SharperDingaan

China plays the long game, and plays it very well. China generates a lot of electricity via hydro, solar, and wind; augmented with coal and gas fired electricity when the wind ain't blowing, or its dark. Nuclear is additional, they have ability to shut down heavy users (BTC mining, AI data centres) on the public grid, a material portion of energy demand is now electric, and there is quite a bit of domestic on/off shore production, along with discounted Russian supply. The nation is also well known for its mercantile prowess. Should global inventories actually bottom out as forecast, much of their floating SPR will be sold off at inflated prices, and replenished from domestic production and Russian imports. SD

You might want to look closer at China. Now both a significant o/g producer, and a material user of green tech; they could drop their SPR entirely, and rely on surplus domestic o/g production capacity ... as does Canada. China has one of the largest SPRs in the world, and much of it is floating. Demand destruction isn't from high price; it's from everyday cheaper green substitutes (solar, wind, EV/Hybrid, etc. ) that don't use as much o/g. The poorer the nation, the more incentive; now underlined by what happened to Cuba (US tanker embargo). Price discovery relies on a short time horizon, and liquid markets. Anything longer term relies on independent specialist forecasting; the pay for the reports of 2-3 specialists, and adjust for your local conditions. Price will come down once the SOH reliably reopens; the when and how much is a mystery. SD

Just a different POV ........ BTC isn't going to run upward in any significant way until the Iran war is settled. The costs of the SOH closure are now being felt across the board, bond yields are rising, US debt continues to not be rolled over in full, and the poorer credits are being stressed. Draining liquidity, pushing down price. The US needs an off-ramp to Iran, soon; a saleable MOU merely pushes the end of the war off until both Bibi and Trump are back from the polls. One of both looses, and over the short-term, the outcome looks very negative. Hedges via the option market, pushing price lower. The speculation is that the Israeli/US prosecution of Iran falls apart, as votes don't go their way, and economies do their thing. Trump looses, a 20% drop seems pretty conservative ; more if either of them gets assassinated ... as what goes around inevitably comes around (Israel). Not a lot of incentive to hold the full position; thereafter, strong incentive to simply wait. SD

UK energy policy: https://www.gov.uk/government/publications/net-zero-strategy/executive-summary Unsaid, is that the UK no longer has the North Sea o/g to meet forecast future requirements, and will not be able to import the shortfall without wrecking its Balance of Payments and devaluing the pound. The solution is a mass move to electric (nuclear/green energy), and keep the diminished o/g component within what the UK can actually afford. The last time out, the discovery of North Sea oil in the UK sector, bailed the UK out ... now they need another miracle. The global thing is because most countries have that same balance of payments problem. Green energy scales up with few issues, whereas coal doesn't (air becomes too dirty). Nuclear has trust/expertise issues, and green gets cheaper as adoption rises. Everyone knocks carbon pricing, but the reality is that it is the mechanism enabling the business case to reduce pollution, and the economic reuse of old fields via carbon sequesture. Not what many want to hear. SD

Canadian Jan/Feb 2026 capex budgets were largely done at a USD 60-65 price deck; about the full cost of production in many US reservoirs. USD 70-80 (+20%) is just the current capex price deck, 2 months into feedback from the Iran war .... and the forecast average for the rest of 2026. Net of spikes up/down, not unreasonable. The USD 100+ stuff ... assumes the SOH remains closed through July 31. Again, not unreasonable, as the global cumulative shortfalls will be materially worse; but how likely? While probability rises each week of delay, 'prominence' is dependant upon the skill of the promoter ... selling 'oil party' options . All that is certain, is that the longer the SOH remains closed; the longer it will take for prices to return to 'normal'. USD 90-100 for the next two years is not going to wreck the economy, but it will do wonders for industry consolidation/profitability SD

The SOH will be opened, we just don't know the when; but as soon as supply resumes flowing ... price comes down. Until then, price is whatever someone can manipulate it to. SD

