

Fortunes have turned for Spiegel and the naysayers, however. Tesla TSLA, -1.62% on Friday closed with its biggest weekly loss since it went public in June 2010.

Spiegel said he still considers Tesla to be “the biggest single stock bubble in this whole bubble market” for several reasons: No moat, a balance sheet that will return to losing money this year and flattening revenue growth, to name a few.

He predicted that, most of all, a “huge onslaught of competition” will ultimately be the undoing of Tesla and its market capitalization, which is inexplicably larger than Ford F, -0.14% , GM GM, -0.68% and Fiat Chrysler FCAU, +0.65% combined.

“This cash-burning Musk vanity project is worth vastly less than its over $130 billion enterprise value and — thanks to nearly $30 billion in debt, purchase and lease obligations — may eventually be worth zero,” he said.

The stock reached an all-time high of $968.99 in early February before dropping all the way down to $674.98 during the recent market downturn.

Tesla did not immediately respond to a request for comment.

Markets Unfazed By $100 Billion Saudi Shale Plan

For a commodity going through one of its worst slumps ever, you would think that a major oil company bringing more of it to an already flooded market would cause all manner of panic.

At a production clip of 10.3 million b/d of oil, Saudi Aramco is by far the world’s biggest energy company, responsible for single-handedly pumping 10% of the world’s crude supply–at some of the lowest production costs. 

That’s why news that Saudi Arabia–a nation well known for its energy price wars–has just launched the biggest shale gas development outside of the United States should be unsettling for the severely depressed natural gas market.

Only, it’s not.

Understandably, the markets are feeling jaded with natural gas prices slumping nearly 40% over the past year. It’s probably one reason why the specter of another supply glut has only elicited muted reaction.

But there’s more to it than meets the eye.

Major Gas Producer

Saudi Aramco has announced that it will be pumping $110 billion over the next couple of years to develop the Jafurah gas field, which is estimated to hold 200 trillion cubic feet of gas. 

The state-owned company hopes to start natural gas production from Jafurah in 2024 and reach 2.2 Bcf/d of sales gas by 2036 with an associated 425 million cubic feet per day of ethane. The field will produce some 550,000 barrels per day of gas liquids and condensates, around 50% more than current output of just over 1 million bpd. For perspective, Aramco produced 8.9 Bcf/d of natural gas and 1 Bcf/d of ethane in 2018.

If the company hits its development targets for the field, Jafurah will become the largest unconventional gas field outside the U.S., while Saudi Arabia will officially become the world’s third largest gas producer by 2030, behind only Russia and the U.S.

Unconventional drilling has not been very successful outside North America, mostly due to lack of expertise, scarcity of water or other key resources, poor infrastructure or proximity to large population centers. 

But Aramco appears to have it all figured out, and has even boasted about its low shale gas development costs. 

As Amin H. Nasser, president and CEO of Saudi Aramco, has revealed, Jafurah will use plentiful seawater in the fracking process, easing a major worry for the mostly desert nation. 

The Saudi state oil group has also worked with international oil service companies including U.S.- based shale drilling experts SchlumbergerHalliburton Co. and Baker Hughes Co. on the field to develop the necessary fracking technology. The company has already drilled 150 wells since 2013 so it has probably tested all production parameters.

Not for Export

All that sounds impressive; but it probably won’t be enough for Saudi Arabia to become a major exporter of natural gas–still. 

Soon you will hear about the ability of the kingdom to be a gas exporter,” Saudi Arabia’s Crown Prince Mohammed bin Salman said earlier this month, without offering any further details.

That’s easier said than done. 

In the same breath, bin Salman issued an order on Friday for Jafurah’s gas to be used primarily by domestic industries such as petrochemicals to support the kingdom’s Vision 2030 development plan, the prince’s chief economic reform strategy to diversify away from over-dependence on oil. 

Aramco has committed billions of dollars to new petrochemical projects, including a US$44-billion refinery and petrochemical complex in India and a US$7-billion investment in another complex in Malaysia, and is in negotiations with companies for more partnerships in this segment. 

Further, Saudi has been having strained relations with Qatar–its major natural gas supplier via the Dolphin pipeline–since 2017 after accusing Doha of supporting terrorism. Saudi Arabia would be keen to minimize its reliance on Qatar by developing its own gas fields.

