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

[MvR]

3 hours ago, Cattle Prod said:

I'm no expert, I'm sure @MvR could explain it much better. But my read is that most people are out of the current contract, and there are no buyers, no one wants to be in it, so it drops like a stone in a super contango situation like we have today. The contracts a few months ahead probably better represent what the market thinks the price should be, so Shell et al are not getting dumped. Of course if this continues, the same thing will happen next month.

When discussing this with @DurhamBorn as a possibility, I recall him saying "if it hits x (I can't remember the exact target in the teens he had) it will be in the front month contract only, and then only for a short time, days or weeks". That might well be coming to pass now. Of course this has happened before, like in 2016, but the options expiry is hidden in weekly/monthly candles as a spike low.

Edit, contract expires tomorrow, not today.

That video I posted earlier talks about exactly this.. funky front month futures pricing affecting calendar spreads. etc.  from 33 minutes onwards. I don't understand all of it but well worth a look..  At one point they even talk about the ( very slight )possibility of negative pricing on the front month!

https://www.tastytrade.com/tt/shows/splash-into-futures-with-pete-mulmat?_sp=6f683744-e525-4bbe-9d92-8dd89adef054.1587374896450

 

[TheCountOfNowhere]

Canadian Oil prices gone negative...people being paid to take oil away due to storage issues.

 

What do we do ?

How do we profit from this @DurhamBorn ???????

 

[Sugarlips]

4 hours ago, Democorruptcy said:

DB said $14

 

40 minutes ago, TheCountOfNowhere said:

Jesus....11.45  ( that's the oil price, not the time ).

Buy more oil today or at the end of the week ?

Unbelievable. The 3 month chart from oilprice.com

 

I can buy unleaded in Perth today for 79.7c a litre which is 40 pence and is clearly going lower in weeks to come, might have to do a road trip

[Barnsey]

So the narrative now switches to absolutely 0, nada, nil fear of inflation. Even the central banks are acknowledging previous QE had nowhere near the inflationary effect expected (assets don’t count apparently) so therefore can act with much greater ferocity and little restraint. Agree it’s needed in such unprecedented times.

It’s the widespread arrogance that inflation is 100% demographically and economically dead that has made me even more certain it’ll come back with a vengeance, as per thread.

[Andersen]

Not my field so apologies of already posted, IMF are listing corona as the trigger for a global collapse (nothing to do with the fact we've been at breaking point for some time !) https://time.com/5818819/imf-coronavirus-economic-collapse/

[Bear Hug]

48 minutes ago, TheCountOfNowhere said:

Canadian Oil prices gone negative...people being paid to take oil away due to storage issues.

 

What do we do ?

How do we profit from this @DurhamBorn ???????

 

There is oil future cfd with tomorrow's expiry on trading 212 platform. However, I think it will just crystallise the outcome tomorrow, so there is no way to profit from future rises. 

I just asked the same question as you and think that the answer is a no in that particular direction

[Hardhat]

Watching the RDSB and BP prices carefully. I still have another ladder to go into both...

"The cure for cheap oil prices is cheap oil prices" as @Cattle Prod has often said...

[TheCountOfNowhere]

8 minutes ago, Hardhat said:

Watching the RDSB and BP prices carefully. I still have another ladder to go into both...

"The cure for cheap oil prices is cheap oil prices" as @Cattle Prod has often said...

I have this terrible feeling that at some point we are going to see carnage on the dow jones.

It could be today, maybe the oil price collapse will spark panic.

Their miraculous recovery is too good to be true.

I'm never right tho :-| 

[Bricks & Mortar]

HMRC application process for the 80% wages goes live today.  They sent me an email.  Unfortunately, I've never been the person who handles wages for our business.  Meanwhile, the accountants who paid the wages and filed the tax for the last 40 years, can't log on, because they're 'not authorised'.
Not sure how widespread, but accountant reports unable to get through to helpline.  Applications must be in by Wednesday if they're to be paid out in time for end of month payroll.
It won't bother us.  But if even a small % of companies are similarly snafu-ed...

[DurhamBorn]

1 hour ago, TheCountOfNowhere said:

Canadian Oil prices gone negative...people being paid to take oil away due to storage issues.

