stock market was up today...

#9,854
#9,854
Thunder Good-Oil said:
Inflation is a different animal in the 2020s. Oil and energy used to be huge parts of household spending. Not so much right now.
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The backbone of the USD is oil. Once this "stimulus"/counterfeiting cycles through the economy, we will see more USD needed to purchase the same amount of oil.

Thunder Good-Oil said:
But cars and trucks are going to get expensive with production shutting down and cheap loans driving up demand (for those that can get approved). Housing might be the big question.
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Money will be flowing into food and other necessities. That is where you will gradually see the inflation and increase in money velocity. People right now have no interest in buying a new SUV or pick-up truck with all of this uncertainty. That will drive prices down.

Thunder Good-Oil said:
Cheap mortgages, but lenders might not approve as easily. Supply and demand of the housing stock seems like it will be they key factor with inflation for the next year or 3.
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As time goes on, more Baby Boomers are dying off, leaving more inventory on the market. At the same time, younger buyers are not seeing the wages necessary to purchase a home and/or they are strapped with huge student debts that make it prohibitive. Meanwhile, with all of this "work from home" trending lately, what will that do to commercial real estate if you have all of this empty office space in metro areas?
 
#9,855
#9,855
Thunder Good-Oil said:
I'm comparing investments.
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You were not comparing investments. You compared Boeing (one company) to an entire industry. And it has nothing to do with any morality stance that I have against Boeing... other than I don't want them to be bailed out by the taxpayers when they were on the verge of crashing due to their own negligence.

Again, find me a mining company that is equally as inept and we can have a conversation.
 
#9,857
#9,857
Rasputin_Vol said:
You were not comparing investments. You compared Boeing (one company) to an entire industry. And it has nothing to do with any morality stance that I have against Boeing... other than I don't want them to be bailed out by the taxpayers when they were on the verge of crashing due to their own negligence.

Again, find me a mining company that is equally as inept and we can have a conversation.
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Boeing did $100B in sales as recently as ‘18
Boeing has $B’s in cash on hand
Boeing has myriad Defense contracts

They were not, and are not, on the verge of collapse.
 
#9,858
#9,858
Rasputin_Vol said:
You were not comparing investments. You compared Boeing (one company) to an entire industry. And it has nothing to do with any morality stance that I have against Boeing... other than I don't want them to be bailed out by the taxpayers when they were on the verge of crashing due to their own negligence.

Again, find me a mining company that is equally as inept and we can have a conversation.
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I compared investing in Boeing with investing in precious metal. And mining isn't the only component of gold.

Don't forget, you started all of this with your ass hat question about what's up with my "sick love affair" with Boeing. I explained why it's on my radar and then asked you a similar question about your hatred of Boeing... then you got all self righteous about them having bean counters letting people die. Historically, airplane manufacturing is far less damaging to people than gold trade and production.

You just can't help yourself from having the first AND last word on your crap.
 
#9,859
#9,859
It's not everyday that the stock market is up on a day when the government reports 6.6 million people are no longer employed this week.
 
#9,861
#9,861
Wall Street Wins Again: Banks Force Treasury To Double Rate On Small Business Rescue Loan

Furthermore, these loans are guaranteed by the federal government and don’t require collateral, and will be forgiven if funds are used for payroll costs, mortgage interest, rent and utility payments for two months and if businesses retain and rehire employees. So bank don't take any risk - why are they charging any interest at all, or rather why do they have any say in what the rate should be?
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Because they are the snakes that control mankind...
 
#9,864
#9,864
Velo Vol said:
wut
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I said that the USD is backed by oil. If we continue you to counterfeit/print more money, that is an inflationary action. Meaning, it will take more of those USDs to purchase the same units of oil.

This is really not that hard to understand. This is Econ 101 level stuff.
 
#9,865
#9,865
Rasputin_Vol said:
I said that the USD is backed by oil. If we continue you to counterfeit/print more money, that is an inflationary action. Meaning, it will take more of those USDs to purchase the same units of oil.
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Except everyone in the world uses USD. And we're a significant oil producer. So we're not going to pay more relative to everyone else.
 
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#9,866
#9,866
Rasputin_Vol said:
I said that the USD is backed by oil. If we continue you to counterfeit/print more money, that is an inflationary action. Meaning, it will take more of those USDs to purchase the same units of oil.

