SharperDingaan

Look at the Cardinal Energy thread .... it might change your mind SD

The majors will continue to produce, so long as the cash netback is >0. It costs significant cash to shut-down/restart a reservoir, it permanently impairs future production, and when the losses are primarily from amortisation ... it's better to just temporarily incur and claim back on taxes. If you insist on only buying the majors, you can do no better than everyone else, and your gain will be limited to primarily the difference in the level of the tide ... between when you sold and bought. Buy an o/g index fund, and walk away; the PM will do it better than you, and at less risk. Buy the reservoir specific juniors and intermediates, the same economics apply; but local knowledge will make you rich. Tourist roadkill, and the absence of a comparable competing index fund (high career risk for a PM), further adding to your wealth. But it means ability to think for yourself, and expertise with risk management ... not typical tourist attributes. Even with instant VZ regime change, it will take quite some time to get the VZ infrastructure working at scale again; then there are the new rounds of bribes/shipment, extortion via drone attack on the processing/egress facilities, and the many mouths of the political opposition and little fish. Similar thing with Iraqi heavy oil; against all of which there is more reliable and cheaper heavy oil from Canada, in quantity, and today. Lot of spin/hype ... but not much actual change. SD

USD 56/bbl is not sustainable, and well below break even for most US producers. When the average bbl delivered is now at a loss, the highest cost oil gets shut in, to lower supply and raise the price. Good or bad, the shares of all producers fall dramatically ... as the entire industry is cursed. Including those shares of producers with break even costs well below the current price .... buy today at 75c off yesterday's price and sell next week at 75c above yesterday's price. Dimes on the street for the picking up. For those low cost producers ... nothing changed, but if you owned them and acted, you are now a lot richer. However, to know who they are, you need to be continuously long ... and trading in/out as opportunity presents. Not a lot of risk to the approach ... as long as you know your part of the oil patch, the 10,000 hour thing. Ya dance with all the girls, but that's all that you do; ya don't marry them. SD

Today everyone is depressed as all the talk is of WTI at sub USD 60. Whereas a month from now it will be quite different when we're all back to work, past the festive season, and it is the start of a new year, with new opportunities. There is a lot of change lying on the street, for those willing to temporarily take on some modest risk; but it's not for everyone. SD

I hear you. Treasurers. Lot of Investment Policy Statements are under review around BTC-ETF; specifically the magnitude/volatility of the liquidity discount if there has to be a forced sale at an inopportune time. Not wise to change the existing position, so a conservative solution is to include the derivatives so that the BTC-ETF value is hedged; when the instruments have multiple times the leverage of a ETF ... there is a lot of opportunity Most would expect. Ordinarily would agree, but when the US has a lot of BTC (seized silk road), and with Orange Boys presence in the crypto space, we're more inclined to trust in greed/graft. To really hit the jackpot, BTC needs to become a preferred asset backing a CB issued stable coin ( a currency, or a bond). Reserve status. For the longest time, the 'City' didn't believe it possible either, but things change; think of it as a evolving process over 5-10 years, with significant chunks corroding off every few years, then a quiet collapse. Greeks, Byzantines, Romans ... all went through the same process, and it looked different for everybody. SD

Most of the BTC demand is from BTC treasuries, BTC ETF's, and sovereign/corporate treasury holdings of BTC vs T-Bills. Falling BTC prices crimp retail ETF demand, and most corporate treasurers would prefer to use BTC options/futures vs buy incremental BTC-ETF. So ... for the BTC price to rise, there has to be NET buying from the BTC treasuries, and a liquidity pump to buy the BTC treasury prefs that finance the incremental purchase. Fed Reserve QE5, and consolidation as the stronger BTC treasuries gobble the BTC holdings of the weaker. A reserve currency doesn't just collapse, the demise is 'managed' (ie: Pound Sterling); lot of ways it can be done. While the BRICS are using gold to back their currency, most would expect the US to also use BTC as a reserve asset - if only 'cause many don't believe the US has the physical bullion claimed. So much so, that it is wiser to hold physical bullion reserves OUTSIDE of the US, so that it cannot be expropriated. Hardly surprising, when a US signature on a trade agreement is no longer trusted. If the US had the physical bullion; it has very likely already gone to the BRICS vaults, the middle east, and asia. However, while paper gold can be sold at any time, there are real limitations when you're reliant on borrowed gold held abroad. The best defence is restored global trust in US administration, which is no longer practical. When even a Canada is doing everything that it can to reduce reliance on the US market, the writing is on the wall. Not a bad thing overall, but the sun is setting on the empire. SD

