The Calm Before The Next Oil Price Storm?

published on August 2, 2020

Okay so before we get into tonight's main show topic for the live stream show let's just go over the economic data that has come out some of the key points in the last day or two for the us economy so first the fed's official balance sheet

Is down by about 15 billion dollars give or take over the last week officially again i don't really trust that because just look at the dollar look at the money supply growth

So the official balance sheet says one thing the weakness in the dollar index the dollar index is now below 93 so it's bouncing around there in a bunch of different support levels in there before it might go down to 91 or 88

And if it breaks 88 it's gonna be real trouble i have a technical analysis chart behind the paywall for my pa over a thousand now patreon account contributors if you want to set up for

Only five bucks a month there is over a hundred pieces of unique content research well-researched articles with fundamental analysis technical analysis audio podcasts

On a lot of different topics behind the paywall if you want to take a look at the updated dollar index chart that i put out but as right now there's still some support levels left on the dollar index but we'll see

If they hold or not okay so in addition to the fed's official balance sheet being down 15 billion give or take the q2 gdp numbers for the us came out and they are the worst ever

They dropped by 329 percent which is not the number that the atlanta fed was projecting but guess what the stock market didn't care the stock market just shrugged it off

We have hedge fund managers like keith mccullough of hegei well former hedge fund manager i don't know if he actually he trades his own account i'm not sure if he manages hedge fund money now

He focuses mostly on research in his own trading and he interviewed this guy this hedge fund manager named michael taylor portfolio manager critical mass partners and they were talking about in a recent

Interview about the plunge protection team i'm not going to play the audio clip right now actually you know what i could go let me just grab it really quick i have it

Right here 87 so we've had many many many instances of uh the feds uh giving the wink nod what the hell is the ppt and why do you keep talking about ppt at two to three in the morning

Oh my god are you do you mean the payment protection program i'm sorry did you say ppp or the the i found the clip so we'll play it real quick it's only a minute or two ppt the the plunge protection team

Oh my god you believe in it what are you talking about do you believe in it no some people think that i'm being a conspiracy theorist i mean they're they think that i'm just making it up

Uh actually it's actually quite well documented throughout history uh many instances in uh 87 i mean art caching has gone on many times to uh recreate and replay that back

Where uh that you know the fed the banks called the uh fed and said by the way we have all this insurance it's gonna be bad and then they said why don't you start buying stocks now and that was it

And so and that's going back to 87 so we've had many many many instances of uh the feds uh giving the wink nod in order to move uh stocks there's many ways to do it now though

Because they can do it through bonds they can do it through um selling vol so they don't have to go and directly buy equity futures in order to move markets dramatically and honestly all they have to do is get

Somebody else to do it with a wink nod and that can be i mean look at overnight repo right overnight repo is a great way to do it because you're basically telling them like hi we're going to give you a shit ton of

Liquid what are you going to do at 3 am that's it no all you have to do is uh and and moreover and in this day and age you just have to

Get the machine who doesn't think at all to believe and then they just chase the pattern so i mean um you know there's more to me it appears that there's more than a collective effort

From the buy side fully loaded whether it's the quants or other people with an interesting agenda to make that happen it's it's an interesting setup i mean uh to me it's quite bubbly i don't think you entirely disagree with that there's

A lot of behavior out there that is beyond bubbly i mean what do you think about that component of this into the setup the whole notion that i think the one-liner is

Stocks don't go down okay so i played that clip for you guys i'll touch the link in the information and description section if you want to listen to the whole interview but the point is

That a lot of people are openly discussing stock market and other manipulations now in public that it used to not be polite conversation to discuss this

I remember when i was first getting started there was very few it's called fringe it was considered fringe to discuss things like this openly now you have a lot of people

Openly discussing this on podcasts you know more mainstream people discussing this and this goes into my point about the real economy versus the asset markets and the stock market so they're openly talking about market

Manipulation you also have the jobless claims numbers and another 14 1 6 million new americans filed for unemployment the total amount once the crisis started it's over 54 million americans now have

Filed jobless claims so it's an insane number and again this is divorced from asset markets so the real economy is totally dislocated from asset markets

And a lot of it has to do with the federal reserve and also we have an election coming up in the not too distant future okay so let's get into tonight's main show topics about the oil market i've

Been getting a lot of requests to do an oil market update and honestly the oil market has been kind of boring for the last six weeks give or take so the oil market has

It rallied pretty strongly and for the last six weeks it's been fairly range bound in the high 30s and it's peaked its head i think above maybe 41 very very few times but really