This is really not that hard to understand. This is Econ 101 level stuff.
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You literally just preached out the same line that you you were giving me crap for a week ago 😂
 
#9,867
#9,867
Rasputin_Vol said:
I said that the USD is backed by oil. If we continue you to counterfeit/print more money, that is an inflationary action. Meaning, it will take more of those USDs to purchase the same units of oil.

This is really not that hard to understand. This is Econ 101 level stuff.
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USD is "backed" by the fact of it being the world's reserve currency. It's the world's reserve currency because we got to make the rules after WWII because the rest of the industrialized world was destroyed.

Oil being priced in USD is a consequence of it being the reserve currency.
 
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#9,868
#9,868
Rasputin_Vol said:
I said that the USD is backed by oil. If we continue you to counterfeit/print more money, that is an inflationary action. Meaning, it will take more of those USDs to purchase the same units of oil.

This is really not that hard to understand. This is Econ 101 level stuff.
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Where is the inflation? It didn't materialize when Obama started his "economic stimulus" and I don't think it's going to happen when this latest round of here is some free money crap ends either.
 
#9,869
#9,869
VolStrom said:
Where is the inflation? It didn't materialize when Obama started his "economic stimulus" and I don't think it's going to happen when this latest round of here is some free money crap ends either.
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As I have stated before, the "inflation" showed up in the stock market, housing and to a lesser extent student tuition. Inflation didn't show up at your local supermarket or at Best Buy necessarily.
 
#9,870
#9,870
05_never_again said:
USD is "backed" by the fact of it being the world's reserve currency. It's the world's reserve currency because we got to make the rules after WWII because the rest of the industrialized world was destroyed.

Oil being priced in USD is a consequence of it being the reserve currency.
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The Bretton Woods agreement after WWII was negated after Nixon closed the gold window in 1971. After that, the dollar became a fiat currency that is backed by oil. If you wanted to buy oil after the Petrodollar agreement was made, you had to purchase oil in dollars.
 
#9,872
#9,872
Velo Vol said:
Oh.

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How much... wait back up. How much Russian or Saudi oil does Canada need to buy anyways? They are pretty much self-sufficient. So what good would putting tariffs on any imported oil do if they hardly need any imported oil.

As far as the US, how much Russia and Saudi oil do we really purchase/need? Most of our oil comes from this hemisphere.
 
#9,875
#9,875
Thunder Good-Oil said:
Long, but interesting (oil price crash):

Peter Zeihan 3/9/2020
The Oil Wars Are Going Viral

The Oil Wars Are Going Viral - Zeihan on Geopolitics

We just had the second-biggest oil price drop on record as Asian markets opened March 8.

For the past couple of weeks the Saudis have been attempting to cobble together an oil production cut of about 1.5 million barrels per day. As of last Friday, they had been sufficiently successful to get buy-in from the bulk of both OPEC and non-OPEC members, but there was one niggling hold out: Russia. On March 7 any pretense of a deal collapsed and the Saudis committed to flooding the market. First, they lowered their asking prices for crude being shipped to Europe and Asia. Second, they announced plans to quickly ramp up output from some of their spare capacity.

There was a hilarious day-long window where the Russian propaganda machine seized control of the narrative and fooled a host of financial reporters into proclaiming that Russia was going to war with the U.S. shale industry. It is difficult to delineate just how incredulous such a claim is since U.S. shale output has a lower production cost than Russian crude, but hey, people fall for propaganda allll the time.

The primary reason I laughed when I read those breathless headlines is that the Russians couldn’t launch a price war even if they wanted to do so. The problem is all about location. Much of Russian production happens on difficult land that can turn swampy in the summer and freeze solid during the winter. If those wells are shut-in, particularly during the winter, the risk of well damage (up to and including explosions!) is high. In the truly frozen sections of Russia, when the time comes to restart production, you can’t just turn them back on. You must re-drill them. In winter. Likely the following winter.

Russia has never cut production on purpose. Its “cuts” in 2019 were nothing more than some seasonal maintenance. The last time the Russians actually reduced output it was the Soviet collapse. It then took Russia nearly two decades to get back to where they had been.

