SharperDingaan

I think it's time we stop saying Trump this and Trump that. It should be "the GOP" or the "Trump-led GOP". This person could not be in this position or remain in this position without the GOP support, his circle of enablers. Agreed, but some passing observations first. This is a time when leadership carries the day, and the US doesn't have any. In the American system the star of the show carries the crown, and the thorns; there are no exceptions. The president hires to fire, the GOP hires the president to fire. We 'the people' hire/fire the GOP, once an election cycle, just the way the founding fathers planned it. The virus will pass, but the economic party of the last decade, is now over. We aren't going to be doing monetary policy, or globalization, the same way anymore. Additionally, a great many people are going to lose their livelihoods, and be in need of a 'new deal'. It was the peoples 'cries for change' that both drove Brexit, and brought Trump to power; and that change is now here. As at 9:44 am the Dow Jones is down 2,250 points, has already tripped a circuit breaker, and may well trip a second by end-of-day. May we all survive the coming weeks and months. SD

As at 9:36 pm, Dow Jones futures are down 1,045 points. Trump would seem to be trying to beat his record last week of 2,000 points in 20 minutes. The US has done very little to flatten the viral infection curve. What are the odds that the projections now indicate loss of control? hence the political panic. Trump is on record stating that Covid-19 is under control, this is going to kill a lot of the elderly, and people will want someone to blame. The China experience suggests that the virus will be over shortly before the US election. All we see is a drowning man, grabbing at anything that might keep him afloat. The USD is not just a currency, it is also the worlds reserve currency. Cutting rates to zero, simply forces everyone else to cut their rates to zero, or further. It adds little net value, except deter Trumps bankers from foreclosing on the family real estate. More drowning man reaction? Most recognize that US Shale will have to be bailed out, but it is not practical unless it’s the majors consolidating the industry, and using QE dollars. It may well save 2/3 of all the industry jobs, but are Texans still going to vote for Trump after that? And in the same numbers? We live in interesting times. SD

Really dumb question ... If you get the virus, and then get over it with no ill effects (ie: you're healthy), are you now immunized against that particular strain of virus, or can you get it again? The ask is because if you're now immunized, the areas where this virus has been, must now be developing a progressively more robust herd immunization as time goes on. It becomes progressively harder for the virus to spread in those places, hence the numbers of new infections/deaths drop like a brick. It would also explain why authorities have been mass quarantining in the millions. The aim is large numbers of mild cases that do not require assistance, to create a herd large enough upon exit, that it makes it harder for the virus to spread. If you can't quickly and reliably make and administer large quantities of vaccine, isn't this the next best mass alternative? SD

And today we have this ..... White House likely to pursue federal aid for shale companies hit by oil shock, coronavirus downturn https://www.washingtonpost.com/business/2020/03/10/trump-oil-bailout/ Money talks. You do what your biggest donors tell you to do. Exxon, etc. What are the odds the message is to 'negotiate' a stable price, and lend them the money, to consolidate the industry. There will be some employment loss, but everybody goes back to making money, and Trump can be the hero. Campaign contributions are for a reason, and its collection time. SD

The obvious solution is to make the US part of OPEC+, and settle on both a price and a supply quota agreement. Maybe USD 60/bbl. so that everyone who supplies makes some money, and those that don’t, go out of business. It seems pretty clear that Russia is concerned about gas market share, and that OPEC is concerned about the volume of light liquids. Shut in some of the US shale, and both go down in a big way. More importantly, the remaining US shale consolidates under the majors, and ongoing production stays down as long as the USD 60/bbl. is maintained. Until the end of the month, there is still 1.7M bbl/d of supply being held off the market. OPEC claim they need an additional cut of 1.5M bbl/d, however the market believes that the entire 3.2M bbl/d plus surplus is already in the market, hence the contango. Negotiate an agreement between now and the end of the month, and we’re going back up. If you want to get re-elected in November … you are going to negotiate. SD

As at 10:31 pm EST the Apr price for WTI futures is USD 30.65, down USD 10.54, or 25% !!! And the pre-market DOW futures is down 1,254 points, or 4.86% https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html https://money.cnn.com/data/afterhours/ Good luck to us all. SD

