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

[DurhamBorn]

40 minutes ago, Majorpain said:

Friend just posted this on FB, TUI desperately clinging to what cash it has in the bank!  I can see this paper promise business getting nasty in all sectors.

You have to feel for these companies though,governments forcing them to lose all their equity.I was thinking earlier.I own a few Card Factory.They are forced to close,Tesco over the road and Home Bargains both sell cards but are open.How can the government justify that?.They are in affect coming to my house stealing my capital and giving it to Tesco.There will be lots of angry people out there for lot of different reasons,but mostly it comes down to the government getting the virus action all wrong.Still flying in from New York yet Tui cant sell a holiday to Benidorm.

[Yellow_Reduced_Sticker]

On 20/04/2020 at 20:33, TheCountOfNowhere said:

... and never buy centrica shares. 

 

I bought back my entire holding yesterday...

FFS, today they are DOWN 6% ALREADY!

[Bricks & Mortar]

7 minutes ago, DurhamBorn said:

I own a few Card Factory.They are forced to close,Tesco over the road and Home Bargains both sell cards but are open.How can the government justify that?.They are in affect coming to my house stealing my capital and giving it to Tesco.

Have Card Factory actually been forced to close?  Sure, we had government ministers SAYING "all non-essential shops". 
But, as far as I can see, no changes were made to the The Health Protection (Coronavirus, Restrictions) (England) Regulations 2020.  At least, as printed on http://www.legislation.gov.uk/uksi/2020/350/contents/made
That legislation only forced cafes, hairdressers, pubs etc to close.

Are we so far down the road that police are enforcing the whim of government ministers, without an actual law to back it up?

[TheCountOfNowhere]

30 minutes ago, Yellow_Reduced_Sticker said:

I bought back my entire holding yesterday...

FFS, today they are DOWN 6% ALREADY!

[Talking Monkey]

12 hours ago, Vendetta said:

Second leg down coming. 

Jon Browne Ex CEO of BP was saying today that oil could be on its knees for years ..... (add in climate change and renewables to Coronavirus). 

Lets wait and see eh? 

Fear really starting to creep into the markets now. 

A few 5% + drops on the indices coming and suspension of trading..... 

DOW to sub 18000 and FTSE sub 4600....

....and then what ...????

MORE STIMULUS!! 
 

Bring it on.

Crack-up BOOM cometh..  

Not sure why Ex BP CEO is saying what he is saying. With the supply destruction taking place and the inevitable return to regular economic activity, the tightrope of supply/demand balance will reappear at a  much lower pricepoint than before the lockdown/slowdown. The worlds capacity to add green energy sources to replace oil is a multi decade endeavor. 

Maybe when they roll out folks to opine on shit the desire to conform and go along with the prevailing narrative is huge, along with the fact trying to explain a contrarian position to a most likely feeble minded journalist would be a non starter so the easy option of going along with the prevailing narrative is taken

[Democorruptcy]

51 minutes ago, DurhamBorn said:

You have to feel for these companies though,governments forcing them to lose all their equity.I was thinking earlier.I own a few Card Factory.They are forced to close,Tesco over the road and Home Bargains both sell cards but are open.How can the government justify that?.They are in affect coming to my house stealing my capital and giving it to Tesco.There will be lots of angry people out there for lot of different reasons,but mostly it comes down to the government getting the virus action all wrong.Still flying in from New York yet Tui cant sell a holiday to Benidorm.

That's the danger of buying into a more specialist high street business. Aldi went into a deal with them, so they will still be selling a few for you?

[Democorruptcy]

54 minutes ago, Yellow_Reduced_Sticker said:

I bought back my entire holding yesterday...

FFS, today they are DOWN 6% ALREADY!

FFS.

I wish people would stop mentioning negative figures that I'm trying to avoid looking at. I don't do red. 

[Talking Monkey]

3 hours ago, Vendetta said:

Hi all

Be warned - those trading oil ETFs eg Wisdom Tree CRUD WTI etc it is not a one way bet as one would think....

https://www.wsj.com/articles/the-fund-that-ate-the-oil-market-11587489608

A little knowledge can be a dangerous thing—especially in the oil market.

Individual investors conditioned by years of (mostly) being rewarded for buying the dips will become acquainted with that proverb as they absorb losses in a popular exchange-traded fund that allowed them to buy virtual barrels of crude. This time there could be collateral damage.