Since june 22nd i looked back on the charts june 22 june 23rd when oil got above 40 for the first time in quite a few months it hasn't really done very much so it's

A very calm market but calm markets can tend to be the calm before the storm and with a weak dollar with what we're seeing one would think that maybe a higher oil

Price would be in the cards but i think the supply demand fundamentals for the oil market and the articles that you can see there on your screen a lot of experts are looking at this whether this is i think rystad energy research or

Royal debt shell and then there's also in the article here from energy intelligence it was a free article from thursday july third well actually that was their way it says thursday july 30th on their website the

Article is from monday july 27th about oil price pattern sees rising selling pressure the oil price has been extraordinarily stable over the past six weeks but the stability could well be disguising

A steep price fall in the making charts from technical and analysts show the front month brand futures contract closed over 40 a barrel for the 30th straight trading day on monday and the us west texas

Texas intermediate or wti price made it to 12 consecutive trading days above 40 dollars a barrel the current slow price advance is interpreted as stability walter zimmerman of icop

Technical analysis wrote in a note but it in fact quote reveals powerful overhead selling pressure in the report zimmerman says the wti price is moving in a quote diagonal

Triangle wave 5 up such a move is rare in technical analysis charts and only happens when prices have risen fast before the wti september contract rose 90 in two months

In the charts the market has been rising quote too far too fast and the current waves of trading slightly up create patterns that are excellent bull traps quote in a textbook perfect

World the september contract would bottom out by 40 40 20 cents a barrel then rebound to forty three dollars twenty five cents a barrel area final peak then kill over and drop hard icap said

The september contract which expires on august 20th hit a low of forty dollars forty cents a barrel on monday the lack of firmer uptrend has pushed numerous traders to the sidelines with concerns growing about the global

Economy again this the concerns about the global economy go back to the fundamentals of oil for supply and demand particularly the demand side which are the story headlines you can see there on

Your screen oil prices were weak on monday before recovering in the afternoon in new york the nymax september wti contract closed 31 cents up at 4160 a barrel

In modest trading volume in london on ice ice futures the brent september contract added seven cents at 4341 cents a barrel in light trading volumes the physical market signals that the

Immediate surplus of crude supply is ample with the brent contango where spot is a discount to later supplies at more than 30 cents per barrel per month per barrel which pays for

Storage west african oil producers have had trouble selling their september loading oil and that is a key bellwether in the light and sweet crude oil market traders there note sizeable overhangs of

Supply fragile refinery margins and slower buying from key markets europe and china and china has known is well known to stockpile key commodities so whether that's copper

Aluminum oil they just continually it seems like build new strategic petroleum reserves i think they built one a couple months ago another one so china does stockpile commodities but

When but then when china either takes a break or stops stockpiling commodities and the commodity price could crash it's happened a lot over the last 10 years both nigeria and angola still had numerous august cargos for sale when

They unveiled their september loading programs last week david brent these brought the spot brent price with a loading date is trading at par with the front month futures contract down from a slight premium

The weaker brand price is also reflected in the small 50 cent premium for brent over dubai in the brent to dubai exchange of futures for swaps which is a more typical market would show a 250

Brent premium okay that's it for this short little article if you want to read it on your own there's some a couple charts in here this is a free article that energy intelligence put out on monday july 27th

Oil price pattern sees rising selling pressure the article will be below the video after the show is over in the information and description section recently one of my favorite oil

Journalists nick cunningham he does a really great job at oilpricecom which is one of the best free resources also if you want to track gasoline demand here in the us there's a new website that shy girl

Tracy shoe chart was promoting a gas buddy so they track gasoline demand trends but there's also a forbes article i have out here from two weeks ago saying us demand for gasoline is still well below

Its pre-global pandemic levels so why oil remains stuck at 40 by nick cunningham from july 29th oil prices posted gains once again on wednesday on the back of bullish data from the

Eia energy information agency but analysts are warning that plenty of downside risks remain so the probability of the oil price falling is quite high and a lot of it is based on i would say

Not just demand but also how many people are getting infected and the politicians and bureaucrats and central planners trying to impose more restrictions on the economy so the more

People that the politicians claim are sick the more restrictions that the politicians and the bureaucrats put on the economy the less likely the amount of the demand for oil and

Gasoline and jet fuel is going to increase and if it does roll over if demand which was rallying from a couple months ago and yes it's still low compared to what it was before the

Pandemic but it has rallied a pretty decent amount but if it rolls over again if demand rolls over again you could see another crash in the oil market and you're already starting to see

