The Finance Thread

[SillyBilly]

Interesting posts. I read somewhere a while back that Iran's crude oil at sea is low quantity condensate so not easy to shift in this market without massive price reductions, a lot of refineries won't be interested.

Either way, there seems to be a consensus in quite a few oil reports calling for a low early next year (to coincide with the Iranian taps being full open to the market by next spring). I tend to think we're looking at the supply problem now and the latter half of 2016 could be introducing the demand problem (something not really talked about at all?). If we enter a global recession in 2016 through to 2017, how will oil fare then, given OPEC countries are starved for cash as it is? They are pumping more due to budgetary pressures rather than less to support price. Given that, I am not desperate to buy Shell just yet, rather sit on the sidelines when it comes to oil, particularly given how sensitive it is to war and political posturing (something it looks like we're going to get a lot more of). Imagine if Saudi fell apart in a civil war with the Ghawar field shut down, you'd have $140-200 oil overnight!

[SillyBilly]

Wow, just having a look at what happened yesterday. Oil battered down to just over $35/barrel and FTSE back below 6000. Good chance we'll see 5500 within a short period if we get a rate rise next week. I might start some buying at that level. I hope Yellen doesn't back out once she sees next weeks market carnage running into the decision. Bring it on!

It will be fascinating to watch a $30 oil scenario play out at a slightly higher interest rate with respect to the implications for the shalers in the U.S. The fact the U.S is pumping so hard is not a testament to the strength of the shalers it is an admission they need cashflow and they need it now to serve their huge debts. They need to pump harder and harder to meet the debt repayments. And the debt becomes more expensive potentially next week. We are talking massive numbers which look about as precarious as the U.S mortgage market in 2006/07, you can't do a takedown of Texas and North Dakota without that being felt elsewhere. We're approaching the realms of loss/barrel not profit/barrel at these prices and that means debt liquidation.

I will be watching the junk bond market closely, yields in the CCC market spiked to 17% this last week - something tells me the **** is hitting the fan! It was at 8% in 2014 for context. This can't go on. Its the shalers that issued these bonds. Expensive debt and they're cash hungry! F**k all liquidity either by the looks of it, institutionals are all out now so its Joe Public's market. Who wants to buy this crap?

Good article on oil below I think:

http://www.telegraph.co.uk/finance/economics/12046185/russia-opec-saudi-arabia-bluff-40-oil-price.html

Sums up nicely. The oil price sits at the mercy of a political impassé, at present a war of attrition between Russia and Saudi Arabia.

 

[SillyBilly]

Oil price at $20-30 and we'll see yields explode. No coincidence spiking yields normally happens in the build up to and daring a recession.

[Ramarena]

5 hours ago, SillyBilly said:

Wow, just having a look at what happened yesterday. Oil battered down to just over $35/barrel and FTSE back below 6000. Good chance we'll see 5500 within a short period if we get a rate rise next week. I might start some buying at that level. I hope Yellen doesn't back out once she sees next weeks market carnage running into the decision. Bring it on!

It will be fascinating to watch a $30 oil scenario play out at a slightly higher interest rate with respect to the implications for the shalers in the U.S. The fact the U.S is pumping so hard is not a testament to the strength of the shalers it is an admission they need cashflow and they need it now to serve their huge debts. They need to pump harder and harder to meet the debt repayments. And the debt becomes more expensive potentially next week. We are talking massive numbers which look about as precarious as the U.S mortgage market in 2006/07, you can't do a takedown of Texas and North Dakota without that being felt elsewhere. We're approaching the realms of loss/barrel not profit/barrel at these prices and that means debt liquidation.

I will be watching the junk bond market closely, yields in the CCC market spiked to 17% this last week - something tells me the **** is hitting the fan! It was at 8% in 2014 for context. This can't go on. Its the shalers that issued these bonds. Expensive debt and they're cash hungry! F**k all liquidity either by the looks of it, institutionals are all out now so its Joe Public's market. Who wants to buy this crap?

Good article on oil below I think:

http://www.telegraph.co.uk/finance/economics/12046185/russia-opec-saudi-arabia-bluff-40-oil-price.html

Sums up nicely. The oil price sits at the mercy of a political impassé, at present a war of attrition between Russia and Saudi Arabia.

 

Third Avenue stopping investors pulling out of their junk bond fund. This is the sort of thing that was going on in 2007 in the run up to the GFC.

http://www.cnbc.com/2015/12/11/third-avenue-to-liquidate-junk-bond-fund-that-bet-big-on-illiquid-assets.html

[Zag zig]

On 12 December 2015 at 14:43, SillyBilly said:

Oil price at $20-30 and we'll see yields explode. No coincidence spiking yields normally happens in the build up to and daring a recession.