A lot of folks are now driving hybrids, or full EV's .... changes the gasoline pain point quite a bit. We drive a 2026 Toyota Rav-4. Even with today's higher gas prices, it costs the same as it used to cost to drive the prior 2021 Rav-4 .... and maybe 2/3 of the cost of the gas guzzler before it. But also comes with materially lower maintenance, and higher insurance costs (high on the 'steal' list). While lots of people talk the cheap Chinese EV import down; their running cost is often as low/better ... quality is comparable .... and they are a lot cheaper to insure. Lot lower pump price impact. This time around it will not be gas/diesel prices that tip the cart; it'll be the cost impacts on the secondary uses ... fertiliser, jet fuel, cooking oil, helium, plastics, power generation, winter heating, etc. Slow burners that are hard to substitute around .... keeping the forward curve up SD

Quite a few o/g mid/small caps have begun raising their capex budgets; most using a price deck at around $80-90. Folks might bitch more, but are still going to drive, and do their own thing. SD

Whatever is left after recovering the initial capital .... that remains invested in the name. Of course .... if you should also happen to get paid periodic dividends on it ..... SD

Like it or not, everyone is going to have significant exposure to SpaceX once the stock is in the various indices; add it to the Mag 7 ... and total exposure is maybe in the 15-30% range - can't get much bubblier than that. The TSX, back in the day, when Nortel was doing its thing ... Back then, as it will again be tomorrow, the conservative solution was to buy the index fund of some other market ... that didn't have as much exposure; and talk down Nortel. SpaceX will now make even Europe look good Of course, the 'hope' is that the combined SpaceX/Mag 7 index weighting, results in a large enough 'too big to fail', that it comes with an implied put on all the globes central banks. The antidote is smaller weightings in the other market indices, and a significant US market sell-off (mid-term election results, extended Iran war), that would benefit everyone. Volatility; make it your friend SD

Commodities have always been despised by PM's, as it often means the pending end of a career. While you can indeed make a great deal of money from commodities; become too well known as the 'o/g (or mining) star' .... after the party is over, and all are paying the piper, you're yesterdays man .... and unemployable. Same as the pro athlete, you need to be fairly certain there are at least a few good years to the cycle, and avoid injuries (scandal, firings, etc.). Bias. Share price as a multiple of earnings is largely within capital market control; employers pay the analysts, and reports that don't sell ... result in unemployment. Commodities screw it up, as earnings are a function of the price products sell at, and commodity forward curves are notoriously inaccurate. Reliance has to be placed on specialist supply/demand forecasts; by folks much more independent, and much less influenced by capital markets. Control issues. O/G is the most political of all commodities; as the end user public is price sensitive, and too high a price, at the wrong time, often causes loss of power. Widespread price manipulation is common, and expected. Misinformation. The result is incentive to pooh-pooh commodities ... as whatever, pooh-pooh those folks much more independent, and much less influenced by capital markets, tweet/threaten, and manipulate press/reserve releases. Paid for via a little front running of insider information. So .... always sniff test, then help yourself! Mosquito bites only SD

If the 'opposite' of a bubble is a crater ..... look to the energy thread. Does anyone really believe that both tankers and freighters are going to be freely clearing the SOH within the next 6 weeks. If everything works out, hail the hero's as oil sells off .... and help yourself to the o/g small caps and utilities. SD

19 million barrel total draw down last week ... largest in history. Very likely more this week, along with new all time highs; yet the SOH remains closed, and the WTI price is going lower "The American Petroleum Institute (API) estimated that crude oil inventories in the United States fell by 9.1 million barrels in the week ending May 15. In the week prior, US crude oil inventories fell by 2.188 million barrels. For week ending May 15, 9.9 million barrels left the SPR - the largest single-week draw down in history" https://oilprice.com/Latest-Energy-News/World-News/US-Crude-Inventories-Fall-Quickly-But-Still-Up-This-Year.html SD