More oil service firms and drillers declare bankruptcy in the last 10 days you've had oil firm bj services file for chapter 11 bankruptcy i'll put i'm not going to read that story i'll put the story from reuters in the information

Description section that story was from july 20th the other story is another permian oil producer files for bankruptcy from july 27th by charles kennedy and that one

Is permian oil producer rose hill resources so let me get back to the forty dollar why oil remains stuck at forty dollars okay the eia reported a huge drawdown in crude oil inventories on wednesday with

A drop of 106 million barrels that was enough to lift crude oil prices a little bit but several analysts argued this week that the bigger picture is murkier with economic and pandemic

Related risks looming quote while and especially in china if you've seen a lot of the coverage from china in focus or ntd or joshua fill up or china uncensored

There is a lot of natural disasters and problems with dams and flooding and earthquakes and also a new second rounds of pandemic all over china i mean joshua phillip is

Documenting this on his youtube channel excellent youtube channel he's an excellent journalist about like how a lot of the main chinese communist party elites are have not been seen in the

Major cities in weeks so they're staying away they've ducked out of the cities and that's because according to the stuff that they're showing on on china infocus and joshua phillip

On their on their news coverage of china that there's more uh global pandemic outbreaks back in china that the chinese government is not controlling and lying about and covering up

So china is dealing with a lot and china is one of the main demand drivers for gas for oil and gasoline okay risk looming uh pandemic related risk looming quote while upward momentum has stalled over the

Past month we still think prices are overdue for a downward correction to reflect the flattening of oil demand recovery and the darkening of economic prospects standard chartered an analyst wrote in a

Note the investment bank added that quote consensus views on the oil market balances in the second half of the year have quote weakened significantly over the past month we're

Now we now only rarely hear talk of v-shaped oil demand recoveries and extremely tight markets the views that allowed brent crude to rally beyond 40

A barrel standard chartered said instead the main talk among traders seems to have shifted to precisely how much demand will disappoint and how long we'll take to normalize inventories so

This is not if that is the expectations in the market a surprise to the upside a surprise in demand level or a drop in inventory would move the oil price higher however

It seems that a lot of people are expecting the opposite now it is not guaranteed the oil price will crash and we're in a world where there's constantly changing rules there's a lot of manipulation in markets

There's a lot of paper oil futures contracts too so there's it's really weird to see the oil price basically in a really tight trading range for the last four to six weeks so the

Odds of in terms of probability the odds of this continuing where the oil price stays around forty dollars a barrel for another four weeks or another six weeks or another eight weeks or another ten

Weeks or twelve weeks probably pretty low so i think the probability as we see more and more news stories more and more economic data points that the us economy that a lot of

Small businesses are closing and the unemployment the amount of unemployment is starting to increase again i think the last two weeks the amount of americans that filed for jobless claims has started to spike

Again so as we see these types of bearish economic data points i mean the less normally anyway because a lot of people don't have savings unless they're getting paid an extra 600 a week for their unemployment benefits

But normally when people don't have jobs they tend to not drive nearly as much then you also have the auto sales data here in the us the auto sales data in q2 i think that came out in the last

Month it was down over 30 percent and summer driving season the data on that just does not look that good so normally for oil and gasoline demand here in the us if

A lot of the demand is from summer driving season and the summer driving season numbers are not good so the rest of the year is normally nowhere near the levels of summer driving season now maybe things

Will change will be different than normal because of the pandemic and there's some type of recovery later in the year next year but normally the summer driving season is by far the

Largest amount of gasoline usage here in the us because a lot of families or college kids get in cars and drive somewhere for a mini vacation a short vacation instead of flying i mean people also fly

But a lot of people also drive especially if gasoline prices are cheaper so again if you want to monitor gasoline demand you can go to the website gasbuddycom i think gas buddy has a

A weekly now for free gasoline demand update okay the investment bank added that consensus views on oil market balances in the second half of the year have weakened significantly over the past

Month we now only rarely hear talk of v shaped recovery uh demand recoveries extremely tight markets the views that brent okay okay normalizing i already read that

That assessment stands in stark contrast to the behavior of crude prices in the last six weeks volatility has vanished which is really rare for volatility to vanish this much considering

How many papers futures contracts there are to actual barrels of physical crude oil there's a lot more paper barrels than there is physical crude oil barrels i think it's at least five to one

Volatility has vanished with wti remaining rooted at about forty dollars a barrel and brent crude a few dollars more prices have been stuck at those levels even as the optimism surrounding economic