This isn't going to last long. Nobody makes enough money at this level, and it isn't going to bankrupt US shale unless it goes on for at least 4-6 months. All it does is allow the refineries to max out their on-land and at-sea storage, while borrow costs and storage are dirt cheap. Then as/when prices rise it will be on diminished volume until the storage is worked off. Friends helping friends, ensuring lots of cheap gasoline is available just before the US election? However, Aramco is down 19% since issue, and continuing to fall. At some point Aramco is going to buy the issue back, and the lower the price, the better. It'll be a very profitable swing trade, and will go some way to offsetting the opportunity cost of flooding the market. The Russians either do as asked, when asked, or take the opportunity loss; which do you think is the more likely? SD

How many sellers do you know, who can actually pay for their goods. AT THE TIME THEY BUY THEM? Virtually no one can. They need 5, 10, 30, 60, 90 days etc. to re-sell the goods and raise the cash to pay for the purchase. If you cant sell, or sell enough (mass/individual quarantines) during the credit period; you cant pay, and bankrupt. If you survive the first shock, you credit is severely restricted, and you can only reorder in small quantities that turn over rapidly. If/when life returns to normal, you can then only slowly order more as you progressively profit from every inventory turn. A credit crunch, ending hundreds of thousands of little businesses, world wide. All a monetary authority can do is target the big suppliers, and inject enough liquidity into them to fund a minimal additional 30 days of credit sales. Inclusive of the payroll of those workers whom you told to stay home, and quarantine. China didn't just pull the size of the 174B, post lunar new year injection, out of its ass. Each of Europe, the US, and SA, are going to have to do something similar. The mystery is if/when the US goes to negative rates, how the world reacts to that, and if it occurs within months of a US election. Europe is closer to zero, a lot sicker than the US, and they are going to have to at least match/exceed US rate cuts. We're having the 1,000 point sell offs for a reason. Hence our comment that the most coronavirus-resistant investment is cash. Alternatively gold or platinum, but it's heavy and comes with a commission cost ;) SD

Yes, the data goes back almost 20 years, and we're not going to share it. No exceptions. SD

Your comparative is not the S&P, it is the YTD performance of the various index funds your employer offers. A swing-trade win: You sold the index fund at a high price, bought it back at a lower price, and gained additional units. A index win: You sold a bond index fund, bought an equity index fund at a low price, and made no further changes. Your win is the year-end value of your equity index units, less the year-end value of what your bond index units would have been. For the more astute employee, it's not uncommon to add a annual 5% to your portfolio value via fund rotation. If it were just you, you wouldn't do it as transaction costs would exceed the benefits. If the employer is paying, you're typically allowed a maximum 2 asset mix changes/year. If you're trading bonds, this is the place to do it ;D SD

Consolidation is not a bad thing, particularly in NA, and US shale. Thousands of analysts will disagree but the reality is, that at the margin, prices have long been driven more by politics than by change in supply/demand. Nobody makes money at these levels, so we will not be here for long. However, MbS is the royal who drove the failed Aramco IPO, the royal who ordered the botched Khashoggi killing, the royal who botched today's OPEC+ price support, and the royal driving the Yemen thing. It would be a lot better for literally everyone if the Saudi/Iran conflict ceased, and MbS has just put down what he thought was a US backed coup d'etat - including putting 3 more very senior royals (including his brother) in the Hilton. To a great many in the NA industry, fracking has to go. It has severely disrupted the economics of literally trillions in capital investment, and severely damaged landholder relations throughout the industry. The only positive is that shale fields are really GAS fields that happen to CURRENTLY produce light oil/liquids; manage the current flow in a consolidated fashion, and you get decades of production of cheap, land-based, largely local, and clean gas as the dividend. In the US that means either kill shale via legislation (new president), or via bankruptcy and consolidation. Again, politics being the major driver. Obviously, depending on your risk tolerance, volatility is either your friend or foe. Hence, o/g, commodities, etc. is not for everyone. SD