A lot of it is just people trying to find an explanation .... 'cause their initial assessment could not possibly have been just wrong. BTC pricing is liquidity driven, and liquidity is moving into bullion to support the new BRICKS currency. USD 40B/month of fed reserve injection isn't enough to both mop up treasuries and goose BTC. We know from the last injection that USD 5B raises the price of BTC by roughly USD 6,000. Low forecasts are because BTC treasuries are expected to have to sell some of their holdings. SD

Look to the coming Canadian infrastructure build-out ..... there will be a variety of bond and equity opportunities. Then keep in mind that as tidewater oil flows rise, CAD becomes more of a petro currency ... so there will ALSO be a FX gain on capital eventually repatriated home Whereas that same capital going to the US ... will come back with a FX loss as USD continues to lose reserve currency status. The presence of Orange Boy as purely a bonus! The BRICS have moved to a 40% gold backed currency for trade settlements amongst themselves. A result being that so many US T-Bills have rolled off to buy bullion ... that the Fed Reserve had to step up with an immediate commitment to USD 40B/month of QE5 ... and no cumulative total limit. https://www.msn.com/en-us/money/markets/peter-schiff-slams-federal-reserve-s-plan-for-buying-treasury-bills-qe-by-any-other-name-is-still-inflation/ar-AA1S8pAx All good! SD

Lots of EU and US companies pay too high a price for an acquisition, with assets that are undervalued; sadly, there is no monopoly on stupid. However it was purely on the investor, as to whether or not to buy the shares of that EU or US company ... decisions made by the dumb, and dumber Imagine that you're a legal drug dealer, based in Denmark, via a holding of NVO shares NVO does USD 250M (assume) of business in the US, but everyone hates NVO .. so NVO shares trade at only 10x earnings (assume). US business/company earnings of USD 25M [USD 250M/10] A much smaller US based competitor (with friends in the right places) does USD 100M of business in the same space, and trades at 20x earnings. US business/company earnings of USD 50M [USD 100M/20] The reason you're in Denmark is 'cause you're getting that same US business exposure at a 50% discount ... 2x the US exposure for the same dollar of earnings; multiple times the competitors size, and a hard-ass running NVO, are bonus. Today the vikings are bums, but tomorrow they will be hero's; after they bail out the friends of the failing competitor via a timely acquisition that comes with a package of tax/regulatory credits. That hard-ass is there for a reason, and is rubbish if he is no good! Not what the MAGA folks want to hear .... SD

The reality is that one can buy the same US exposure (at the revenue level) for a lot less, via a EU based company, vs a US one. And if you are EU based, you also have the advantage of FX change. Not what those based in the US want to hear, as it wrecks the business proposition. Do business in the US ... but don't make your company US resident. The tax difference will still be zero, after your tax people are through with it. Not what the MAGA folks want to hear SD

No dog in this, but a few observations. FFH has Fairfax India and Fairfax Africa as long-term regional growth vehicles. FFH investors are free to participate at either the lower risk parent level (FFH), or the higher risk growth vehicle (India, Africa, etc). Assuming a buy/hold forever approach, it makes most sense for the young (via inheritances?) to hold the growth vehicles versus the parent. The growth vehicles make a great deal of sense when the investor doesn't have the connections &/or the expertise to invest in the regions directly; the alternative is a regional index fund, and associated expense. There will be ups/downs, but if the intent is to buy/hold forever it doesn't matter; what does matter is reasonable likelihood that the share price is 4-8x higher (depending on the CAGR), 20 yrs out. The current price of 3rd world index funds is event/liquidity driven, and it will be the same with these vehicles. The alternative is to swing trade against a treasury position; systematically sell treasuries/buy the vehicle after big losses are reported, sell the vehicle, buy treasuries as/when there are liquidity events. Assuming an average 1 liquidity event 18 months, a would be market maker could do very well ... as long as the vehicle doesn't bankrupt. Old men hold the parent, grand-kids hold the regional subs, and the parents apply the gains from swing trades against the mortgage on the family house. Simultaneous and entirely different viable approaches, on the same stock. SD