Much prefer a chart than words, picture paints a thousand n all that.

 

[SillyBilly]

American stocks pretty flat so far but FTSE down a lot again today, bit of a bounce in Crude to $38. FTSE adjusted for inflation is way, way off peak, really getting tempting. Commodities at 13 year lows and oil at $35-40, anyone buying FTSE now? I don't think I'd be too worried about it dropping significantly from this point (still think 2016 is going to be bad), long term seems a good entry point for accumulation.

I was waiting for 5500, see what happens on Weds first..

[SillyBilly]

This technical chartist is pretty bearish on FTSE!

[SillyBilly]

Seems a lot of chartists are putting big support around $35 on crude. Did bounce off it hard today.

[SillyBilly]

And a nice graph of the Baltic dry index to finish. Lower than the height of the Great Recession. That graph just screams depression and deflation.

[SillyBilly]

Sorry to spam but just found this on Bloomberg:

$4.3 billion dollars traded in high yields in a day, that is more than three times the amount any other corporate bond ETF has ever traded in a single day! This is all retail as well as mostly. Above the likes of Amazon trading and not far off Apple. That is insane.

[IronRam 140.6]

So all this debt that nearly every country/central bank has..... Who or what are we/borrowing from? 

 

Better still, where does money get generated and get its value from in lieu of the gold standard - which no longer exists. I think I'm bright enough to understand that concept. Not the current system though.

It's all a bit of a con isn't it? 

I had it explained to me that if everybody paid all debts backwards then the only thing to remain would be debt interest?? Essentially money that has never and never will exist. 

 

Be gentle. Economics wasnt a strong point, I grew up on a council estate, have never had a pension plan or savings or a mortgage or earned much more than the national average, wage-wise.

I'm screwed aren't I?

[Zag zig]

1 hour ago, SillyBilly said:

Seems a lot of chartists are putting big support around $35 on crude. Did bounce off it hard today.

Do wonder about these supports, the scenario of $20 pill could play out.

No real cuts being seen in U.S rig counts, shale oil production still going strong, in fact the whole U.S big oil sector is proving resilient beyond sense. If the Saudi's are trying to make it crumble, more pain is needed. I'm not long anything in the sector yet until reality arrives. Question also remains just how much the Saudi's themselves are prepared to keep the game going.

All a bit Russian roulette, excuse the pun.

[SillyBilly]

1 hour ago, Zag zig said:

Do wonder about these supports, the scenario of $20 pill could play out.

No real cuts being seen in U.S rig counts, shale oil production still going strong, in fact the whole U.S big oil sector is proving resilient beyond sense. If the Saudi's are trying to make it crumble, more pain is needed. I'm not long anything in the sector yet until reality arrives. Question also remains just how much the Saudi's themselves are prepared to keep the game going.

All a bit Russian roulette, excuse the pun.

I don't really have a clue about technicals but do read quite a few bloggers, more out of passing interest as I don't trade, bounce off mid 30's back up before taking out support on the next leg down in 2016? Seems to be a few calling it. Time will tell.

[SillyBilly]

 

2 hours ago, IronRam 70.3 said:

So all this debt that nearly every country/central bank has..... Who or what are we/borrowing from? 

 

Better still, where does money get generated and get its value from in lieu of the gold standard - which no longer exists. I think I'm bright enough to understand that concept. Not the current system though.

It's all a bit of a con isn't it? 

I had it explained to me that if everybody paid all debts backwards then the only thing to remain would be debt interest?? Essentially money that has never and never will exist. 

 

Be gentle. Economics wasnt a strong point, I grew up on a council estate, have never had a pension plan or savings or a mortgage or earned much more than the national average, wage-wise.

I'm screwed aren't I?

No, not screwed, you've at least demonstrated your one of the few persons obviously interested in knowing about the delusion of money.

I will try and describe it simply and in dollar terms - when you go into your bank and deposit $100, they do not keep that $100 in the bank, they only keep a small fraction of your money and lend out the rest to someone else.  If that person deposits the money that was just borrowed at the same bank, that bank can loan out most of that money once again.  In this way, the amount of “money” quickly gets multiplied.  But in reality, only $100 actually exists.  The system works because we do not all run down to the bank and demand all of our money at the same time. FRACTIONAL RESERVE BANKING.

Nothing stands behind the dollar and pound apart from the sheeple not understanding the financial system. They have confidence in the fraud. Except it always crashes, given time. This hasn't been a long experiment and its only just ramped up to its extremes in the last few years.

