Credit deflation and the reflation cycle to come (part 2)

[nirvana]

8 hours ago, DurhamBorn said:

These people are much better off than i was in the early 80s,but they dont feel like they are.What they actually lack is some certainty

how come they're 'much better off'? the benefit scroungers yeah but the rest have been totally fucked over the last few decades along with the rest of the planet!

the boomers stole the houses and the pensions...

the corporates, media and NHS has fucked their health and the poor fuckers will be lucky if they're not still working at 75.......and now the government has caged them up to save the embarrassment of a few old dead cunts piling up

Is it any surprise that the dim fuckwits sit playing on games consoles all day and look like bloated heffers on social media

God save us all, RIP planet earth 

NB oh yeah forgot to mention the piles of debt in order to get an 'education' nowadays 

[Barnsey]

Shot......and chaser 

 

[jamtomorrow]

7 hours ago, goldbug9999 said:

Topped up my silver by 5k earlier today, worth a punt although I'm not convinced it will get the reddit treatment but nothing to lose really.

Same. Transfer out of NEST just hit my SIPP. 50% straight into PSLV.

[jamtomorrow]

8 hours ago, wherebee said:

In terms of this thread, and investment macros, how do we take that into account?

Think carefully about jurisdictional risk and how market structure could evolve.

That frog has been boiled *very* slowly over the cycle, to the extent that messing with globalised free-flowing capital markets with direct access to "backbone" assets now seems unthinkable to many, even among contrarians (although it's notable that access to CB reserves has never been fully democratized).

Well they just messed with it, bigtime. And the sky didn't fall in, which means they'll keep messing with it from here.

The direction of travel is clear: you, me, and all the other retail investors are going to be herded out the door and into our own separate "markets" for financial instruments which will largely be derivatives of the underlying.

You won't be allowed to buy or sell the same assets in the same pool as institutions. Only accredited institutions will be permitted to hold instruments like government debt, corp bonds, stocks and shares. Everyone else will have to buy derivatives from the institutions.

Manipulation? They're just getting going. This Robinhood fandango is the perfect excuse for more of the same.

[Democorruptcy]

9 hours ago, dgul said:

RH has apparently drawn on their credit lines.  How bad is this?

https://www.bloomberg.com/news/articles/2021-01-28/robinhood-is-said-to-draw-on-credit-lines-from-banks-amid-tumult

Robinhood CEO was just on Bloomberg (youtube). When trades are placed they take 2 days to clear. RH have to provide margin. When nobody is selling there is nothing coming in the other way to offset it. Apparently they have raised $1bn to cover their margin. I thought this was over last night but maybe it isn't. If I was a hedge fund with positions worth fortunes, I'd be helping fund RH. Yesterday I thought this was The Big Long because it was forcing hedge funds to buy to close short positions but if it carries on and hedge funds start toppling over maybe it's The Big Short 2?

[geordie_lurch]

It's far from over IMHO - the systemic shocks and risks are only really just getting started as the people buying GME aren't selling till it hits $1000 at least so other stocks are going to be sold to cover

[Heart's Ease]

!

Added a scrappy paste of the article.

Norway Wealth Fund Dumps Oil Stocks Amid $10 Billion Loss

By 

Lars Erik Taraldsen

, 

29 January 2021, 05:00 GMT

 

Photographer: Andrey Rudakov/Bloomberg

Norway’s sovereign wealth fund has sold its entire portfolio of companies focused on oil exploration and production, marking a major step away from fossil fuels for the investing giant.

 

 

The portfolio, worth about $6 billion in 2019, was fully exited by the end of last year, Trond Grande, the fund’s deputy chief executive, said by phone on Thursday. The move completes a years-long process to reduce the giant investor’s exposure to a sector that has defined Norway’s economy for the better part of half a century.

 

 

Trond Grande

Photographer: Odin Jaeger/Bloomberg

Grande spoke after the fund revealed a roughly $10 billion loss on oil and gas holdings in 2020 that had been valued at over $40 billion at the start of the year. The fund still holds integrated oil companies, with Royal Dutch Shell Plc its seventh largest equity investment when it last disclosed its holdings at the start of last year.

 

 

 

The fund declined to comment on the size of the oil exploration and production portfolio.