Reopenings has dissipated the only sign of a more pessimistic outlook creeping into oil markets is a shift from backwardation towards contango as standard chartered points out the discount for front month brent

Contracts well relative to front a fourth month brent contracts has widened over the course of july quote in our view brent above forty dollars a barrel seems

Increasingly discordant with the flow of news regarding the global pandemic and the outlook for the global economy and particularly jars with increasingly bearish oil market fundamentals standard

Chartered analyst concluded and yes i did miss the rally in a lot of these oil stocks but i didn't think the rally would be nearly as strong it went up a lot quicker

Than i expected it to i thought maybe the oil price would rally back to after it crashed and went negative it would rally back to a trading range maybe between 20 and 35

And be very volatile and instead it rallied very sharply probably on short covering my educated guess there was so much shorts so many people piling on shorts that those shorts covered and that

Fueled the upward movement in the rally and we've had a rally faster than i expected in the oil price where it's gone back to 40 whereas i expected a trading range for a

While for between 20 and 35 very volatile too and we haven't had that volatility so it's very interesting that we haven't had the volatility for a while now it's over four weeks about

Six weeks very little volatility for the oil market very very unusual too again considering the amount of papers futures contracts in the oil market relative to the amount of actual

Physical barrels of oil in our view brent crude above 40 seems increased okay uh however on the flip side us gasoline demand jumped in the latest eia energy information agency data through july 24th

Rising to eight points so gasoline demand did jump rising to 88 million barrels per day ending several weeks of decline at least temporarily that level of consumption is the highest in four months

Also i forgot to bring up the point about the actual oil stocks so i'm not in a hurry to add any oil stocks so some of you some of my patreon account contributors are sending me

Messages they want to know my best small oil company picks and if you want ideas for that you should go listen to the dan stephens interview i did in the last couple weeks he's out of

Houston texas area and he covers the tinier smaller and mid cap oil companies in the us full time so he does an extensive amount of valuation and research and analysis

Works as industry contacts if you're looking for small oil companies if you're actually bullish oil in this environment and i i'm again i'm really worried about the demand side now if the dollar gets weak

Enough and miraculously there's some type of vaccine and i'm not optimistic that that's going to happen anytime soon so i'm not in a hurry to go out and

Load up on oil stocks right now there was a nice rally in oil stocks after oil prices went negative the as tavi costa said the oil stocks actually when oil prices went negative for the front month futures

Contract they actually the oil stocks actually rose so there was a lot of smart money that was accumulating oil stocks then seeing the rally was going to happen but it looks like all the easy money on the

Oil rally has been made and now there's significant now obviously nothing's guaranteed anymore except for currency devaluation and taxes and politicians changing the rules

Politicians and bureaucrats and central bankers changing the rules but there is a high probability of a lot more downside again in the oil market especially if the global economy has a lot more problems

Okay ending several okay the oil market demand excuse me the gasoline demand jumped in the last eia data through july 24th rising to 88 million barrels per day ending several weeks of decline at least

Temporarily that level of consumption is the highest in four months more of these surging cases in the united states has eased ever so slightly with key states such as texas florida and california

Seeing infections coming down from recent peaks uh actually it looks like that data's starting to reverse in a lot of those states starting to go up again this could be a sign of retreating demand risk from

Possible slowdowns or targeted lockdowns but the prospect of a second wave later in the year still presents looming risks clearview energy partners wrote any node to clients the second wave in the us may

Be plateauing for the time being and the rebound in gasoline demand combined with the drawdown in inventories boosted in boosted oil prices midweek but the sentiment shifts from week to week and

It is not clear that the prevailing wisdom that oil markets would be in a substantial supply demand deficit in the second half the year will pan out on tuesday ricedad energy

Which is a oil research firm warned that the loosening of the opec plus production cuts could lead to a renewed surplus for the next four months global supply is expected to increase rather significantly over the next

Several months because in other word forty dollars the lower cost us shale oil producers want to start bringing on wells again because they need the cash flow again

This is a global cash flow problem and oil companies yes a lot of them shut in wells and cut production but now that the oil prices rallied a little bit they need that cash flow back

Global supply is expected to increase rather significantly over the next several months outpacing expected demand increases opec's experiment to increase production from august could

Backfire as we are still nowhere near out of the woods yet in terms of oil demand the overall liquids market will flip black back into a mini supply glut and a swing into deficit will not happen again until

December 2020 bjorn tong hao tong haugen reisted energies head of oil market research said in a statement on tuesday on wednesday tong haugen stuck with that thesis despite the price increase on the

Back of the energy information agency data rystad pointed to the unexpected rise in infections in europe a negative development that has yet to be factored into market expectations