The travails of the United States Oil Fund,ticker USO, in some ways mirror the collapse of inverse volatility note XIV two years ago, but with two key differences: Traders who sold XIV in time had made a fortune, and the repercussions of its 95% collapse were limited to an arcane corner of financial markets

 

The travails of the United States Oil Fund,ticker USO, in some ways mirror the collapse of inverse volatility note XIV two years ago, but with two key differences: Traders who sold XIV in time had made a fortune, and the repercussions of its 95% collapse were limited to an arcane corner of financial markets.

 

“Thinking you buy an ETF and it will mirror the oil price and you can ride out 50-70% falls..  but in 10-20 years you will have x 20+ your money so don’t worry.....”

Think again. I think this could blow up in people’s faces. 
 

Wanting exposure to oil in this market? Im thinking just the big players; RDSB, BP, Exxon, Phillips etc etc.... as all the little ones fall / competition is eaten up/dies at sub $10 a barrel.

Admittedly I’m learning fast and no expert. So Not advice! DYOR etc.....

Anyone KnoW the best way to buy into Oil long term?
Without using an ETF?

Without just buying into shares of the big players? 
 

Surely you can just buy the commodity? How do you do that say on Hargreaves & Lansdowne?

I’ve never traded commodities so apologies for stupid question. Same would go for gold? How to trade it electronically on a broker site? (I know how to use the physical bullion suppliers in post).

Good luck out there - it’s very choppy! No easy gains or sure winners! 

I won’t go near ETFs now. The new CDOs, MBo’s etc. 

@confused alluded to this earlier on in this thread. Be careful they stink of shit. 

 

 

 

For trading commodities you could use a spreadbet/cfd account. Look into the holding costs as they charge overnight funding if you hold the position overnight rather than day trade.

[AlfredTheLittle]

58 minutes ago, Yellow_Reduced_Sticker said:

I bought back my entire holding yesterday...

FFS, today they are DOWN 6% ALREADY!

I thought I was clever because I got in at 44p last month... It turned out I wasn't 😁

[sancho panza]

Bigger picture

https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/deaths/bulletins/deathsregisteredweeklyinenglandandwalesprovisional/weekending10april2020

[sancho panza]

13 hours ago, Vendetta said:

Second leg down coming. 

Jon Browne Ex CEO of BP was saying today that oil could be on its knees for years ..... (add in climate change and renewables to Coronavirus). 

 

It'd be more telling to know if he's offloaded oil shares during march or bought more?

[DurhamBorn]

19 minutes ago, Talking Monkey said:

Not sure why Ex BP CEO is saying what he is saying. With the supply destruction taking place and the inevitable return to regular economic activity, the tightrope of supply/demand balance will reappear at a  much lower pricepoint than before the lockdown/slowdown. The worlds capacity to add green energy sources to replace oil is a multi decade endeavor. 

Maybe when they roll out folks to opine on shit the desire to conform and go along with the prevailing narrative is huge, along with the fact trying to explain a contrarian position to a most likely feeble minded journalist would be a non starter so the easy option of going along with the prevailing narrative is taken

Or he wants to keep buying cheap shares for his grandchildrens trust fund.The doc i put up is well worth watching for anyone with a couple of hours.

[DoINeedOne]

10 hours ago, DurhamBorn said:

A fantastic new doc by Michael Moore worth a watch for anyone interested in how fossil fuels have a lot of life.

 

Just sat down and watch that great documentary similar thoughts to the book i posted about few pages back

[Don Coglione]

10 minutes ago, Democorruptcy said:

FFS.

I wish people would stop mentioning negative figures that I'm trying to avoid looking at. I don't do red. 

Don't log in to my account then!

[Democorruptcy]

3 minutes ago, sancho panza said:

It'd be more telling to know if he's offloaded oil shares during march or bought more?

....or planning any acquisitions of firms going to go bust if the oil price stays low for longer

[DurhamBorn]

All this talk about the company whos name shall not be mentioned.What about Drax up 50% from bottom ladder?,dividend maintained,highest riser on the market.Im almost tempted to sell  ,pull up the search box,type C,,,,,,N,,,,,,,A,,,and go bangbusters,,il have a cup of tea instead i think 

4 minutes ago, DoINeedOne said:

Just sat down and watch that great documentary similar thoughts to the book i posted about few pages back

Yes fantastic isnt it.Well worth watching for anyone.

[Talking Monkey]

4 minutes ago, sancho panza said:

It'd be more telling to know if he's offloaded oil shares during march or bought more?