Gotta love the volatility Existing crude inventories run dry next month (June); 2-6 weeks left for SOH resolution, then price spikes. Alternatively, another sizeable global SPR release (a good chunk Chinese); price remains largely unchanged, maybe even goes lower. Either case ... the forward curve moves up/out Of course, some SPRs will never refill to prior levels ... reliance placed on alternative sources and unused domestic production/egress instead; mystery as to how much a US/China might do . But, however much the eventual refill ... it will primarily come from existing producers .... now using mostly damaged wells/reservoir .... and will take quite some time. All supportive of a forward curve up/out SD

The further from the field the less gas supply there is; as every sale progressively reduces the remaining quantity of gas available. Hence gas at the gas field is worth almost nothing, but has value at a delivery hub where demand is concentrated. Add the demand from LNG exports, and you can raise the price. 15% may seem small, but when the base is billions of cubic feet ....it's a lot of incremental gas per day. To move it ... you may have to periodically sell it below cost. SD

Dependent upon your investment horizon, look at SouthBow Energy ...... https://www.southbow.com/ Should Keystone 2.0 actually get built, there will be additional volume, and some kind of reversal of the existing Keystone 1.0 write-off (multi Billion). All that returning equity boosting the financial metrics, and lowering the ongoing cost of borrow. Just keep in mind that in its early years, it might not always be full; as the Canadian incremental preference will always be additional west vs south bound flow. In its later years it will be full of south bound Alaskan/Arctic crude, and strategically resemble the Saudi pipe to the Red Sea (avoiding a blocked SOH, little different to avoiding a blocked NW passage). SD

Very good Around that time, I pitched a sizeable local art gallery on putting on a display of NFT's; using donated hardware (on its way to schools); all they had to do was put up the space, pay the electric/set-up, and lease a few of the NFTs for a few weeks. Sell some T-Shirts/Mugs in the gift-shop, and maybe a short lecture outlining the mechanics of blockchain/NFT, to offset the very modest outlay. I was treated as though I had laid a very large and odious turd on their carpet Most would simply divide the closing USD price of BTC by the closing USD price of gold, to get the BTC/Gold equivalency. Thereafter, track it, and flip between the two as soon as equivalency is within a range (version of bollinger band). SD

Keep in mind that around start-up financing, Canada is just more conservative; the later stage 'show us' (via successful funding rounds in the US), and land that contract first. Thereafter, financing will be very competitive, particularly if it also generates new sales to markets largely outside of the US. Frustrates start-up founders, focused on immediate financing to meet cash burn. While Trump will eventually pass, US business relations are not going back to what they once were. Business will continue between friends, but the overall aim will be to reduce the US share. Healthy diversification. Example. Within Canada, most aluminium beverage cans come from the US (raw aluminium ingots exported to the US, and imported back as cans). Today, they are increasingly being made in Canada, and the US bypassed entirely; the new production a joint venture between friends .... SD

A new well might produce an initial 400 bpd. One year out; 15% of that initial 400 bpd is now gas, 10% water, and 75% oil (300 bpd). Two years out, another 15% on that 300 bpd is gas, along with another 10% of water (usually more). To produce the oil, the producer has to get rid of the by-product ... as the oil is produced; 'cause stop producing for any length of time, and it damages the wells/formation. The water is typically pumped back into the formation to maintain pressure; the gas either transported/dumped for whatever can be raised, or flared off. Even if zero new shale wells were drilled, the gas supply would increase (15% in this example). Hence, local demand needs to also rise 15% if the local gas price is not to fall; more if new wells are also drilled. The purpose of collectors is to aggregate supply/demand at market nodes, and connect them to tide-water. Export LNG via tidewater, and local demand along the collectors automatically increases. All about the egress. SD