 

 

Overall, 2020 was one of the investor’s best years ever, with the total portfolio generating $123 billion in returns, buoyed in particular by its holdings of tech stocks.

 

Read: Norway Wealth Fund CEO Says This Market Can’t Continue Forever

Norway’s wealth fund, the world’s biggest, started turning its back on oil and gas more than three years ago. The intention back then was to diversify away from an industry to which Norway’s economy was heavily exposed, with a view to addressing a key financial risk.

But the fund’s new CEO, Nicolai Tangen, has now made sustainable investing an explicit focus of his strategy, and says all portfolio managers who work for the fund need to operate with that in mind.

Renaissance Man

The 54-year-old former hedge fund manager, who’s also a trained chef with degrees in art history and social psychology, says his expectations around ESG skills extend to the external managers, who now oversee about $60 billion of the fund’s total assets.

 

Tangen needs to operate within a complex governance structure that includes an ethics council, as well as Norway’s central bank, government and parliament. So there are limits to how much he can change. But he says a key contribution the fund can make to ethical investing, without needing to change any mandates, is by digging a lot deeper into how companies actually run their businesses.

“On the forensic side, that is where we can add value,” he said during an interview with Bloomberg Television on Thursday. “We do ESG, risk-based assets, and we have done a range of those over the last few years.”

 

 

Tangen has also assigned about 10 asset managers to hunt down investment opportunities in renewable infrastructure. The fund, which the CEO says has yet to invest a single cent in the area, wants the portfolio to eventually reach about 1% of the total $1.3 trillion fund. Tangen has already admitted that might prove hard, with demand for renewable infrastructure assets driving up prices.

“We’re working relentlessly to get something under our belts here, and we hope that will happen this year,” he said in an interview. “We’re looking for wind and sun projects in Europe and America.”

 

Back in October, Tangen said “there’s a lot of competition” for the kind of projects the fund would be interested in buying.

 

[Craig]

12 minutes ago, geordie_lurch said:

It's far from over IMHO - the systemic shocks and risks are only really just getting started as the people buying GME aren't selling till it hits $1000 at least

I'd have thought this will inevitably Peter out as there must come a point when these kids start to lose their principled stand and take profits? Unless there's some big backer behind this, certainly Musk has been pretty vocal for example. 

[Hancock]

20 minutes ago, Heart's Ease said:

!

 

Thats just bloody ridiculous, it was created with oil money and if Norway as a nation stopped producing they'd go back to being Eskimos.

[Democorruptcy]

4 minutes ago, Hancock said:

Thats just bloody ridiculous, it was created with oil money and if Norway as a nation stopped producing they'd go back to being Eskimos.

Are they going to FIRE using the income from the wealth fund? (FIRE and igloos.... ooopsss!)

[Castlevania]

38 minutes ago, geordie_lurch said:

It's far from over IMHO - the systemic shocks and risks are only really just getting started as the people buying GME aren't selling till it hits $1000 at least so other stocks are going to be sold to cover

It’s today’s option expiry where it will get interesting and does create a catch 22 situation. If enough people take delivery it could lead to a scramble for shares to deliver, but then on Monday you’ll have a load of shares that you’d probably want to sell. Conversely if people cash settle the option dealers will have a load of shares that they’d been using to hedge to dump. Could go either way.

[Castlevania]

9 minutes ago, Hancock said:

Thats just bloody ridiculous, it was created with oil money and if Norway as a nation stopped producing they'd go back to being Eskimos.

Depends if their own oil and gas reserves run out. There’s wrong way risk in being exposed to both their own resources and also owning other oil and gas stocks. Then again if their own reserves run out - you’d want exposure.

I think they did things the wrong way around. They should never have bought any oil and gas stocks until their own reserves start running down I.e. now would be a good time to start buying.

[DoINeedOne]

16 minutes ago, Hancock said:

Thats just bloody ridiculous, it was created with oil money and if Norway as a nation stopped producing they'd go back to being Eskimos.

Its all weird im i getting this mixed up the countries wealth fund dumps oil (sending the message we are green don't hate us)

But....

Norway awarded 61 offshore exploration blocks to 30 oil firms in its latest pre-defined areas (APA) licensing round as it seeks to find more resources close to existing fields, Energy Minister Tina Bru said on Tuesday.