In fact data from europe shows a decline in road traffic as virus cases rise quote don't be fooled by today's price gains they may be canceled as soon as production exceeds demand which is around the corner and as this

Is expected to last for some time traders will race to price it in tung house tong howen said i have two more articles here let's hear shell ce this is from july 16th the royal dutch shell ceo says

Don't expect a v-shaped oil demand recovery the global economy and oil demand are most likely not headed for a v-shaped recovery as the global pandemic will have a knock on energy demand for years

Royal dutch shells chief executive ben van burden told ihs market vice chairman daniel jurgen in an interview quote it's most likely not going to be a v-shaped recovery while gasoline demand

Is recovering due to increased use of personal transport energy demand and some of the demand for mobility will continue to be lower even when the the virus is behind us shell's top executive noted

Quote but in general because a lot of people probably don't have jobs and a lot of people working from home but in general energy demand and certainly mo or don't have their small businesses anymore and certainly

Mobility demand will be lower even when this crisis more or less is behind us what it will mean that uh well excuse me will it mean that it will never recover it's probably too early to

Say but it will have a permanent knock for years shells ceo said on the q1 earnings conference call at the end of april that the current crisis is a crisis of uncertainty

And we don't know what's on the other side of it and they slash their dividend i think it was smart for them to cut their dividend because i was predicting that british petroleum or bp

About three or four months ago would cut their dividend i was looking at their q1 financials when they announced and i did a article on this for my patreon account contributors months ago

And their financials looked their balance sheet and and income statement statement cash flows looked really ugly and it looks like bp is going to be cutting their dividend i haven't checked

In the last week or so to see if they cut it already but it looks like they're going to we're looking at a major demand destruction that we don't even know that will come back so the oil price may come

Back but if the volumes are significantly lower we still have a major dislocation of course in our own cash wheel bps chief executive bernard looney is not ruling out either that the oil

Demand crash and perhaps the subsequent lasting change in people's lifestyle may have already brought about uh peak oil demand at the height that doesn't mean the oil price can still rise though if the dollar is devalued

Enough or supply uh very little investment is made into new oil supply because only the us shale oil companies for the last six or seven years were getting the capex that they needed

They're actually getting too much capex and still losing money it was subsidized by the us government in the federal reserve and wall street shale was subsidized it's meant to be a loser

To give the us energy security at the height of the lockdowns around the world shell announced in april it's ambition to be coming okay i'll just skip that part because that doesn't have to do with oil

Supply demand fundamentals okay last story here rice adds new oil demand this is from july 25th by julianne geiger on oilpricecom again probably the best free website for free oil natural gas

Energy market research rice dad's new oil demand scenario banks on second wave of the global pandemic rice dead energy is now changing its base case scenario for oil demand banking on a second wave

Of the global pandemic the new assumption for the base case now incorporates a mild second wave of the global global pandemic which will stall the global oil demand

Recovery while europe reopens parts of its economy triggering an increase in oil demand increases in the number of global pandemic cases in other large oil consumers including the united states brazil and india will

Offset those european increases according to rice dad rystad also added a worst-case scenario one that sees oil demand to be 37 million barrels per day lower for the remainder 2020 compared to the above

Base case scenario if full lockdowns are re-implemented globally due to increases in the global pandemic reisted notes however that even in this case where a second wave causes widespread full lockdowns

And a lot of it is politically oriented too so people should be responsible for for protecting themselves not politicians and bureaucrats implementing stuff especially dr fauci

There who doesn't even wear mass at the baseball game just ridiculous these guys are hypocrites drunk with power horrible track records hypocrites oil demand will not be as hampered as it was back in april when

The virus first shocked the oil markets this reisted suggests is because the world is now armed with better information with which it could implement more targeted lockdowns and handle increased

Infections yeah but that would hurt the economy even more which would also hurt oil demand so if if even if they're better able to deal with the virus

They're still hurting the economy this is still intervention that's hurting the economy as dr ron paul said in the excellent interview with george gammon recently also at play is the fact that the

Economy simply cannot handle another economic meltdown thank you captain obvious reisted now sees its base case calling for oil demand to stay flat through october before

Inching slowly up thereafter but more slowly than ricedad had previously predicted for july reisted now expects oil demand to average 902 million barrels per day 906 million barrels per day in august

September and october 93 million barrels per day in november 947 million million barrels per day in december so they're predicting a recovery by november and december

This compares to oil demand of more than 99 million barrels per day last year so it's still down pretty significantly but rice dad's predictions don't just have oil demand snapping back immediately after 2020

