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

spunko

By spunko
in Property Prices & Economy

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Harley

Harley

Posted
Posted
18 minutes ago, Noallegiance said:

I read so much I'm confused now.

Is there actually an oil shortage? Is it a macro lead/lag thing? Is it that the oil is there but we just can't get it to the right place?

Anecdotally, I went to fill up last Thursday at a BP before all this kicked off and many pumps were already empty.

I hear in the media it's lack of drivers rather than fuel.  Out and about on Sunday.  All stations open not that I needed any being an apprentice prepper!  Tesco had turned their price sign off but people were using the pumps.  No queues.  Glad I moved here!  So are people filling up going to drive more (maybe do "victory" laps around town!)?!

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DurhamBorn

DurhamBorn

Posted
Posted
1 hour ago, planit said:

My Bold, brave guy to go against the DOSBODDERS, he sounds pretty desparate. Not a great week for him. :D

 

Bearish Hedge Fund Manager: ‘Nothing Can Save Oil’

 

The oil industry is in a terminal decline, hedge fund manager James Jampel told Bloomberg on Friday, noting that this year’s rise in oil stocks has been “the biggest dead-cat bounce in history.”

Jampel, who manages the HITE Carbon Offset hedge fund that aims to profit from decarbonization by “shorting decarbonization losers”, is extremely bearish on oil, despite the 33-percent rise of the S&P’s energy index this year.

The oil industry will be the loser of the energy transition, says Jampel, whose $187-million hedge fund is focused on shorting the most overvalued and vulnerable stocks in the carbon value chain, such as producers, transporters, marketers, processors, and users of oil, natural gas, and coal.

“Industries where volume is declining, where demand is declining, have a lot of trouble making money,” Jampel told Bloomberg in an interview published on Friday.

According to the hedge fund manager, nothing can save oil as the energy transition will only accelerate from here thanks to improving technologies for alternative energy sources.

Despite being short on oil, Jampel isn’t long on renewable energy and renewable assets.

“The reason we don’t do that is because that kind of fund would be far, far too volatile,” the hedge fund manager told Bloomberg.

Jampel’s hedge fund is betting that the broader market will outperform old energy.

This year, inflows into U.S. large-cap energy funds have jumped as oil demand started to recover and oil prices reflected this recovery. Last week, the Energy Select Sector SPDR ETF (NYSEARCA:XLE) saw the fourth highest inflows into U.S. large-cap funds at $1 billion.

Shares in several U.S.-based oil firms have provided more than 100-percent returns so far this year, excluding dividends. The five top returns were Antero Resources Corporation with 206.6% year-to-date share return as of last week, Range Resources Corporation with 182.8%, Continental Resources with 157.5%, Magnolia Oil & Gas Corporation with 136.7%, and PDC Energy with 114.6%.

By Tsvetana Paraskova for Oilprice.com

 

I love this line below.Funny enough BAT made me a quarter of a big one during 25 years of volume and demand declining.Its easier to make money in a declining market with sticky products and no new entrants.Macro page 1 stuff.

“Industries where volume is declining, where demand is declining, have a lot of trouble making money,” Jampel told Bloomberg in an interview published on Friday."

Below is wrong wrong wrong,government bond holders and cash holders will be the biggest losers due to inflation.

"The oil industry will be the loser of the energy transition, says Jampel, whose $187-million hedge fund is focused on shorting the most overvalued and vulnerable stocks in the carbon value chain,"

The below is correct,it is.Terminal.No chance it survives long term,zero,none,ziltch.The question is how much free cash will be generated between now and that date and what do the companies do with it?.If they buy back shares,pay increasing dividends and end up owning the new industries too then its likely shareholders continue to get a good return on capital employed.

"The oil industry is in a terminal decline,"

 

As for his others talk of oil and gas being dead.My model shows gas value trebling by 2050 and oil down around 12%.Thats value,not volume.Big integrated have a very very long runway of massive free cash flow to buy up the new areas.

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DurhamBorn

DurhamBorn

Posted
Posted

This article from them is comedy gold.He gives the very reasons prices were going to increase xD 

https://www.hedgeweek.com/2020/07/31/288086/mainstream-niche-how-energy-specialist-hedge-fund-hite-thriving-bearish-carbon

 Jampel is resolute that this markedly bearish stance on the future of energy will continue to pay off, observing how a victory for Joe Biden in the forthcoming US presidential election will have a major impact on the sector.

“Our book is positioned to profit, just by its very nature, should Biden win,” he says of the approaching November poll. “Out of all the industries out there, energy is singularly vulnerable to a Biden presidency because it has no friends anymore, unlike pharma or tech, which have helped us during this virus.”