NATO/Armouries. The reality is that the troops/nations are primarily European, with the armouries split between Europe and North America. Ramped up North American weapons, fuel/food production compensating for European losses; should the conflict occur in Europe, and enemy rockets/drones/bombs degrade European production (as occurred in WWII). The US as the primary armourer made sense, as long as the US could be trusted .... to NOT remotely disable the targeting/avionics/etc on allied weaponry, if it didn't get its way. While it made sense to threaten to disable weaponry to get GNP contributions up, the loss of trust meant European weapons suppliers offshoring production to Canada. New military hardware/software just has to be able to talk to US systems, and comply with NATO specs (shells, bullets, drones, fuel grades, etc.) ... it does not have to be US. Griping aside, the reality is that Canada geographically falls within the protective US North American dome; both are NATO allies, Canada is between Alaska and the mainland USA, and the US needs deep detection sites across the entire arctic; the only question is who contributes how much and how. Not so hot for US weapons makers, and not a bad thing. UK Economics. Either accept that London is the economic centre or take your money elsewhere; it isn't going to change, you are. Not a lot different to France (Paris), the US (New York, Silicon Valley), Germany, etc. The centre sucks in capital, and trickles it out to the rest of the nation via orders for goods/services used. The more activity, the better everyone does. The wealthy get richer, the money piles up in these cities as higher real estate prices within select postal codes. Those up, buying from those down; houses as luxury goods, no different to Tiffany's jewellery. There is a reason why we prefer to own in these postal codes Thing is ... the wealthy stay rich, only as long as the less wealthy let them. French royalty forgot that, and it cost them their heads. London's privileged forgot that, and it cost the UK Brexit. The US elite seem to have forgot that .... and it has cost them Trump - that MAGA base with much to lose, not much different to the under privileged UK population ... who actually had the numbers to vote Brexit in. Europe Opportunities. Soooo ... many trade agreements, side practices/arrangements, an enterprising lad is hard put to choose But for the young, independent, unattached, and adventurous ... it's still better to temporarily leave, and seek a new life elsewhere. Reach, let life happen, then either stay away or come back later as circumstance dictates. SD

Nice substack We just look at the chip makers, and can recognise when we're looking at vendor take-back financing on steroids... no matter how well disguised. XYZ sells its high-end chips (at a high price) to Cloud Coy ABC in return for preferred vendor status and a convertible note paying nominal interest. Upon maturity, interest is paid and the note is rolled over into a new convertible note at a higher price, plus a new shipment of chips based on the difference in value. The better Cloud Coy ABC does, the more chips it gets, and the more valuable it becomes. The XYZ share price goes up on record volumes of high margin chips selling at progressively higher prices. Of course Cloud Coy DEF has its own supplier, and while Cloud Coy DEF is forced to buy the same chips from XYZ (at a higher price) to maintain its competitive advantage; Cloud Coy ABC also has to buy chips from the DEF supplier. Everybody loves each other, and the companies end up with market caps > the GNP of some European countries. What could possibly go wrong When Cannabis was made legal in Canada, everybody rushed out to build the biggest greenhouses possible ... in quantity - didn't work out so well. It would seem that the same thing happens here. SD

Thing is ... all of this is digital. Same as any supply chain, it is the last mile that kills you ... and that is primarily human. They don't buy in .... the tech fails to deliver. All that capex, and very little revenue to offset the enormous amortization. Great tax write off, but the rest of the business has to subsidize the cash burn .... via layoffs. There are limits. Ok if it hides obscene profits and the attraction of windfall taxes ... but comes the day profits fall. Every round of layoffs throughout the economy pushing that day closer. We're all for progress, but we also question, and look at risk. The feedback loops within the magnificent seven are a problem that isn't going to end well .... and a developing opportunity SD

Doomberg is more of a feet on the ground personality than most, and this ain't his first rodeo. Very much the US oilfield, and more the grunt versus the suit view. Always worth a listen, even if just as a counterpoint. Just keep in mind that the US fields are very different to the WCSB, and that not everything will translate. Canadian operators are also a lot more disciplined .... those that weren't were road kill a long time ago. SD