Let the man make his own mistakes ....... The DCA thing is very sound advice for most people; but when you're young ... you also need to reach; and if you get burnt now and again ... it's tuition. Put enough boats out there, eventually one will come in; and if it pays off the mortgage decades earlier ...... But nothing can happen until one selectively takes on market risk, all the time, and changes the game if it makes sense. Sh1te at investment, but great at business ..... SD

Changing yields don't matter if you're holding to maturity, and/or it is part of an ALM strategy. For those seeking gains, the alternates range from a zero-coupon ETF, through an extended bond fund hold during a period of falling interest rates. Higher expertise required, the more risky one wants to get. The whole world is refinancing/borrowing big, and is expected to continue doing so for at least the next few years. Have to think that interest rates go higher, and bond prices go lower, simply 'cause of global supply/demand. Could care less whether it's a result of higher inflation, worsening ability to repay, etc. Lot of equities (common & preferred) have dividend yields comparable to bond yields; fixed income is not limited to bonds. Hence, owning bonds as a separate asset class allocation, really comes down to margin ability; 90%+ for a state/provincial/fed bond, vs 70% for a high quality equity ... that doesn't change much even in a 40%+ market sell off. Not what most want to hear. SD

Sadly ... one has to be both . After you've made your fortune, you still need a pleasant place to live; if the place has become a shit-hole, and you now need to live behind a gated community (Maralago!), it's a wasted effort. SD

Gas that is way cheaper than it should be .... In the Permian, gas prices have dipped below zero intermittently since 2019 as pipeline construction failed to keep pace with soaring production. But this year, negative pricing has been more pronounced than ever. Cheap supplies of gas — a key manufacturing input and a major player in meeting power demand from artificial intelligence — stand to give the US an edge over countries facing fuel shortages. The divergence between gas prices in America and the rest of the world “could mean the US economy will prove more resilient than expected this year. Natural gas is more important to the manufacturing sector — particularly chemicals, fertilizers, electricity — than crude oil is.” https://oilprice.com/Energy/Natural-Gas/Permian-Gas-Glut-Means-Producers-Are-Paying-Buyers-to-Haul-It-Away.html SD

Lot of bubbles in the US (Mag 7, etc) .... not so much in Canada Paying 2x the 'norm' via a high P/E today; just means that you expect E to 'double' tomorrow ... the 'when' being a mystery. Of course, if you also expect to be paid for the wait via DCF; .... then you actually need 3x E to compensate The more one can convince the market not to do DCF, the more bubbly. All bubbles fly on 'story', the more compelling and simpler the better; and the more skilled the promoter(s) the higher she goes! That Vancouver penny stock mining promoter, versus his/her Silicon Valley counterpart, uses very similar techniques, but wears a cheaper suit. It's still a hole in the ground, and a liar at the top Lot of folks in the US have strong incentive to keep the bubbles going until after the pending midterms. Thereafter, 'failure to win' strongly incentivising a Kennedy moment, to suddenly collapse the bubbles ... and harvest on the way down. Building a data centre every few states, when there's no power and no grid to deliver it, makes very little sense. A whole lot cheaper, and less capital intense, to simply archive/purge 'history' after X months, than keep it accessible for live retrieval .... but way less sexy. Of course, no new data centres, no additional chips, and no additional E Relocating old factory behind US tariff walls so that they can temporarily be competitive, is very similar. The world just moves on, technologies/processes become more efficient, and the old factory dies .... refreshing the US 'rust belt'. Of course if you're underground before that happens ... it's not a problem! Opportunity. SD

Fraud comes in many forms, we just choose not to see it. Extortion, via senators withholding votes unless their people receive economic benefits, is systemic fraud; that's every state in the US, all with strong lobby groups, and some worse than others. Black budgets, using 'security' to avoid public scrutiny, is intentional systematic fraud; also a great many states in the US, with even stronger lobby groups. Sure, there are all kinds of petty frauds, but cumulatively ? .... small vs the losses to extortion and black budgets. All about hyping the anti-fraud efforts on the 10% of total fraud, so that the other 90% goes freely Corruption. Opportunity. SD