Norway, which began to extract oil and gas from its offshore continental shelf 50 years ago, believes it has still only pumped about half of its available resources.

Firms that won stakes in the licences included Equinor, Shell, Aker BP, ConocoPhillips, Total, Lundin Energy and Eni’s Vaar Energi

[Harley]

1 hour ago, Heart's Ease said:

!

Added a scrappy paste of the article.

Norway Wealth Fund Dumps Oil Stocks Amid $10 Billion Loss

By 

Lars Erik Taraldsen

, 

29 January 2021, 05:00 GMT

 

Photographer: Andrey Rudakov/Bloomberg

Norway’s sovereign wealth fund has sold its entire portfolio of companies focused on oil exploration and production, marking a major step away from fossil fuels for the investing giant.

 

 

The portfolio, worth about $6 billion in 2019, was fully exited by the end of last year, Trond Grande, the fund’s deputy chief executive, said by phone on Thursday. The move completes a years-long process to reduce the giant investor’s exposure to a sector that has defined Norway’s economy for the better part of half a century.

 

 

Trond Grande

Photographer: Odin Jaeger/Bloomberg

Grande spoke after the fund revealed a roughly $10 billion loss on oil and gas holdings in 2020 that had been valued at over $40 billion at the start of the year. The fund still holds integrated oil companies, with Royal Dutch Shell Plc its seventh largest equity investment when it last disclosed its holdings at the start of last year.

 

 

 

The fund declined to comment on the size of the oil exploration and production portfolio.

 

 

Overall, 2020 was one of the investor’s best years ever, with the total portfolio generating $123 billion in returns, buoyed in particular by its holdings of tech stocks.

 

Read: Norway Wealth Fund CEO Says This Market Can’t Continue Forever

Norway’s wealth fund, the world’s biggest, started turning its back on oil and gas more than three years ago. The intention back then was to diversify away from an industry to which Norway’s economy was heavily exposed, with a view to addressing a key financial risk.

But the fund’s new CEO, Nicolai Tangen, has now made sustainable investing an explicit focus of his strategy, and says all portfolio managers who work for the fund need to operate with that in mind.

Renaissance Man

The 54-year-old former hedge fund manager, who’s also a trained chef with degrees in art history and social psychology, says his expectations around ESG skills extend to the external managers, who now oversee about $60 billion of the fund’s total assets.

 

Tangen needs to operate within a complex governance structure that includes an ethics council, as well as Norway’s central bank, government and parliament. So there are limits to how much he can change. But he says a key contribution the fund can make to ethical investing, without needing to change any mandates, is by digging a lot deeper into how companies actually run their businesses.

“On the forensic side, that is where we can add value,” he said during an interview with Bloomberg Television on Thursday. “We do ESG, risk-based assets, and we have done a range of those over the last few years.”

 

 

 

Tangen has also assigned about 10 asset managers to hunt down investment opportunities in renewable infrastructure. The fund, which the CEO says has yet to invest a single cent in the area, wants the portfolio to eventually reach about 1% of the total $1.3 trillion fund. Tangen has already admitted that might prove hard, with demand for renewable infrastructure assets driving up prices.

“We’re working relentlessly to get something under our belts here, and we hope that will happen this year,” he said in an interview. “We’re looking for wind and sun projects in Europe and America.”

 

Back in October, Tangen said “there’s a lot of competition” for the kind of projects the fund would be interested in buying.

 

FFS.  So they have fully exited their portfolio except they still hold integrateds such as Shell and have yet to invest in renewables.  Then add some blah, blah, ESG, blah, blah, chef, blah, blah.  A minute of my life wasted reading that!

PS: Not digging at you @Heart's Easejust the jurno class.  They are so in bed with the finance industry, as they currently are with the government, etc over Covid, etc.  I just watched the IB CEO interview and several other similar ones yesterday - glam girls cutting off some serious people and them and the rest of their cohort pushing a vested narrative.

[Option5]

31 minutes ago, Hancock said:

Thats just bloody ridiculous, it was created with oil money and if Norway as a nation stopped producing they'd go back to being Eskimos.

It's a business decision, the fund is independent of the oil industry and is just looking to make money, they may buy the stocks back later if they think it's a good idea.