You're simplifying it too crudely...let me explain...it is IMPOSSIBLE to pay back the debt. There isn't enough money in the system! The amount of money in the system is quantified by the M1, M2 and M3 supply. Forget about what these are, that is complex and boring, just know the aggregate number of the those 3 numbers is how much money, in whatever form that may be, actually exists. That number is roughly about $32 trillion right now in dollar terms. An eye watering amount. But:

American national debt = $18 trillion

Chuck in private debt of c. $58 trillion

http://www.cnbc.com/2015/05/21/our-58-trillion-love-affair-with-debt-in-one-crazy-chart.html

So if there is only $32 trillion in money in the system, in whatever form, how can Americans pay back the $76 trillion their households, their companies and their government owe? They can't! Refer back to the first paragraph and familiarize yourself with how money is created by commercial banking via fractional reserve banking. It is quite extraordinary really. It is a ponzi scheme, built on ever more debt, ever more delusion and ever more devaluation. Until the general public loses confidence...

The government can't really deleverage without the private sector leveraging up as it stands. And vice versa. We are supposed to "grow" our way out of this but their model for growth involves institutions lending us (and its debt which is strangling us). The whole system is DEBT. It is a debt based monetary system. There is no way to get out of this mess but to destroy the debt. Liquidate it. They showed us in 2008/2009 and since that hell will freeze over before they allow that to happen (and the system with it). So, we'll likely see QE4 and helicopter money before this ends. With a hike in between just for show but might make things interesting!

 

[IronRam 140.6]

10 minutes ago, SillyBilly said:

 

No, not screwed, you've at least demonstrated your one of the few persons obviously interested in knowing about the delusion of money.

I will try and describe it simply and in dollar terms - when you go into your bank and deposit $100, they do not keep that $100 in the bank, they only keep a small fraction of your money and lend out the rest to someone else.  If that person deposits the money that was just borrowed at the same bank, that bank can loan out most of that money once again.  In this way, the amount of “money” quickly gets multiplied.  But in reality, only $100 actually exists.  The system works because we do not all run down to the bank and demand all of our money at the same time. FRACTIONAL RESERVE BANKING.

Nothing stands behind the dollar and pound apart from the sheeple not understanding the financial system. They have confidence in the fraud. Except it always crashes, given time. This hasn't been a long experiment and its only just ramped up to its extremes in the last few years.

You're simplifying it too crudely...let me explain...it is IMPOSSIBLE to pay back the debt. There isn't enough money in the system! The amount of money in the system is quantified by the M1, M2 and M3 supply. Forget about what these are, that is complex and boring, just know the aggregate number of the those 3 numbers is how much money, in whatever form that may be, actually exists. That number is roughly about $32 trillion right now in dollar terms. An eye watering amount. But:

American national debt = $18 trillion

Chuck in private debt of c. $58 trillion

http://www.cnbc.com/2015/05/21/our-58-trillion-love-affair-with-debt-in-one-crazy-chart.html

So if there is only $32 trillion in money in the system, in whatever form, how can Americans pay back the $76 trillion their households, their companies and their government owe? They can't! Refer back to the first paragraph and familiarize yourself with how money is created by commercial banking via fractional reserve banking. It is quite extraordinary really. It is a ponzi scheme, built on ever more debt, ever more delusion and ever more devaluation. Until the general public loses confidence...

The government can't really deleverage without the private sector leveraging up as it stands. And vice versa. We are supposed to "grow" our way out of this but their model for growth involves institutions lending more (and its debt which is strangling us). The whole system is DEBT. It is a debt based monetary system. There is no way to get out of this mess but to destroy the debt. Liquidate it. They showed us in 2008/2009 and since that hell will freeze over before they allow that to happen (and the system with it). So, we'll likely see QE4 and helicopter money before this ends. With a hike in between just for show but might make things interesting!

 

Just as I suspected. It's all very comforting!!!

[Rev]

Going back to the oil situation, I work for a small firm in the oil industry, last 3 months has seen orders from the North Sea companies drop 90%, offset somewhat by a rise in demand from the far east.

However, all the north sea companies say they expect demand to ramp up again by March 2016, can anyone see any reason this would be so, because I'm struggling to see it.

[SillyBilly]

And if you don't know what I am getting at with that previous post it is this: debt is as much a powerful means of control. It keeps the masses in line. Remember when you take on a mortgage for the next 25 years serving the debt on some overpriced bricks, that the bank effectively created that money from nothing. And you'll pay interest on it. And you won't question it. It works better for the bank if you are in more debt. And that the action of these central bankers in cohorts with commercial bankers forces you to be in more debt (quite frankly they don't have any better ideas for growth than to lend people money to push asset prices up).