Best proxy to knowing that would be what the current executives of BP are doing, in fact what the executives of all the majors are doing, i'm guessing they're buying big time

[sancho panza]

10 minutes ago, Democorruptcy said:

....or planning any acquisitions of firms going to go bust if the oil price stays low for longer

Exactly,on the basis he's talking about XOM/BP/RDSB won't be running the slide rule over any of teh following

[Democorruptcy]

2 hours ago, Majorpain said:

Friend just posted this on FB, TUI desperately clinging to what cash it has in the bank!  I can see this paper promise business getting nasty in all sectors.

On the BBC today they did a piece with a travel "expert" chap from Which and 2 Tui customers wanting refunds. The chap said the governbankment should create a fund to give customers all their money back. 

Have I got that right? My taxes are supposed to bail out a travel firm with HQ in Germany and hotels in such as Spain and Greece etc. OK Tui employ some staff in the UK and reps abroad but redeploy them in staycations in this country and the holidaymakers would be boosting our economy not Spain, Greece etc. Thomas Cook wasn't much of an advert for a taxpayers propping up holiday firms.

[sancho panza]

12 hours ago, DurhamBorn said:

Since when was cheap oil bad for an economy?.It is the Fed holding the markets up,but thats exactly how they work.They first inject into the capital markets,and that then enters the real economy.This time they also have government injecting massive fiscal amounts.The equity markets do still look very expensive given where we are,but there are very cheap areas within the market.There are big falls to come,but markets arent linear.Once they see the cycle ahead will be industrial they will pivot.There is lots of dislocation to come,but not all equity based.Southern house prices and bonds will take a lot of the pain .

Remember the basis of this thread was credit for companies is going to become expensive and not available for many.Pricing power is coming back,surviving this stage is key of course.

 

S&P market cap roughly $22trillion

Apple $1.2tn,

MSFT $1.3tn

AMZN $1.2tn

Google $835bn

FB $500bn

Loads of S&P stocks are on the floor as you say.

 

 

2 hours ago, Majorpain said:

Friend just posted this on FB, TUI desperately clinging to what cash it has in the bank!  I can see this paper promise business getting nasty in all sectors.

Any friends who do business with Countryiwde or another chain EA? Can't be long before they feautre in the collapse thread.

1 hour ago, DurhamBorn said:

You have to feel for these companies though,governments forcing them to lose all their equity.I was thinking earlier.I own a few Card Factory.They are forced to close,Tesco over the road and Home Bargains both sell cards but are open.How can the government justify that?.They are in affect coming to my house stealing my capital and giving it to Tesco.There will be lots of angry people out there for lot of different reasons,but mostly it comes down to the government getting the virus action all wrong.Still flying in from New York yet Tui cant sell a holiday to Benidorm.

Absolutely.They'll be picking apart the govt's policy response to this crisis for years in clinical terms ie shutting hospitals to non covid patients who need treatment and economically ie costs associated with economic dislocation.

Imperial College paper that changed govt policy will be an interesting read.See graph above.

 

50 minutes ago, Bricks & Mortar said:

Have Card Factory actually been forced to close?  Sure, we had government ministers SAYING "all non-essential shops". 
But, as far as I can see, no changes were made to the The Health Protection (Coronavirus, Restrictions) (England) Regulations 2020.  At least, as printed on http://www.legislation.gov.uk/uksi/2020/350/contents/made
That legislation only forced cafes, hairdressers, pubs etc to close.

Are we so far down the road that police are enforcing the whim of government ministers, without an actual law to back it up?

A lot of businesses closed because they would have had no customers or staff.It was a fait accompli.

I,personally, think the police went too far during this,particularly cracking down on people minding their own business on public parks trying to get a break from their flats.

[sancho panza]

5 minutes ago, Cattle Prod said:

Just on that lot Sancho, EQT and CNX are two of the biggest risers over the last month. This is because they are Marcellus focussed shale gas players, and as I suggested a few weeks back, a shale oil shut in and/or production cut is extremely bullish for natural gas in the United States. Probably too late for an entry, but these could easily double or triple by the autumn. The shale oil production cut is going to be far i excess of the ~1.9mbpd I last calculated - the rig count decline is extremely steep, and the legacy production decline is far, far higher than in 2016. This is just natural decline from not drilling wells, shut ins will be ontop of this. Could easily see a 4m bpd production drop in the US this year.

They've doubled or tripled since March 20......wow.This all goes back to your 'cure for cheap oil is cheap oil' quote.Your prediction coming true....