[DoINeedOne]

3 minutes ago, Harley said:

FFS.  So they have fully exited their portfolio except they still hold integrateds such as Shell and have yet to invest in renewables.  Then add some blah, blah, ESG, blah, blah.  A minute of my life wasted reading that!

Thats the problem clickbait headlines always assume the worse 

[DoINeedOne]

“Although 2020 was an unusual year in many ways with the pandemic and the decline in oil prices, investments on the shelf were at the same level as previous years,” Director general Ingrid Sølvberg at the Norwegian Petroleum Directorate said as she on Thursday presented the Shelf 2020 report.

Figures made available by the Directorate show that investments in the country’s shelf development amounted to NOK 155 billion (€15.04 billion), up from NOK 151 billion in 2019. A total of 31 exploration wells were spudded, and 14 discoveries made, most of them in the Norwegian Sea.

Growing production

Oil production increased to 1,7 million barrels per day, which is the highest level in nine years. And production will continue to grow for several more years, much thanks to the newly opened Johan Sverdrup field in the North Sea. According to the estimates, production is expected to reach more than 2 million barrels per day in 2025. Also natural gas production is expected to remain stable for several more years.

Controversial tax incentives

The crisis year of 2020 ultimately did not bring any crisis to Norwegian oil. According to Sølvberg, that is much thanks to the Norwegian Government’s tax incentives that were introduced during the major drop in the oil price.

The incentives were strongly disputed by environmentalists, who argued that the money instead should be invested in renewable energy transformation. Oil companies now openly say that the incentives have helped speed up investments in new petroluem projects

More exploration

The directorate leader also made clear that Norway will continue to explore its shelf for additional resources. So far, only about half of the country’s oil and gas resources have been exploited, and more than 25 percent have yet to be discovered, she said and pointed at the High North as the most prospective region.

Arctic resources

“It is bubbling in the Barents Sea North,” a slide in Sølvberg’s presentation said. It pictured the Arctic seabed embraced in gas bubbles.

This is a sign that there are petroleum resources in the area, the Directorate leader explained.

Norway’s resource potential is believed to be especially high in the northern parts of the Barents Sea. More than 60 percent of the un-discovered resources are in the region, and most of them in the areas north of the 74th parallel.

This region has not been opened for drilling. But Sølvberg signals that she would like to see an opening. In 2020, the directorate conducted a major survey of natural oil and gas leakages in the area, and results apparently indicates significant resources.

25th License Round

Southern parts of the Barents Sea have been a disappointment for oil drillers, and in 2019 Equinor and several more companies announced that they will move out of the area. Other parts of the region, however, remains top priority. In Norway’s announced new 25th Licensing Round, a record high number of 125 new exploration blocks are in the Barents Sea.

It has sparked an outcry from environmentalists.

Climate action plan

The drive towards more drilling also stands in sharp contrast to the Norwegian government’s growing climate commitments. Only three days before the presentation of the Petroleum Directorate’s Shelf Report, did Prime Minister Erna Solberg present an ambitious plan to curb emissions.

At least 40 percent cuts will be made in non-ETS emissions by 2030, the government says, and those cuts will be made domestically.

“We will cut emissions and enhance removals of CO2 in a way that transforms Norway and promotes green growth,” Solberg said, and called for an industrial sector that is “greener, smarter and more innovative.”

The country’s oil industry intends to introduce green power in new offshore project and take several more measures aimed at reducing emissions. But parts of the industry is strongly skeptical towards the produced measures.

The Norwegian Oil and Gas Association has already expressed its opposition to a proposed hike in carbon tax rates from the current level of about NOK 590 to NOK 2000 per tonne CO2 equivalents.

https://thebarentsobserver.com/en/industry-and-energy/2021/01/norwegian-oil-big-investments-growing-production-and-desire-high-arctic

 

 

So fucked if i know 
Calling @Cattle Prod 

[Harley]

20 minutes ago, DoINeedOne said:

Thats the problem clickbait headlines always assume the worse 

Crudely written PR fluff piece?  Like 99% of their output?  It's hard to make money, and impossible listening to this lot.

[Harley]

"Don't trade, stay at work, save bonuses, protect the Street".