Either according to reichstag the second global pandemic wave will last through february 2021 annualized reisted now sees full year 2020 oil demand averaging 897 million barrels per day with 2021

Or so that would be almost 10 million barrels per day below the 2019 numbers which were uh this compares oil demand of more than 99 million barrels per day

Last year in 2019 so they're projecting averaging 897 million for 2020 with 2021 oil demand averaging 971 million barrels per day still under the 2019 average

In fact rice dad does not see oil demand snapping back until the end of 2022 when it sees aviation activity as fully recovered so jet fuel auto sales the auto sales data i've seen especially in the us

Is abysmal it is abysmal i don't know why anyone would go out and buy a car right now especially when if you wait for congress and congress might start giving giving uh subsidizing and giving away

Free cars coming up with a new type of bailout scheme maybe even more ridiculous in cash for clunkers i don't know who's gonna buy you a new car in this environment the used car

The used car sales numbers are horrible too i looked at those in the last couple days as well okay i have some super chats let me take a look at those don't forget to click tap or smash the

Like button if you like the content also if you want to check out my patreon account there is over a hundred pieces of articles audio podcasts technical analysis charts behind the paywall for

Only five dollars a month which is the cost of a overpriced mediocre cup of coffee there are a lot of articles there about royalty and streaming companies oil companies over the last four or five

Months i haven't done that many oil updates in the last couple of months i've been waiting to see the q2 earnings and also i've been suspecting that there might be a rollover here

I'm not in a hurry to go and buy a bunch of oil stocks right now given what i'm seeing in the real economy the problems in the chinese economy with natural disasters and the global pandemic the amount of

Reinfections are the amount of outbreaks again okay super chat from jonathan thank you for the super chat he is also one of over a thousand patreon account contributors what do you think about oil

Tanker stocks most of them are at an all-time low so i was debating interviewing a cuppy about this cuppy is i think the first person who was big into the oil tanker trade the super contango oil tanker trade

And he is still adamant that they can lock in the free cash flow and a lot of other people are adamant that he's wrong so the uh i've seen a number of articles over the last six weeks that the oil

Tanker leaser rates lease rates for oil tankers have collapsed by well over 20 percent the lease rates but uh cuppy has said that the that the oil tanker companies already

Locked in the lease rates so it's kind of i would have to spend more research on this this is probably something i'd have to do like balancing it out and presenting

Both sides of the argument maybe in an article for my patreon account contributors so it's not something i'm gonna do on a live stream show for for for five dollars

Um i think it's complicated i think there could be maybe another pop especially if demand collapses and then there's a rush to maybe store the oil but so far it looks like i was right

When i was arguing with some of the some of my patreon account contributors who were adamant that the oil tanker trade would last a long time and i said it was just a trade and i think it lasted maybe 60 days

Approximately it lasted 60 days before the lease rate started to collapse and then the the people that were long a lot of these oil tanker stocks started to really get worried

So in hindsight i think it was for now i think it was just a short-term trade but we'll see we could have another pop but in general these oil tanker companies are not good businesses

So even though the oil tanker companies had like record high lease rates and demand for them some of these oil tanker company balance sheets still did not get fixed that well

20 super chat from daniel ashley thank you for the super chat much appreciated he says to upvote the video that would be nice be nice if i got to 40 000 youtube channel subscribers quickly

So thank you for the super chat daniel i appreciate it super chat from jb weld thank you for this 10 super chat appreciate your work jason if inflation takes off do you think the fed will pull a

Paul volcker and let interest rates take off to arrest it okay so the fed can't pull paul volcker this time because how leveraged the economy is it would collapse everything the fed cannot they're going to let

Inflation run hot stack flight in tax and lie they cannot raise interest rates everything is way too financialized way too leveraged you have a leverage short volatility

Trade if the fed raises interest rates significantly more than just like a quarter point let's say they they attempted to do something i don't know maybe they raised two percent or something

Which would be a lot everything is so leveraged so you have a massive amount on this leveraged volatility trade if there's a lot more this is why the fed's trying to manipulate volatility

Trying to knock it back down everything is way too leverage the financialization of the economy the leveraged short vault trade the risk parity trade the basis trade all these trades that are being set up by all

These entities that are pretending to be hedge funds the pension funds university endowments even central banks when you have that much leverage in the system

You can't raise rates that much it'll collapse everything so they're going to they're going to do stagflate they're the what the scenario that they want is stagflating tax and lie where they let

