Credit deflation and the reflation cycle to come (part 3)

[planit]

• bp will exit its 19.75% shareholding in Rosneft.
• Both bp-nominated directors to resign from Rosneft board with immediate effect.
• bp will no longer report reserves, production or profit for Rosneft.
• Changes in accounting treatment of Rosneft shareholding expected to lead to a material non-cash charge.
• bp’s financial frame and distribution guidance remains unchanged.

https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bp-to-exit-rosneft-shareholding.html

 

This reads like BP's solution is to pretend it doesn't own 20% of Rosneft. Sounds like this is to placate the politicians and wokesters. The wording is all carefully constructed in order to manage the fallout from the public focus on this stake. Perhaps we should be looking at who was heavily shorting BP last week.

Notice BP is not saying it will perform a fire-sale which would not be in the interests of shareholders. The accounting changes are due to it being held as an "asset for sale" instead of an integral part of their business. They still have the opportunity to change their mind and reinstate it if it all blows over (but I doubt they will due to their green changes).

 

Quote

bp chief executive officer Bernard Looney added: “Like so many, I have been deeply shocked and saddened by the situation unfolding in Ukraine and my heart goes out to everyone affected. It has caused us to fundamentally rethink bp’s position with Rosneft. I am convinced that the decisions we have taken as a board are not only the right thing to do, but are also in the long-term interests of bp. Our immediate priority is caring for our great people in the region and we will do our utmost to support them. We are also looking at how bp can support the wider humanitarian effort.”

 

I for one am more worried about Looney's green agenda than I was before, whilst BP kept that stake it showed they weren't going ESG insane.

I also think this is going to get slaughtered in early trading tomorrow as the way it's worded is very negative sounding. They had already pissed off all the O&G investors so this will clearly not help and on top of that they are still a long way from attracting any ESG investors.

I would be happy if they did an extra $2bn of buybacks tomorrow with all the cash they are making.

 

Even though I have too many BP shares (through options) I will be buying if I can get them less than 320.

If we are trying to pinpoint the bottom tomorrow I will pick 308p. 

The covered calls I sold on Friday look like a good move 

[planit]

 

Does anyone else believe Russia is making out like bandits by using all the oil profits to buy Russian companies at pennies on the pound?

All this virtue signalling is very expensive to the companies and countries carrying it out.

[DurhamBorn]

If BPs stake is worthless it should knock max 9% off the share price.Anything over is an over-reaction.Of course the question is who will buy the stake if they are to get anything for it?

On normal days BP buys back around 10% of shares traded with its buybacks and given their lower priced hedges should be rolling off now and being re-hedged around 100 bucks they could up that in the short term by a lot to counter the flow of sell orders

Id rather BP didnt lose the stake,but in the scheme of whats going on probably best to move now before the Ruskies do it for them.

Obvious Putin has made a huge error invading Ukraine,he has united the west,even Sweden sending arms now,very likely talks will kick in soon,the question then is should BP of waited it out,but i think they have probably made the right choice,but selling the stake at best with the ruble where its going will destroy between 5% and 9% of value.

[JimmyTheBruce]

23 minutes ago, planit said:

 

Does anyone else believe Russia is making out like bandits by using all the oil profits to buy Russian companies at pennies on the pound?

Must admit was thinking this myself last week.

[kibuc]

2 hours ago, PrincessDrac said:

LINK

Expected this.

Could be a good day or week for the PM miner's. 

MOSCOW, Feb 27 (Reuters) - Russia's central bank on Sunday said it would resume buying gold on the domestic market from Feb. 28, as it undertakes measures to try and ensure financial stability during Western sanctions against Moscow for its invasion of Ukraine.

Earlier, Russian President Vladimir Putin ordered his military command to put nuclear-armed forces on high alert as Ukrainian fighters defending the city of Kharkiv said they had repelled an attack by invading Russian troops.

I'm not sure why they'd advertise their position like this, unless the goal is to create a price spike for their planned dump. I think it's only logical they'll have to sell some of their reserves - whether it's $ or gold - to prop up the Ruble.

[Jesus Wept]

24 minutes ago, DurhamBorn said:

If BPs stake is worthless it should knock max 9% off the share price.Anything over is an over-reaction.Of course the question is who will buy the stake if they are to get anything for it?

On normal days BP buys back around 10% of shares traded with its buybacks and given their lower priced hedges should be rolling off now and being re-hedged around 100 bucks they could up that in the short term by a lot to counter the flow of sell orders

Id rather BP didnt lose the stake,but in the scheme of whats going on probably best to move now before the Ruskies do it for them.

Obvious Putin has made a huge error invading Ukraine,he has united the west,even Sweden sending arms now,very likely talks will kick in soon,the question then is should BP of waited it out,but i think they have probably made the right choice,but selling the stake at best with the ruble where its going will destroy between 5% and 9% of value.