But keeping its own natural gas also makes plenty of economic sense. The kingdom has been burning though nearly 900,000 b/d of valuable liquid fuels for industrial use and power generation. Replacing all that oil natural gas could generate more than $10 billion in additional export revenues and possibly significantly more if oil prices recover in the future. That extra oil could also provide a nice cushion to spare its crude capacity that was recently tested by the Abqaiq attacks.

Saudi Arabia is not likely to be in a position to export natural gas any time soon even if it wanted to. 

Global energy analyst Platts Analytics has estimated that Saudi Arabia’s natural gas production needs to reach at least 23 Bcf/d by 2026 to fully meet the nation’s growing power and industrial demand. This means that natural gas alone will barely be able to meet half the industrial demand even with Jafurah at full blast.

Assuming Saudi Arabia is able to export an extra one million b/d of oil by replacing some its own demand with natural gas, there still won’t be much to worry about. In its latest estimates, the EIA expects that global petroleum and liquid fuels demand will rise by 1.0 million b/d in 2020, and another by 1.5 million b/d in 2021. 

Any more of the black commodity in this oversupplied market is bad, but it probably won’t matter much in the bigger scheme of things.

This IRA Move Looks Smarter After the Stock Market Correction

One of the biggest problems with the way that most people save for retirement is that they fail to take taxes fully into consideration. With traditional IRAs and 401(k) plans, you typically set aside pre-tax money into a tax-deferred account that shelters your money from tax as long as it stays in the account. But once you start taking withdrawals in retirement, that’s when the tax bill hits, and if you’re not prepared for a substantial portion of your withdrawals to end up paying Uncle Sam, the tax implications can come as a major shock.

To follow is to use Roth IRAs for all or part of your retirement saving. These retirement accounts don’t give you an upfront tax break, but they do let you take withdrawals during retirement on a tax-free basis. Moreover, if you started with a traditional IRA but want to switch to a Roth, you can by doing what’s called a Roth conversion. Although some investors gave up on Roth conversions after tax reform changed one of their most beneficial aspects, it still makes sense under certain conditions to convert a traditional IRA or 401(k) to a Roth — especially after big downturns like the one we’ve seen recently.

How Roth conversions work

If you have money in a traditional IRA, then you can convert all or a portion of your account to a Roth IRA whenever you want. Thereafter, the money in the newly formed Roth IRA will have the same beneficial tax provisions as any other Roth, and any further growth in the assets in the Roth IRA typically won’t get taxed when you make withdrawals in retirement.

However, there’s a catch when you convert existing traditional IRAs to Roth IRAs. You have to include the value of the assets you convert as taxable income for the tax year in which you make the conversion. Effectively, the decision you have to make is whether it makes sense to pay taxes now at whatever rate of tax applies in your current financial situation, or wait until later to pay taxes when you withdraw money in retirement. A big part of that question depends on how much you expect your money to grow after making the conversion.

Until a couple years ago, you used to have an opportunity to get what amounted to a free look at a crystal ball. Old tax laws would let you undo your Roth conversion at any time before the extended due date for your tax return for the tax year in which you made the conversion. That gave taxpayers up to 21 months to see what would happen to their converted account. If the value went up, then they could leave the conversion in place. If it went down, though, they could undo the conversion with no tax consequences at all. It was a winning strategy all the way around.

Unfortunately, lawmakers removed the ability to recharacterize Roth conversions in the tax reform package in late 2017. Now, once you do a conversion, you’re stuck with it — even if the value of the converted assets keeps going down.

When Roth conversions still make sense

Even without the ability to undo them, Roth conversions can still be a great way to tap into tax-free growth. In particular, if you expect that the current low income tax rates aren’t likely to last, then doing a Roth conversion effectively locks in those tax rates in exchange for paying no taxes during your retirement.

The reason why it’s important to look at Roth conversions right now is that with the stock market having entered a correction, the value of your IRA assets is probably down from where your account started the year. That means you can convert your IRA to a Roth with less of a tax hit, and if the stocks bounce back after you convert, then the resulting gains will be tax-free.

Falling markets can be tough to endure, but they do open the door to some retirement planning. By looking at the possibility of a Roth conversion, you can take advantage of low stock prices and buy yourself a future tax break more cheaply.

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