He adds: “If Biden gets in it, there’s never going to be another significant piece of fossil energy infrastructure built in the United States again.  Why would there ever be another pipeline, for instance?”

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VeryMeanReversion

VeryMeanReversion

Posted
Posted

Gotta love the divis from the companies recommended on this thread over the last few years. This is mine for the last few weeks. (not normally anywhere near this good).  Report is from a Hargreaves Lansdown SIPP.

24/09/2021 ST DIV BP Plc Ordinary US$0.25
Dividend Payment 		£714.33
23/09/2021 ST DIV Rio Tinto plc Ordinary 10p
Dividend Payment 		£1,919.48
23/09/2021 ST DIV SSE plc Ordinary 50p
Dividend Payment 		£829.76
21/09/2021 ST DIV BHP Group Plc Ordinary US$0.50
Dividend Payment 		£1,824.94
20/09/2021 ST DIV Royal Dutch Shell Plc B Shares EUR0.07
Dividend Payment 		£671.39
13/09/2021 ST DIV Lloyds Banking Group plc Ordinary 10p
Dividend Payment 		£105.76
19/08/2021 ST DIV British American Tobacco plc Ordinary 25p
Dividend Payment 		£198.89
18/08/2021 ST DIV National Grid Ord 12, 204/473p
Dividend Payment 		£415.51
06/08/2021 ST DIV Vodafone Group plc USD0.20 20/21
Dividend Payment 		£691.17
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JMD

JMD

Posted
Posted
6 hours ago, ThoughtCriminal said:

And look at what these excess deaths are from. Cardiovascular, strokes etc. 

 

Hmmmm............. 

Plus did those patients test positive for covid when first admitted into hospital. Did they have covid at time of later death... A proper analysis of those figures might be quiet an alarming discovery, because already there is some evidence, and much medical murmoring, that many hospital covid recorded deaths actually contracted the covid virus whilst in hospital, however even the subsequent death of the patient resulting from their pre-existing chronic disease didn't stop these patients from being added to the 'deaths with covid' figures. 

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DurhamBorn

DurhamBorn

Posted
Posted
1 hour ago, Hancock said:

More tax rises for young educated workers, on top of the NI increase.

Wages rising and bringing down the threshold, its as if they want people to work less of force a "brain drain".
https://www.telegraph.co.uk/money/consumer-affairs/younger-workers-face-600-bill-treasury-targets-student-loans/image.png.e4670d1302d6a865700996980067ea50.png

Or less tax increases for people who dont benefit from higher education and the loans etc and instead go and become say lorry drivers or care workers because those who choose to use it gain more.Higher education needs massive reform,and maybe the best way would be for students to actually question if their course,and general woke attitude was going to cut it in the real world.Blairs focus on education was a plan with Brown to increase left wing voters working in education,students were just cannon fodder for them.

Likely this is one of those things leaked that then never comes out,or something much less costly,but i think it would be much better than increasing other taxes.

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HousePriceMania

HousePriceMania

Posted
Posted
1 hour ago, Cattle Prod said:

Why does no one seem to see that taxing work is insane?

 

Let me rephrase that, Why don't work shy sponging shysters living off the back of workers through taxes and systematic theft see that taxing work is insane ?

Capeesh 

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planit

planit

Posted
Posted
4 minutes ago, Bobthebuilder said:

Nice little run on Rolls-Royce recently. Any traders here getting an itchy sell finger, or does it have legs yet?

There has been a sector rotation over the last couple of weeks, my portfolio looks very different to a week ago.

There is nothing to stop everyone going back to crazy tech without notice but value is so under-rated that we are right at the beginning of what is possible. I for one am staying put and keeping my fingers under control.

 

Oil for one is already near the highs but we have still had no realisation or press coverage regarding the depleting inventories.

 

But no one ever went bankrupt taking a profit and a lot of people ended up with nothing who didn't.

 

1 minute ago, Phil said:

And petrofac. Maybe tomorrow?

I am having a good week with Petrofac :)

Court hearing has been put back to Friday which gave the shares a dip but I will be waiting for the verdict on the penalty (and hoping for a further rise when the uncertainty is removed).

This has gone on for 3 years and the SFO must have an outline agreement with PFC on the level of the fine. I know the RNS said that the judge will decide on the fine but I expect the deal is already done and the judge just needs to rubber stamp it to make sure there is no more bribery between the SFO and Petrofac on the deal xD. For this reason I am hoping the fine is not too large as otherwise PFC wouldn't have agreed to plead guilty.