Inflation run hot pretend that there's no inflation screen to everyone that there is deflation while everyone's bills go up and then politicians at the state and local level here in the us will raise

Taxes when they they shouldn't raise taxes they should be cutting back on the size of government but they're that's not what politicians and central planners and bureaucrats do

They don't do prudent things like that they just see if there's a problem their solution is always just raise taxes or create new taxes or layer on old tax or either raise existing taxes or layer

On new taxes so i don't think there's any paul voters out there the system is the system is way too leverage it's a ponzi scheme for all intents and purposes the current

Global financial system with fiat currency and credit is a ponzi scheme because it mathematically cannot be paid off and so new debt at cheaper interest rates

Must be used to either cancel out or roll over or be issued to deal with the old debt that was higher interest rates so the system is currently set up as a ponzi scheme

And you can't raise interest rates significantly on a ponzi scheme the system was not a ponzi scheme when paul volcker was there there was not hundreds of trillions of dollars in derivatives

There was not pension funds and university endowments leveraging up their balance sheet like crazy and all these guys doing the leverage short volatility trade all these entities doing the leverage short

Volatility trade where a five percent drop in asset prices could potentially wipe out major players and the fed would have to go in and bail out a bunch of different long-term capital managements

Super chat from bob thank you for the super chat thank you for the five dollars i appreciate it the the fed's gonna let inflation run hot now they don't want the dollar falling

Too quickly but we'll see what type of control mechanisms they have that's my view that's my view on things my opinion so stack fleet in tax and lie is where the fed protect screams about the

People on financial tv and the federal reserve screams about deflation oh we're not going to even think about raising interest rates but meanwhile your bills your all your everyday stuff

And your taxes your your bills and your taxes are going up super chat from anthony for five dollars thank you anthony for the five dollars he says he loves my patreon the loose change in sword supply how are

We uh with loose change in short supply how far away are we from the dreaded fed coin um the federal reserve all these major governments are all

Are all moving things along towards government crypto um i think china's ahead of everyone else because china's already testing crypto yuan with their version of uber uh their taxi

Service or rideshare i think it's called dd and then also their grocery store delivery so the other governments are moving it along they're just um a couple years at least behind china

Super chat from eric for five dollars thank you for the super chat my thoughts on photo companies like kodak getting billions for vaccine products ie fuji and kodak

Seems a little fishy kodak was a silver hedger silver bailout it's just a culture of corruption um the average american does not understand the magnitude of waste fraud corruption and abuse

Here in the dc metro area for the federal government all the government agencies they don't understand the waste from the pentagon they don't understand the medicare

Medicaid social security fraud waste so when the ppp program the uh the paycheck protection program or the sba loan program that's supposedly a loan grant and the grants are forgiven it was very predictable because i'm well

Aware of all the government's group big government screw-ups here with corruption unbidden contracts federal government employees getting away with felonies and the mainstream me and stealing and the

Mainstream media doesn't care unless trump is in the white house that's like the only time they care they didn't care about that at really at any time prior it's almost as if like the mainstream

Media is pretending that there was no corruption at all here in the washington dc metro and waste prior to 2016 so i'm not surprised at all that there was some type of scheme

Bailout with insider share purchasing knowing that he was going to get all this what a 765 million dollar loan that can be forgiven from the federal grant or loan or something

But the the amount of uh waste in the ppp program the fraud and the waste that was very predictable most americans are not even aware of this about the amount of medicare medicaid and social security

Fraud it's tens of billions of dollars per year in medicare medicaid and social security fraud that's per year for decades that's how wasteful things are it's big and bloated

The government is bad it wastes tons of current it weighs tons of currency units and if the dollar didn't have the world reserve currency i don't think that they could get away with it

There would still be government corruption because that's the nature of government but nowhere near the scale that we have now and they get to pay for it over so the waste fraud corruption and abuse

The federal reserve just gets to and the fed just gets to paper over a lot of it so there are here in the dc metro area the demand for real estate is enormous there are tons of people moving here

Willing to pay higher and higher real estate prices and it speak it's based on the assumption that the federal government will not have to cut its budget so whether biden wins or

Trump gets a second term the assumption is that the federal government here in the dc metro area will not have to cut back at all and the budget may even increase and the size of government here in this area may grow

And that's good for dc metro area real estate okay last super chat here before i wrap things up i'm kind of getting tired let's see here how long have i been going for

43 minutes okay thank you for the 5 super chat abby road he is also a patreon account contributor my oil stocks are down 8 again you were the one who emailed me telling me that you bought the oil