The PV of $100 in 20 yrs discounted at 25%/yr is $1.15 ... McKinsey says USD 2.9 trillion/yr of value in 2030; a very generous valuation, with everything working perfectly, in 5 years. Really We calculate the economic value of AI and automation in the United States by multiplying employment, salaries and wages, and estimated automation adoption in the midpoint scenario of 2030 for each occupation. Occupation-level employment and wages are based on 2024 data from the US Bureau of Labor Statistics. For details, refer to the chapter 3 sidebar “How we estimate the economic value of AI” and the technical appendix. Of course, in the real world shyte happens; rushed new builds take longer to deliver, and often deliver at less than the nameplate capacity. Assume AI delivers only 40% of the promise [USD 1.2 trillion/yr] across the entire US economy, and 20 years in the future, versus this very optimistic 5 years. 1.2 trillion x 1.15/100 is only USD 17.4 billion/yr. Microsoft does that in a single deal ... https://www.b-ta.ai/blog/microsofts_17_4_billion_ai_deal_nebius_cloud_infrastructure The reality is that the AI thing ... just isn't that big a deal across the US economy as a whole. Where it is a big deal is at the social level, and the US isn't good at social change. When there is no power, there is no data centre, no AI, and multi-billion write offs; it needs a lot of green backs to cover over the dark patches that are starting to show. Real, versus artificial intelligence. SD

The artificial stupid ...... Lot of potential uses, all needing high end chips, and the makers of some of those chips ..... valued at well over the GNP of some sizeable countries ???? Many years out, maybe the entire factory is robotic; from raw material processing through manufacturing, packaging, distribution, programing, and equipment repair/replacement. Value today at a 25% discount for that factory that is 20 years out? Almost squat, and still squat even if it now occurs 15 years out. Artificial stupid And all this with zero resistance from the working populations that artificial intelligence is supposed to replace. Nuts, bolts, sand, sugar, acids, backdoor programs, signal jamming, don't work well with sensitive machinery. So ... if artificial intelligence in the real world versus the lab .... is more like a ponzi scheme vs a game changer. And there are very high pay offs on it having at least a few stumbles .... how high do valuations have to go before a helping hand aids with that first stumble ??? Real, versus artificial intelligence SD

If really needs the various regulators to add the crypto backbone, propose acceptable use cases, the pro's/con's, and the new capital requirement if the use case is adopted. Think of anything with material catastrophic risk that needs to be insured (nuclear, space, shipping, etc). Why is it that the specific risks are not on a regulators transparent reinsurance block chain, with each block on the chain being a reinsurance tranche? along with reasonably current inception to date claims data. Too difficult? or really ... just a lack of imagination. Regulators are reactive, not proactive .... tell us what to do! SD

The only real value to this type of thing is whether it can be rotated within a larger collection that people pay a entrance fee to see; the museum, art gallery, etc. Many a museum with life style exhibits from the 1950's finds them popular with the younger kids; the kitchen, fashion, dial up phone examples, etc. Look at how grandma lived! Lot of it in turn also reliant upon the marketing at the time. A better example being 'The Antique Road Show' watched by millions around the world, with each rerun earning a new royalty dollar. Put a dollar value on old junk, and make it entertaining to search the attic to see if we have one of those! Hockey/baseball cards evidence there is inherent entertainment value to collecting, as does vintage clothing and shoes. Part of it is to show off who has the best! and in a non-digital format. Put all the stamps, dolls, shoes, vintage clothes, jigsaws, guitars, cards, vinyl, and signed memorabilia, etc in one place .... for a limited time ... over a holiday period... and you have something. To the collector its really just another tax write off to reduce death duties on the estate. The passing on of historic artefacts that deserve a better home than the local dump. SD

Canada will be restructuring its postal service (loses 1B+/yr), and delivering to a central location once/day in most places; the more remote, the less frequent the service. Lot of ways this could go, but at some point most would expect some form of drone delivery as well (remote settlements, within 40km+ of the central drop-off location). Postage stamps used to be lick and stick, then became peel and stick, and thereafter will very likely disappear altogether. Long a stamp collector, and a fan of only the lick and stick, we have a few albums worth of entire sheets of Canadian lick and stick; most bought at either face value, or at a deep discount to the catalogue value at the time (as dealers retired). Sheets only as usage, dealer break-up, and age progressively reduces both the number of mint sheets available, and raises their rarity. All those 1940's WWII stamps will accrue 'antique' status (100 years old) in 15 years, and when you're one of only a few with sheets of them .... The reality of course is that these things are essentially historic artefacts that younger generations have no use for. They end up in a library/museum, as a donation for a tax break equal to the catalogue value at the time. Tax value increasing at about the average inflation rate during the intervening period, so there's no real loss to continuing to hold. BTC gains (ironically), periodically sprinkled into the pool via additional acquisition of the rarer sheets. Some folks stroll around the antique markets at Christmas ... others do the stamp dealers SD