 

[SillyBilly]

6 minutes ago, reveldevil said:

Going back to the oil situation, I work for a small firm in the oil industry, last 3 months has seen orders from the North Sea companies drop 90%, offset somewhat by a rise in demand from the far east.

However, all the north sea companies say they expect demand to ramp up again by March 2016, can anyone see any reason this would be so, because I'm struggling to see it.

I'd say 2016 is as likely a recession year as any. I'd guess at supply plateauing by March 2016 (Iran fully to market) and demand collapsing but my guess is as good as theirs. Where are they seeing this demand coming from?! Ask yourself what North Sea oil company 2-3 years ago forecast 2015 $30-40 oil, answer = none. They don't have a clue like the rest of us. They are at the mercy of whatever the global economy throws at us and China hasn't even got going yet IMO. I used to read oil reports until I realised I was wasting my time given how political and volatile that commodity is. Now, I just make wild calls based on nothing - just as accurate!

[IronRam 140.6]

10 hours ago, SillyBilly said:

 

No, not screwed, you've at least demonstrated your one of the few persons obviously interested in knowing about the delusion of money.

I will try and describe it simply and in dollar terms - when you go into your bank and deposit $100, they do not keep that $100 in the bank, they only keep a small fraction of your money and lend out the rest to someone else.  If that person deposits the money that was just borrowed at the same bank, that bank can loan out most of that money once again.  In this way, the amount of “money” quickly gets multiplied.  But in reality, only $100 actually exists.  The system works because we do not all run down to the bank and demand all of our money at the same time. FRACTIONAL RESERVE BANKING.

Nothing stands behind the dollar and pound apart from the sheeple not understanding the financial system. They have confidence in the fraud. Except it always crashes, given time. This hasn't been a long experiment and its only just ramped up to its extremes in the last few years.

You're simplifying it too crudely...let me explain...it is IMPOSSIBLE to pay back the debt. There isn't enough money in the system! The amount of money in the system is quantified by the M1, M2 and M3 supply. Forget about what these are, that is complex and boring, just know the aggregate number of the those 3 numbers is how much money, in whatever form that may be, actually exists. That number is roughly about $32 trillion right now in dollar terms. An eye watering amount. But:

American national debt = $18 trillion

Chuck in private debt of c. $58 trillion

http://www.cnbc.com/2015/05/21/our-58-trillion-love-affair-with-debt-in-one-crazy-chart.html

So if there is only $32 trillion in money in the system, in whatever form, how can Americans pay back the $76 trillion their households, their companies and their government owe? They can't! Refer back to the first paragraph and familiarize yourself with how money is created by commercial banking via fractional reserve banking. It is quite extraordinary really. It is a ponzi scheme, built on ever more debt, ever more delusion and ever more devaluation. Until the general public loses confidence...

The government can't really deleverage without the private sector leveraging up as it stands. And vice versa. We are supposed to "grow" our way out of this but their model for growth involves institutions lending us (and its debt which is strangling us). The whole system is DEBT. It is a debt based monetary system. There is no way to get out of this mess but to destroy the debt. Liquidate it. They showed us in 2008/2009 and since that hell will freeze over before they allow that to happen (and the system with it). So, we'll likely see QE4 and helicopter money before this ends. With a hike in between just for show but might make things interesting!

 

A JP Morgan, Rothschild system I understand?

 

Am I right in thinking that a few Middle Eastern/North African countries had an alternative system......

 

........and have a substantial investment of High Explosives deposited there via Uncle Sam and her allies! Or is it all anti-war conspiracy stuff? 

[Ramarena]

10 hours ago, SillyBilly said:

I'd say 2016 is as likely a recession year as any. I'd guess at supply plateauing by March 2016 (Iran fully to market) and demand collapsing but my guess is as good as theirs. Where are they seeing this demand coming from?! Ask yourself what North Sea oil company 2-3 years ago forecast 2015 $30-40 oil, answer = none. They don't have a clue like the rest of us. They are at the mercy of whatever the global economy throws at us and China hasn't even got going yet IMO. I used to read oil reports until I realised I was wasting my time given how political and volatile that commodity is. Now, I just make wild calls based on nothing - just as accurate!

On the North Sea oil forecasts, you only have to look at Scotland's financial projections for independence being based upon a price of $100 a barrel. 

Way out.