I sold these two along with a raft of oil service plays in early feb,cut my company count in oilies/services from about 30 to 9.I broke even on the trades overall and was able to plug that into RDSB etc at the bottom.

 

I'm looking to up our exposure to a broader cross section of the sector but going to use call options.Tried getting XOM last night but the prices were higher than last week ....

Have you a view on Devon,Parsley,Concho,Continetal? Ovintiv?

By the way,was looking at OXY/SLB and the calls are pricey.Noon'es givning much away here.

[Bricks & Mortar]

44 minutes ago, Talking Monkey said:

Not sure why Ex BP CEO is saying what he is saying. With the supply destruction taking place and the inevitable return to regular economic activity, the tightrope of supply/demand balance will reappear at a  much lower pricepoint than before the lockdown/slowdown. The worlds capacity to add green energy sources to replace oil is a multi decade endeavor. 

Maybe when they roll out folks to opine on shit the desire to conform and go along with the prevailing narrative is huge, along with the fact trying to explain a contrarian position to a most likely feeble minded journalist would be a non starter so the easy option of going along with the prevailing narrative is taken

I don't think a return to regular economic activity is inevitable, or even likely, until we get a vaccine, or herd immunity.  The population seems intent on avoiding the virus, so herd immunity could be a while.  They've been working on an HIV/AIDS vaccine since 1981.
Government could end the lockdown soon enough.  But the public will stay BA Baracus about air travel for a long time.
Who commutes a couple hours each way for a job?  It's your office workers.  Manual work is typically lower paid, and more physically demanding, so your manual worker lives closer to the work.  A lot of office workers are going to be requesting home work after this, and the bosses will comply because the ones going back want the magic 2 metres.
That's before we get to the millions of jobs that just aren't coming back.
International trade looks set to be curtailed, with tariffs, and 'bringing jobs home'.

For me, it's all adding up to structurally lower demand for oil, going forward.  And of course, lunatic governments organising bailouts for oil companies isn't going to help.
I mean, sure, eventually, there'll be an oil shortage.  I'm saying I think the after-effects of coronavirus are pushing that time point out into the future.

[Majorpain]

29 minutes ago, Democorruptcy said:

On the BBC today they did a piece with a travel "expert" chap from Which and 2 Tui customers wanting refunds. The chap said the governbankment should create a fund to give customers all their money back. 

Have I got that right? My taxes are supposed to bail out a travel firm with HQ in Germany and hotels in such as Spain and Greece etc. OK Tui employ some staff in the UK and reps abroad but redeploy them in staycations in this country and the holidaymakers would be boosting our economy not Spain, Greece etc. Thomas Cook wasn't much of an advert for a taxpayers propping up holiday firms.

Yes, its a s**t sandwich alright and its a matter of if the Government or holidaymakers are going to take a bite.  I dont think ATOL have anywhere near enough to cover this type of damage.

*edit

ATOL is actually government run, i think we have found out who the patsy is going to be.  Taxpayer to the rescue!

[Bricks & Mortar]

Searching, on Ebay, for a fuel tanker.  I was intrigued by suggestions someone might try to get one or more of these contracts and just store the oil in their yard or something.  The difference in these two searches is quite something.

UK
https://www.ebay.co.uk/sch/i.html?_from=R40&_nkw=fuel+tanker&_sacat=0&_sop=16

USA
https://www.ebay.com/sch/i.html?_from=R40&_nkw=fuel+tanker&_sacat=0&_sop=16

[sancho panza]

41 minutes ago, Cattle Prod said:

Just on that lot Sancho, EQT and CNX are two of the biggest risers over the last month. This is because they are Marcellus focussed shale gas players, and as I suggested a few weeks back, a shale oil shut in and/or production cut is extremely bullish for natural gas in the United States. Probably too late for an entry, but these could easily double or triple by the autumn. The shale oil production cut is going to be far i excess of the ~1.9mbpd I last calculated - the rig count decline is extremely steep, and the legacy production decline is far, far higher than in 2016. This is just natural decline from not drilling wells, shut ins will be ontop of this. Could easily see a 4m bpd production drop in the US this year.

Just had a reread of thsi CP because I was obviously thinking of my investmetns first

We've discussed the shale patch a lot and the fact that the legacy decline can be quite steep and also once shut they're nopt easy to reopen.SOunds like carnage up there.4mn bpd cut is -to my untrained eye-extremely bullish for oil non?

What per centage of shale production is 4mn?

Will there be much left worht having?