BP's latest annual results, published two weeks ago, revealed Rosneft accounted for $2.7bn (£2bn) of its profits, about a fifth of its total.

@DurhamBornwould it not maybe knock 20% off the sp ? Could we see sub £3 tomorrow? 

[nirvana]

14 minutes ago, Jesus Wept said:

Could we see sub £3 tomorrow? 

let's hope so, I'm back in then 

[geordie_lurch]

The ruble has been seen at the following per dollar as well as possibly over 200 according to the following and closed Friday at 83  https://www.zerohedge.com/markets/traders-brace-chaotic-fx-market-open-ruble-set-collapse

 

[Hancock]

4 hours ago, kibuc said:

I'm prepared to buy anything that drops significantly on Monday, whether it's Poly, BP or Tesla (ok, maybe not that one). Turbulent times create overreactions which generate some of the best buying opportunities. 

Is this one an over reaction?

In total i bought 15 grands worth of Russian shares on Thurs/Fri, and i cant but help think its one of my worst financial decisions.

Maybe its all just been overblown at the weekend and things will calm down, but i don't see my getting that money back for a while, maybe never.

[BadAlchemy]

43 minutes ago, kibuc said:

I'm not sure why they'd advertise their position like this, unless the goal is to create a price spike for their planned dump. I think it's only logical they'll have to sell some of their reserves - whether it's $ or gold - to prop up the Ruble.

They could drive the price higher by selling oil for gold on very favourable terms? Increase the buying power of their gold reserves and cause a headache for the west who want the gold price suppressed.

Interesting thread...

 

[DurhamBorn]

44 minutes ago, Jesus Wept said:

BP's latest annual results, published two weeks ago, revealed Rosneft accounted for $2.7bn (£2bn) of its profits, about a fifth of its total.

@DurhamBornwould it not maybe knock 20% off the sp ? Could we see sub £3 tomorrow? 

I suspect around 12% to 14% then pull 4% of it back over a few weeks of buybacks,however it could be more short term if the market gets hit hard across the board,not sure what US futures are saying they should be open.The value had been cut in half last week anyway.Not sure there will be many buyers,but it could be they sell once things settle down,or the Ruskies take it anyway.

Doesnt bother me at all the falls,but it does show newbies on here why you have max limits on each investment.I sold 23% of my BP holding overall because it grew too big.That 23% had doubled with divs.I didnt want too,same as selling a few BAT,but you need to be clinical,rules remove emotion.It could be i shave something else and add more BP later.

These sort of things happen during a nasty cycle like this,but they all add up to more inflation.I expect CBs will add liquidity while still increasing rates,if so my roadmap was showing that and it made me scratch my head a lot.

The main worry is Putin has made a huge mistake and a caged Honey Badger is nasty.Best thing now would be talks and some kind of bodged deal before we end up with a hot war sucking everyone in.

[Yadda yadda yadda]

1 hour ago, DurhamBorn said:

If BPs stake is worthless it should knock max 9% off the share price.Anything over is an over-reaction.Of course the question is who will buy the stake if they are to get anything for it?

On normal days BP buys back around 10% of shares traded with its buybacks and given their lower priced hedges should be rolling off now and being re-hedged around 100 bucks they could up that in the short term by a lot to counter the flow of sell orders

Id rather BP didnt lose the stake,but in the scheme of whats going on probably best to move now before the Ruskies do it for them.

Obvious Putin has made a huge error invading Ukraine,he has united the west,even Sweden sending arms now,very likely talks will kick in soon,the question then is should BP of waited it out,but i think they have probably made the right choice,but selling the stake at best with the ruble where its going will destroy between 5% and 9% of value.

BP down 3.35% last week despite oil being up on the week. Have you included the decline in your figures?

[ThoughtCriminal]

I have to say that I'd be amazed if putin hasn't factored all of this in before he dropped the hammer.

 

This looks like a Russia, China and India led move to break dollar hegemony.

 

This isn't a blip, we're witnessing the crossing of the Rubicon.

 

 

[afly]

2 minutes ago, Yadda yadda yadda said:

BP down 3.35% last week despite oil being up on the week. Have you included the decline in your figures?

That seems to be how bp works.

Has Russian holdings? Takes a pounding.

Dumps Russians holdings? Gets taken to pound town 

[JREWING]

11 minutes ago, Hancock said:

Is this one an over reaction?

In total i bought 15 grands worth of Russian shares on Thurs/Fri, and i cant but help think its one of my worst financial decisions.

Maybe its all just been overblown at the weekend and things will calm down, but i don't see my getting that money back for a while, maybe never.

So Hancock.

What is the price that BP has to hit for you're balls to grow and you go balls deep into BP.

Or you had a re think. This week could be your moment or you having second thoughts.

[Calcutta]

11 hours ago, geordie_lurch said:

Anyone going to sell BP first thing Monday as they seem to be the most exposed to Russia?