Stocks i've i've been very skeptical about the oil rally i thought more rationally that the oil price should have bounced around in a very wide and volatile trading range

After the oil prices went negative from about 35 a barrel down to 20 and back and forth yo yo back and forth back and forth back and forth and we haven't had that so i think the probability is high that

We might end up doing a trading range like that in the near future the main part to worry about in the oil market is still the demand side your oil stocks are down

Eight percent can you make a wild guess of the prospects going forward one two and five years um educated guess is in the short term probably over the next six to 12 months oil is

Going to be extremely volatile so we've had our uh we had our big crash in oil in february march april i think and then maybe part of may we had our big rally in may and june uh

End of april i think may and june has been shockingly calm for the last four to six weeks the odds of oil remaining calm and flat in a oil market where there's lots of paper

Futures contracts which means a lot more hedge fund traders setting up leveraged trades with a lot more normally volatility the odds of oil staying flat

For that much longer i would say very very low in my opinion so my educated guess is depending upon what happens with the dollar the demand the oil supply demand fundamentals i would say

The demand part is looking weaker over the last month or two with more global pandemic cases problems in the chinese economy that we're seeing on china in focus with the flooding and the natural disasters

That doesn't really look bullish oil demand and gasoline demand for me china did a lot of stockpiling over the last couple months and normally china after they do a lot of stockpiling and drive up the

Commodity price they take a break and what happens when china takes a break from stockpiling a commodity normally the commodity has a pretty big correction or crashes and then china decides if it wants to

Stockpile again so short term i would say there's going to be a lot more volatility in oil the probability probably the higher probability is that it will probably have another correction

Especially what i'm seeing with demand and problems in china then after that there may be another buying opportunity so i did not again i did not tell you to go and buy those oil stocks you

Thought that the the bottom was in that was not my fault on that one i was expecting like i said i was wrong about how large the oil rally would be i got that wrong and i thought there would be a lot more volatility

After oil bottomed and we haven't had the volatility yet so i suspect that over the next six to 12 months there will be a lot more volatility than the oil price coming back and there will probably be

One more bottom bounce i don't know about negative or anything like that maybe oil just goes down to 20 maybe oil goes down to 20 there's one more flush out

We're seeing a lot more signs that oil companies are still some of the uh drillers some of the drillers and oil service companies have had to discount too much either they're not getting business or

They have to discount too much to get any business so they destroyed their margins and i think the tankers might just be if their the tankers do have another pop it might just be another trade

Another short-term trade look cuppy is a really smart guy i've read his tweet threads on the oil tanker analysis but there's stuff that can go wrong in there his his his rationale for that trade for

Um long oil tanker stocks for a long period of time is really good but things don't always go as planned so we'll see what happens someone says if we have world war iii

With the us and china oil will go to 200 maybe maybe but then like the demand side could collapse again you got to remember if oil gets that if oil goes to 120 150 or 200 a barrel

For a prolonged period of time it then starts the renewables start becoming very economic again and then they can start to raise a lot more capital and you're going to start to see all

These headlines about biofuels and exxonmobil's algae company which was not i think they they wrote off hundreds of millions of dollars on their algae company investments their algae biofuels

So those projects start to become economic again now it doesn't happen right away but um for those of us who have been in the energy markets at a long time if oil gets to a high

Enough price again all those renewables start to get funding okay well that's it for this short little live stream show i'm going to end it now before my memory starts to get a little

Uh starts to get dicey because i've been talking for almost 50 minutes thank you everyone for listening thank you very much to my over a thousand patreon account contributors there is a lot of great content behind

The paywall i think i charge cheaper than almost anyone else for the quality of the research that's behind the paywall and thank you very much to my monthly paypal contributors still a few of you

Although most of you have gone to patreon i don't blame you because there's a lot more value behind the paywall on patreon and people tip me uh cryptocurrency i do take one-time tips

For for cryptocurrency too oh and one last thing i did have an interview done with james grant of grant's interest rate observer i recorded it on monday afternoon um unfortunately it looks like

Zoom eight the audio so i'm working with zoom tech support to get back the 50 minute recording hopefully i can get that done in the next couple days i'll get the audio back they said they

Have it on their backup server so hopefully i'll get that and um there's some really great insights in there about financial repression about what the us government did with

Manipulating the us treasury market after world war ii there's a nominal returns versus real returns in the bond market and also if bond vigilantes are dead or bought off and paid for bribed

So hopefully i will will not have to redo that interview and hopefully i will get the audio i did record the audio and then skype uh not skype excuse me then zoom um

Screwed it up so hopefully i will get that back soon

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