 

What do we do ?

How do we profit from this @DurhamBorn ???????

 

Buy the big integrated oilies,they will clean up and buy up cheap assets.They can direct their own oil to their own refineries ,they will cut production,but at least can keep wells ticking over.E+P companies will really struggle.Those fracking plays will be in big trouble if the midstream pipelines get full.

[DurhamBorn]

1 hour ago, Cattle Prod said:

Well it's definitely gone for the "it's all over this is the end of the world" scenario! People forget that oil is the economy, I think.

Profit from this? Same as has been discussed here, ladder into big oil, and dyodd

I'm already fully positioned, and I am so relieved that DB's lowest of the low predictions has come in. I can now finally, FINALLY, stop worrying about maximising capital and optimal entry etc, and forget about this stuff for a a decade or two. Thanks guys, especially the lad from Durham.

It seems quite unreal that the call on oil has hit.It was based on liquidity crunching on a huge debt deflation.You could say it took some luck,but the road map showed the potential downside on a deflation,it didnt look for a trigger.I dont like shorter term calls,but $33 on WTI by late summer is showing.$200 is a lock by 2026,likely we see $300.The oil call though was based on financial dislocation as some financial companies rolled over,and it was based on hitting before the Fed right sized.Given it hit after a lot of printing started says my call was out,because if the printing hadnt started it would of gone under $10,even lower.Thats says the economy is even worse than the road map expected with a massive debt deflation.If i could buy oil itself here without margin calls and hold to 2027 i would,but il settle for the big players.

 

[TheCountOfNowhere]

14 minutes ago, DurhamBorn said:

Buy the big integrated oilies,they will clean up and buy up cheap assets.They can direct their own oil to their own refineries ,they will cut production,but at least can keep wells ticking over.E+P companies will really struggle.Those fracking plays will be in big trouble if the midstream pipelines get full.

Thanks DB.

I've got a few quid Shell, BP, Repsol, Total and Schlumberger now, mostly breaking even or down a little. 

I will wait till the end of the week I think the buy some Exon next depending what happens in the US. 

Their recovery is somewhat remarkable....

 

[DurhamBorn]

6 minutes ago, TheCountOfNowhere said:

Thanks DB.

I've got a few quid Shell, BP, Repsol, Total and Schlumberger now, mostly breaking even or down a little. 

I will wait till the end of the week I think the buy some Exon next depending what happens in the US. 

Their recovery is somewhat remarkable....

 

I think even here should be a superb position longer term.Let the cycle play out though.Dont worry about any more falls,only use it to add if not positioned.I actually sold Exxon on a profit.Id ended up with more in the sector than i wanted and swapped that into potash,Mosaic and OCI mostly.The crucial thing is to try not to sell out early.The really big gains will likely come late in the cycle.

Whats interesting is how the markets are ignoring whats coming.The narrative is obvious.The west has seen China for what it is.Governments now have free reign to pull back manufacturing,and they will.Energy use will skyrocket in the next cycle,and energy assets will be geo-political again.

[Talking Monkey]

3 minutes ago, DurhamBorn said:

I think even here should be a superb position longer term.Let the cycle play out though.Dont worry about any more falls,only use it to add if not positioned.I actually sold Exxon on a profit.Id ended up with more in the sector than i wanted and swapped that into potash,Mosaic and OCI mostly.The crucial thing is to try not to sell out early.The really big gains will likely come late in the cycle.

Whats interesting is how the markets are ignoring whats coming.The narrative is obvious.The west has seen China for what it is.Governments now have free reign to pull back manufacturing,and they will.Energy use will skyrocket in the next cycle,and energy assets will be geo-political again.

I was chatting about this particular point to a mate yesterday evening. Its really going to take some will power not to sell early

[TheCountOfNowhere]

5 minutes ago, DurhamBorn said:

I think even here should be a superb position longer term.Let the cycle play out though.Dont worry about any more falls,only use it to add if not positioned.I actually sold Exxon on a profit.Id ended up with more in the sector than i wanted and swapped that into potash,Mosaic and OCI mostly.The crucial thing is to try not to sell out early.The really big gains will likely come late in the cycle.