I'll have 10k worth @303p please.

 

[JREWING]

11 minutes ago, Calcutta said:

I'll have 10k worth @303p please.

 

Tight git. 

[Hancock]

1 minute ago, JREWING said:

So Hancock.

What is the price that BP has to hit for you're balls to grow and you go balls deep into BP.

Or you had a re think. This week could be your moment or you having second thoughts.

That strategy was knocked on the head the other week. But most definitely knocked on the head as I got carried away last Thursday afternoon /Friday afternoon as the Russia shares seemed like a bargain ... looks like it was a case of buying the dip instead of buying the crash ... though even buying the crash might end up with the company being confiscated.

Really is a whole new paradigm.

My fuck up is i want to buy a house pretty soon, and i may not get the money back from the above for a while if ever ... i'm finishing a 10 day trip tomorrow, and it maybe a case that all the money earned was lost in a mad few hours of button tapping last week. Maybe write the money off as another one of lifes lessons!

Buy a house, do a bit of work and avoid the stress of all this shit .... would prefer to be poor and stress free than trying to grab a few extra grand here and there.

[kibuc]

23 minutes ago, Hancock said:

Is this one an over reaction?

In total i bought 15 grands worth of Russian shares on Thurs/Fri, and i cant but help think its one of my worst financial decisions.

Maybe its all just been overblown at the weekend and things will calm down, but i don't see my getting that money back for a while, maybe never.

I have no exposure at the moment, bought small position in Poly on Thu and sold on Fri for a quick 30%, precisely because I didn't want to hold anyhitng so volatile over the weekend. So, for me whatever comes on Monday (if anything) will be just a first ladder, from which I'll have plenty of scope to average down.

While I'm open to buying anything that looks oversold tomorrow, I might apply different investing horizon to, say BP and Gazprom. BP is the one that got away in 2020 and I'd be prepared to hold it very long term if I managed to buy it on offer. Poly or Gazprom would be more of a short-term play.

Also, I'm currently 100% in junior miners so all my money are by definition never to be seen again 

[planit]

8 minutes ago, Calcutta said:

I'll have 10k worth @303p please.

 

There is a high chance shares are going to dive tomorrow first thing.

The sentiment and chat over the weekend has been extremely negative compared to Friday even though not too much has changed (apart from the west trying to engineer a Russian bank run).

 

There have been a few comments about cashing out on Monday first thing but..

Part time retails traders will have been catching up over the weekend and they all might be putting in orders to reduce exposure for Monday morning. I feel there won't be an opportunity to sell out as these companies will gap down with  everyone trying to get out the door at the same time.

As DB said, try and be non-emotional in your decisions, it is clear that selling BP @-20% is stupid if only 10% of their profits come from Rosneft.

Good luck for tomorrow everyone, I hope the talks on the Belarusian border tomorrow go well and Russian troops stop fighting.

[DurhamBorn]

Tut tut,all these il buy at prices,,if you hold no BP how about buying a ladder if they are 10%+ down and set ladders at 7%,14%,21% below that then go and do something else.Markets whipsaw retail investors all the time,an investors job isnt to time prices,but pick the areas the cycle gives a tailwind to and have a mechanical buying policy.Three of four ladders is the best way iv found in 35 years of doing this to avoid emotion ruining returns.Kaplans tiny ladders are even better,but we dont get free trades.

Think like a contrarian,BP will be buying back shares much cheaper now.

[Alifelessbinary]

Until there are some meaningful steps towards negotiation in the Ukraine it’s going to be extremely volatile market. I’ve been cursing my cash holdings lately due to the inflation drag but I’ll be looking to use them in a few areas. At times like this I’ve learnt to write a list of potential stocks and ladders. 

I’ve been tempted by a few of the Russian stocks like POLY, however I’ve been burnt a few times and so now my investment aim is to simply beat inflation. This means I avoid high risk situation where a total stock loss is possible. Saying that I’m sure some brave souls will make a fortune over the next few weeks, but it’s not for me. 

It’s frustrating that private investors will likely be locked out of the best trading tomorrow morning while the institutions swamp the trading bandwidth. 

If we stay disciplined we can thrive in this environment and beat the big boys. I wish everyone the best of luck and we’ll steer through this one together. I’ll be picking BP up tomorrow if they drop more that 12%.

 

[ThoughtCriminal]

Well well well..........

[Loki]

7 minutes ago, ThoughtCriminal said:

Well well well..........

 

I don't follow, the I in SWIFT means international, the EU couldn't do shit directly to Moscow or China anyway 

[Hancock]

10 minutes ago, ThoughtCriminal said:

Well well well..........

My hope is this weekend people have been watching too much rolling news, and reading twitter and coming up with the conclusion that its going to be the end of the world for Russia.

Obviously its very bad, but hopefully not companies becoming worthless bad.