 

Anyone not wanting to take the risk could sell half or all their holding tomorrow. 

 

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Hancock

Hancock

Posted
Posted
36 minutes ago, DurhamBorn said:

Or less tax increases for people who dont benefit from higher education and the loans etc and instead go and become say lorry drivers or care workers because those who choose to use it gain more.Higher education needs massive reform,and maybe the best way would be for students to actually question if their course,and general woke attitude was going to cut it in the real world.Blairs focus on education was a plan with Brown to increase left wing voters working in education,students were just cannon fodder for them.

Likely this is one of those things leaked that then never comes out,or something much less costly,but i think it would be much better than increasing other taxes.

Its the job market that needs to change i.e. end the need for a degree to become a copper, nurse, solicitor, politician etc ....

I just cant see it meaning the lower paid paying less tax, as those who can earn decent money will just bugger off leaving those left to carry the can .. or people will just not bother working extra to give it to the govt.

Going to be interesting times if inflation shoots up with student paying RPI+ 3%

 

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Phil

Phil

Posted
Posted
1 minute ago, Hancock said:

Its the job market that needs to change i.e. end the need for a degree to become a copper, nurse, solicitor, politician etc ....

I just cant see it meaning the lower paid paying less tax, as those who can earn decent money will just bugger off leaving those left to carry the can .. or people will just not bother working extra to give it to the govt.

Going to be interesting times if inflation shoots up with student paying RPI+ 3%

 

Future students will be like the EE lorry drivers. Non participation. 3 mth visa then nothing. 3 - 5 yr degree then nothing. Well done government. 

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HousePriceMania

HousePriceMania

Posted
Posted
1 minute ago, Hancock said:

A full 0.15% rise.

image.png

inflation 5%, Savings rates 0.1%  They're just thieves really.  Im not even buying that bullshit. They still want -vve rates if you ask me.

What'll be interesting is the 15% house price rise off the back of the QE/0.1% IRs.  0.5% by Next November should see a lot of people under water and given the high starting prices even a 15% fall to get them back to 2020 prices is a massive hole. 

Imagine those £500,000 slave boxes sold at peak with "help" from the tories, houses that should be worth no more than £200K if IRs are at historical averages, a 15% retraction for the people who have completed in the last 3 months is a HUGE £75,000 hole and you'll still have 39 years left on your mortgage :ph34r:

That'll be a lot of peoples deposits vanished into a bankers pocket.

 

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Hancock

Hancock

Posted
Posted
12 minutes ago, HousePriceMania said:

inflation 5%, Savings rates 0.1%  They're just thieves really.  Im not even buying that bullshit. They still want -vve rates if you ask me.

What'll be interesting is the 15% house price rise off the back of the QE/0.1% IRs.  0.5% by Next November should see a lot of people under water and given the high starting prices even a 15% fall to get them back to 2020 prices is a massive hole. 

Imagine those £500,000 slave boxes sold at peak with "help" from the tories, houses that should be worth no more than £200K if IRs are at historical averages, a 15% retraction for the people who have completed in the last 3 months is a HUGE £75,000 hole and you'll still have 39 years left on your mortgage :ph34r:

That'll be a lot of peoples deposits vanished into a bankers pocket.

 

Should have put my ISA money into BP @290p the other week, would have covered this years inflation in a matter of weeks. Live an learn.

Everything seems to be going parabolic at the moment, my SIPP it seems to go up by a grand on a daily basis, can't but help feeling something has got to give soon. 

I'm in the odd position of wanting my SIPP to fall by 50% or more!

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planit

planit

Posted
Posted
37 minutes ago, Errol said:

 

Easy version is it will be very difficult to reverse the trajectory we are going in that will result in $90 oil prices

 

More in depth analysis:

a) From the article they see the current world inventory draw is 4.5mbpd (I assume they mean million -  4.5mmbpd)

(This has gone up hugely from the 2mmbpd suggested 3 months ago).

b) Goldman say that this deficit is too large for OPEC+ to overcome in coming months even if they wanted to. (they are adding only 400k per month)

c) US EIC expects Shale to add 800kbpd in production by end of 2022 but looking at the gradient of the line to achieve this, it's higher than the rate of increase so far in 2021. I don't see how this is possible and on top of that we have the well draw down highlighted by @Cattle Prod which will probably hinder the progress soon.

d) hedging momentum will shift from supplier selling to airline buying. (so sellers market)

 

 

One thing I noticed the other day was US SPR draws were 90 million barrels since March but they had only announced a sale of 10 million barrels.

 

More info on FT article:  Oil prices hit three-year high as gas crunch starts to affect crude market

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