Whats interesting is how the markets are ignoring whats coming.The narrative is obvious.The west has seen China for what it is.Governments now have free reign to pull back manufacturing,and they will.Energy use will skyrocket in the next cycle,and energy assets will be geo-political again.

I'm no longer selling anything, it's hold for retirement now.

As I said up thread everything I now hold is being moved into a SIPP this year

At some point we will see a surge in the shares you focused on, might be 10 years but for retirement that's fine.

 

 

[Talking Monkey]

1 minute ago, TheCountOfNowhere said:

I'm no longer selling anything, it's hold for retirement now.

As I said up thread everything I now hold is being moved into a SIPP this year

At some point we will see a surge in the shares you focused on, might be 10 years but for retirement that's fine.

 

 

Count is there a way to move more that 40K into a SIPP in a given year

Just now, Talking Monkey said:

Count is there a way to move more that 40K into a SIPP in a given year. CGT might be a problem with stuff held outside if things take off

 

[TheCountOfNowhere]

4 minutes ago, Talking Monkey said:

Count is there a way to move more that 40K into a SIPP in a given year

Yes, Get Married.

Then the risk of share price falls is the least of your worry.

I'm not a big share buyer or speculator, I am just trying to move out of cash now.  If it is clear the UK property market is going to collapse I will wait and pump money into that ( with 60% mortgages ) the rest is being pumped into the reflation stocks over the next 5 years and or buried in a box in the garden. 

It's all about wealth preservation for me.

[Noallegiance]

55 minutes ago, DurhamBorn said:

 Thats says the economy is even worse than the road map expected with a massive debt deflation.

 

I only thought to myself over the last few days that your road maps might not include a quick event like the one we're experiencing.

The more I think about it, the more I'm inclined to think that the price calls you've made could now be magnified. Down could end up uber-down and up could end up uber-up.

[Loki]

Is there a chance of a war to get the oil price back up?  That's not meant to sound as dramatic as it does, but they do have form in that area.  Hopefully it all goes on infrastructure not missiles...

[Boon]

From a laymans point of view, how comes oil shares haven't tanked today? 

Was hoping for RDSB to go back to £10 but doesn't look as if will ever happen.

Is there an ETF which just gets you exposure to the oil price and not any companies?

[Loki]

5 minutes ago, Boon said:

Is there an ETF which just gets you exposure to the oil price and not any companies?

WisdomTree WTI...there's even a 2x long for the brave

[DurhamBorn]

 

17 minutes ago, Boon said:

From a laymans point of view, how comes oil shares haven't tanked today? 

Was hoping for RDSB to go back to £10 but doesn't look as if will ever happen.

Is there an ETF which just gets you exposure to the oil price and not any companies?

Markets arent linear.When Shell went below £10 we saw mass panic induced selling,margins calls,everything in one go.Its why i always use ladders to remove the emotion.I dont think there is a way to play oil without futures and costs chipping away at things.

[Loki]

Anyone bought today? Very nearly traded in POG for RDSB, but bottled it.

[Sasquatch]

12 minutes ago, Loki said:

Anyone bought today? Very nearly traded in POG for RDSB, but bottled it.

Nope but then I'm pretty much fully allocated now in PM's, oil, energy and telecoms (and some 100 bagger punts)

I do have £20K to put into my HL S&S isa for 20/21 though (as does Mrs S) so we will need to make some decisions before too long...

[spunko]

2 hours ago, Bricks & Mortar said:

HMRC application process for the 80% wages goes live today.  They sent me an email.  Unfortunately, I've never been the person who handles wages for our business.  Meanwhile, the accountants who paid the wages and filed the tax for the last 40 years, can't log on, because they're 'not authorised'.
Not sure how widespread, but accountant reports unable to get through to helpline.  Applications must be in by Wednesday if they're to be paid out in time for end of month payroll.
It won't bother us.  But if even a small % of companies are similarly snafu-ed...

I read through the guidelines issued by HMRC earlier. They have asked for employers to send in the information in a spreadsheet, but haven't even provided a default template to use. Someone is going to have to check and sort every single application - it'll take months.

Even if there is 50 of them doing it... Which I doubt.