[Democorruptcy]

1 hour ago, Castlevania said:

Depends if their own oil and gas reserves run out. There’s wrong way risk in being exposed to both their own resources and also owning other oil and gas stocks. Then again if their own reserves run out - you’d want exposure.

I think they did things the wrong way around. They should never have bought any oil and gas stocks until their own reserves start running down I.e. now would be a good time to start buying.

They have a lot of brass, trying to move the market down to get a cheaper price?

[Noallegiance]

17 minutes ago, Democorruptcy said:

They have a lot of brass, trying to move the market down to get a cheaper price?

According to 28/01/2021, this is fine.

[Hardhat]

5 minutes ago, Cattle Prod said:

Jesus, where do I start.

Norways a funny place. I admire a lot of what they've done. Growing their own oil industry expertise from scratch, and putting the dosh in the wealth fund while keeping taxes high to prevent Dutch disease being the top two. Their environment is also pristine, they are even run on renewable energy (hydro, they sell the hydrocarbons). But they are a small country of 5 million people. Everyone knows everyone with ~ one degree of separation. They have no problem with cognitive dissonance. Like alcohol: highly regulated, can only buy wine and spirits in government shops. So everyone gets smashed at home and staggers out at midnight to find a bar and go nuts. Everyone knows, nobody minds. They are also very smug about their good fortune, and there is a pervading 'Norway knows best" air about them (I've lived there and worked with many of them elsewhere). They have some good people, but they are all very very comfortable. No risk of redundancy, ever. I personally know people who had their full salaries paid out for 3 years so that they get to retirement age. That kind of thing.

The Norwegian Petroleum Directorate has hundreds of people, many of whom are having a 'rest' from the industry. Sounds like their chief is one, the Barents Sea is not bubbling, it's crap and people keep wasting money there. They won't find much. That said, Norway is the world leader in enhanced recovery, and will squeeze every last drop of what they have found. They quite enjoy each having a share of $1.3 Tn, and won't be stopping funding that. Life is very easy over there, and in fairness, quite equal. You will find a CEO and a plumber in the same neighbourhood, there is not a 300x difference in salary, and everyone's salary is published, believe it or not, so you know what everyone earns. I'm digressing, but this gives you an idea of whats behind these odd decisions. 

So the soveregin wealth fund is run by committee, mostly civil servants. And usually headed up by some Norwegian who managed to get experience elsewhere in financial markets somewhere. In this case, a chef/hedgie. This all worked fine in the great disinflation, as the SWF is essentially a passive index fund. Dropping oilies now is just them being slow on the uptake on what the rest of the finance world has been doing. I'd guess someone noticed XOM was dropped from the DOW, and it's finally worked through committees etc. I bet they haven't dropped Equinor.

Meanwhile, their mates and cousins at the NPD are doing their job, handing out licences, while shaking their heads at the idiots in the SWF dumping at the bottom of the cycle. In return the folks in the SWF are shaking their heads at the NPD handing out licences in a dead industry. In the summer they'll meet up to go fishing, and in the winter to go skiing. They'll politely discuss the pros and cons into the evening, getting smashed, before heading out at midnight to wreck the place like teenagers in Newcastle.

That's the nuts of it.

You should write a memoir about the oil industry @Cattle Prod !

[Option5]

1 minute ago, Cattle Prod said:

Exactly. They'll buy them back expensive, which is fine as some of that money will flow to me!

They also have to be careful what and when they buy in certain industries. Don't want to be accused of insider trading so they're careful what they trade and when.

[Option5]

Just now, Hardhat said:

You should write a memoir about the oil industry @Cattle Prod !

It wouldn't be very different from most multinational businesses.

[Democorruptcy]

6 minutes ago, Cattle Prod said:

So the soveregin wealth fund is run by committee, mostly civil servants. And usually headed up by some Norwegian who managed to get experience elsewhere in financial markets somewhere. In this case, a chef/hedgie. This all worked fine in the great disinflation, as the SWF is essentially a passive index fund. Dropping oilies now is just them being slow on the uptake on what the rest of the finance world has been doing. I'd guess someone noticed XOM was dropped from the DOW, and it's finally worked through committees etc. I bet they haven't dropped Equinor.

I saw one of the chaps who manages the fund interviewed on TV yesterday. He said their remit is to mirror the indices, so that fits.