The reality is that most people do not have the opportunity or skill set to earn the living that allows for your own place in one of the major cities. If you can only work minimum wage, you need to share your place with others to help pay the rent. New arrivals with extended families need to work near every hour of the day, take advantage of whatever assistance they can get (school lunch programs, food banks, language courses, etc.), and have every family member working as soon as possible. Minimum wage covers a lot of jobs. Migrant labour works the farms and picks the crops because it isn't a year round thing; burger flipping at minimum wage in a major city pays better because it's year round, it's possible to do 2-3 jobs to get the hours, you are not captive to any one employer, there's a bus/transit to get to work, and places to rent. People want/need the work, and those marginal improvements matter. AI/Robotics are replacing many of the jobs these folks rely on, and these are the folks who are able to work (desire, skilled, able, and not drug addicted). Hence, installing tech to do the heavy lifting .... also means a monthly payment to those in need, potentially for an entire lifetime. Simply because if you have to work minimum wage over a working lifetime, you also will not have the savings for retirement. Yet silence ....... Today's social net was designed for life last century, not for life in this century. It is obvious that change needs to happen, it needs to be both fundamental and wide reaching, it is going to uproot a great many traditions and social strata, and it is going to be very scary for a great many. Many would prefer to fight/run, others prefer to see it as the unique opportunity for positive change that it is. Change management. Gordon Lightfoot famously wrote the Canadian Railroad Trilogy, essentially a history of Canada. For those up to the challenge, we're about to write the next chapters that a future Gordon Lightfoot will immortalise; this time with all cultures, all colours, all languages, and across all Canada. There is a reason why the major projects office is attracting the best of the best. https://ca.video.search.yahoo.com/search/video;_ylt=AwrEmE0nYjBpDgIA81nrFAx.;_ylu=Y29sbwNiZjEEcG9zAzEEdnRpZAMEc2VjA3Nj?p=gordon+lightfoot+canadian+railroad+trilogy&fr=mcafee#action=view&id=20&vid=550860e05e910deb88028b84f02ae217 All good! SD

Meta is just an example. Yes, the 650M unrealised loss is only a small % in the context of the total portfolio, but it points to their cost base being too high for the current environment. Makes a good headline, and most would ignore the context. When liquidity dries up, loans get called, and credit lines get cut back. Get caught carrying too much debt, without the ability to refinance it (share sales, new loans, etc), and there is a need to sell down some collateral [BTC]. A BTC treasury having to sell some of its BTC, is enough to make demand hesitant, when sizeable supply is coming to market. Thereafter, should the BTC price continue to drop ... contagion does the rest. Today we're enjoying USD 5.3B of new liquidity .... thanksgiving weekend, it looked quite different, and the market dropped USD 5K/BTC. We're bullish overall on BTC, but also approach this as a treasurer would. The cure to a liquidity discount upon sale, is a very low cost base; the solution is to roll in slowly, and use the forced sales of other BTC treasuries as/when they occur. No need to rush, or contribute more demand than is required. Different point of view. SD

Not to pick on Metaplanet as they are just representative .... deep underwater on their BTC, borrowing against the BTC to avoid liquidation; not able to do a share issue at current low prices, to raise the funds to buy more BTC and lower the cost base, without diluting shareholders out of existence. The lower BTC goes, the less margin capacity they have left, and the closer they get to a forced liquidation. Metaplanet is one of the better BTC treasuries, with access to Japans finance .... The lower BTC goes, the more risky, and the more likely creditors reduce the [liquidity related] LTV they will accept against the BTC held as collateral; the dominoes start to fall, and it's a race to USD 50,000. https://finance.yahoo.com/news/metaplanet-doubles-down-130m-loan-171736705.html?fr=sycsrp_catchall SD

If you have not done so already, you might want to take advantage of the very large US liquidity injection this morning. While there was good reason for that, the underlying pressures haven't changed; without the injection, treasury companies (MetaPlanet, etc) would have had to start selling down their BTC. https://cointelegraph.com/news/bitcoin-battles-50k-price-target-fed-adds-13-5b-overnight-liquidity Look through the hype, and a newer treasury company is little different to a real estate speculator. Ongoing realised and unrealised gains, covering the monthly cash burn .... then there's an extended period of little growth drying up the flow of business ... and the price starts to fall. SD

Quite agree. Back in the day even the king and queen had to use a bowl/bucket, in a drafty room, that the servant took out. Today, even the poorest man gets to use a flush toilet in a warm room that washes itself. Progress! SD