Much of Russia’s power in the world, triply so in Europe, has to do with energy politics. The Continent counts Russia as one of its top three energy suppliers in any given year, and with the Brits now out of the EU that dependency will increase. Moscow (rightly) sees the American shale patch as a threat to that influence and so has sought to use propaganda to thwart the sector where possible, up to and including bankrolling some American environmental groups to lambast shale (ask Michael Moore and Jill Stein for details).

And at least to a degree, some of the Russian scuttlebutt on all things oil and shale are correct. The Russians supposedly have been ranting of late that the last round of Russian/OPEC oil output cuts in 2019 simply provided more market share for American shale to fill. That’s totally what happened.

Anywho, the Saudis made the reason for their moves crystal clear late March 8, saying they would compete for market share at every point they can reach where the Russians currently sell their oil, with the intent of underbidding any Russian offers. Saudi Arabia is nearly unique in that it can turn production on and off on a three-month time scale. Most other countries can’t, and certainly not the Russians. In fact, the only oil production zone in the world that can adjust faster than Saudi Arabia is…the American shale patch, where new wells can come online in under six weeks, and where depletion rates are measured in months rather than years.

We’re already scraping the $30 a barrel level. That’s the number where about two-thirds of U.S. shale operators find themselves crying themselves to sleep at night. Even worse (or better based on your point of view), oil prices are likely to remain lower for longer.


The first reason is the most obvious:

Courtesy of the spreading coronavirus epidemic, best guess is nearly half of the Chinese workforce is still off-line this week, and much of China’s industrial plant remains shut-down due to quarantine efforts – most notably in the industrial heartlands of the Yangtze Valley and the Pearl River Delta. China is undoubtedly going to suffer a real recession this year, which will absolutely impact manufacturing supply chains as well as the supply of consumer products globally in the second and third quarters. Chinese oil demand has probably dropped about 2 million barrels per day.

Avoiding additional widespread infections throughout the rest of China is probably statistically impossible at this point, and it is spreading globally like, well, a virus. Iran, Italy, Switzerland and South Korea have robust epidemics that have erupted in just the past two weeks. Follow-on epidemics are all but certain in France, Germany, the United States, Canada and, well, nearly everywhere else later this month and into April. The virus tends to hit less harshly than a cold in 6 out of 7 cases and is not particularly lethal if you are under age 70 and otherwise healthy, so CALM DOWN, but for everyone’s sake follow normal sanity about exposure and hygiene. Following sanity means less movement and travel and interaction and since oil is the fuel of transport, that means less oil gets used. Everywhere.

The second reason is more…colorful. Riyadh and Moscow have rarely gotten along, with their biggest big blow-up occurring at the instigation of none other than Ronald Reagan. In the mid-1980s the Saudis expanded oil output in order to wreck the overextended finances of the Soviet Union. It was part of a collage of factors which heralded the Soviet collapse. With the Russians increasingly active in Iran and Syria and Iraq and Afghanistan, the Saudis have plenty of reasons to dust off an old tool and whap the Russians on the face.

The third reason is more…personal. With the Americans stepping back from the world, the Saudis are finding themselves facing off against the Iranians without the American buffer between them. The Trump administration’s anti-Iranian sanctions are strangling the Iranian economy, an economy that survives on oil exports. Shrinking what little income Iran is still getting via a price war isn’t a dumb move.

The fourth reason is simple economics. Saudi Arabia is annoyed not simply by Iran and Russia, but other oil producers which range from Venezuela to Ecuador to Libya to Nigeria to Angola to Norway to Azerbaijan to Kazakhstan to…American shale. Saudi Arabia has lower production costs than them all. Anything that takes the snuff out of the competition is something that’ll make the Saudis smile. Of all of these, U.S. shale will bounce back fastest, but there will be a lot of bankruptcies and consolidation between here and there. Other countries will face outcomes far more painful.

The final reason is less about economics and local strategy and more about resetting Saudi Arabia’s position in the world. The Syrian Civil War is in its final chapter. The Iranians and Russians are on the winning side…while the Saudis are on the losing side. If Russian-Saudi relations are already deteriorating, it doesn’t take much of a push for the Saudis to remind the Russians (and everyone else) that there is another field of competition – one in which the Saudis excel and the Russians (and everyone else) do not.
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I'll just leave this right here...

Putin: Oil Glut Is Really About Saudi Desire To Crush US Shale
 
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