Most investors hold their investments for < 1 year. Trading, that is largely based on anticipated results, catalysts, etc. over the next 1-2 quarters at best. Hence o/g is terrible, getting worse, and how does anyone just not get this. And totally ignores the fact that an investor can SIMULTANEOUSLY have both a SEGMENTED short AND long term view, on the same sector, at the SAME time. HUh? :o US shale is in truly sh1te shape. Production is rapidly declining as capital discipline is being imposed, drill target quality declines, and the water/gas cuts rise. Can't produce without producing gas, can't flare the gas, hence little choice but to dump it in the pipelines; driving gas prices to record lows that go lower every day. When gas proceeds no longer cover transportation costs, or pipelines reduce volumes due to reduced demand (corona virus), the wells shut in; and for many it will be permanent. Then there's Alberta. Just as video was supposed to kill the radio star, oil prices were supposed to kill the oil sands mega-projects. The latest being the proposed Frontier mine, along with roughly 19 other proposals. However oil sands isn't dead, it's now stronger. Now, if you want to play in the space you have to do it via an expansion of an existing player, raising the market value of all existing mega-projects, reducing the financial risks of any existing party, and creating an oligopoly over the flow of any new oil sands production above existing levels. But unlike the US, that rising gas cut from Alberta's shale has a nearby market, as oil sands is a hungry beast. Same industry, same timeframe. Night and day difference. But over the long term the Canadian pipelines eventually will get built; permanently improving both egress, and value for the product. US shale has nowhere to go but down. SD

Did you read/research anything here that convinced you to be a buyer on Monday? Or did you think that you, and probably most others, are most likely just going to stay pat and see how this thing plays out? Short-term, do nothing. Long-term, no idea What do you think a homeless person, or a drug addict, is going to do, if/when they get the virus? Is quarantine going to be effective - or is it more likely that they just wander around spreading the virus until they've either recovered, or died. The US is not a China, you can't quarantine millions on pain of force With no one buying, and no reason to buy, why should the market not continue to fall?, and materially? We all think the smart thing is to stay out. And if the smart thing is to stay out ... doesn't that also mean sell down our holdings, go to cash, and do it sooner versus later? Our shares contributing to the daily sell, and driving share prices still lower. And speculators not buying the underlying shares, but buying the options instead - both leveraging their short side gain, and materially reducing their risk? Welcome to 2020. SD

Most investors are just gambling, rationality is way down the list. Were it easier to borrow stock to short; the headlines of the day would be how great this is!, how much money can be made, and how easily!! The gambler just needs pieces of paper to trade, a liquid market, and a stream of bids. He/she really could care less about the underlying companies that those pieces of paper represent. But even if you have the means, the investment horizon, you like the stock, and the price is right, why throw out a bid? Isn't it just better to collectively starve the order book? panic the monetary authorities, panic the gamblers even more, and simply force market makers into an order-balancing daily clear of sizeable blocks at a significant discount? That even Uncle Warren has been offering to buy, if the individual deal is good enough... The Coronavirus is unfortunate, and sadly, contracting it is almost a given at this point. What do you think happens when the virus sweeps through US retirement holmes? In an election year? All those guns, weapons, military muscle ... and it didn't work. Most would expect the market correction(s) to become a lot worse. Why buy shares tomorrow, when next week they will very likely be cheaper still? At best, buy a few options/futures to benefit from volatility ... but the underlying shares themselves? ... why bother? SD

Totally anonymous cash If I don't earn at least 20-30% on it over the next 3-4 months, I will be very disappointed :) SD

The Dow Jones made history today, recording its largest 1-day drop ever, 1,191 points. The same day the Toronto Stock Exchange had to execute a circuit-break, and shut down early ... as sell orders overwhelmed the buys. What do you think happens when more Corona cases get reported tomorrow? And when it emerges that it is now in the US, and well beyond the 15 currently being reported? As apparently only the Chinese hide the numbers .... the US and Europe does not :o SD

You might want to bring yourself up to date, re Chicago. What happens to a new product, when the underwriters launching short expires ?? https://bravenewcoin.com/insights/cme-bitcoin-options-launch-to-strong-interest SD

Husband for sale... A store that sells husbands has just opened in Zimbabwe , where a woman may go to choose a husband. Among the instructions at the entrance is a description of how the store operates. You may visit the store ONLY ONCE! There are six floors and the attributes of the men increase as the shopper ascends the flights. There is, however, a catch .. You may choose any man from a particular floor, or you may choose to go up a floor, but you cannot go back down except to exit the building! So, a woman goes to the Husband Store to find a husband . On the first floor the sign on the door reads: *Floor 1 - These men have jobs and love the Lord.* The second floor sign reads: *Floor 2 - These men have jobs, love the Lord, and love kids.* The third floor sign reads: *Floor 3 - These men have jobs, love the Lord, love kids, and are extremely good looking.* "Wow," she thinks, but feels compelled to keep going. She goes to the fourth floor and sign reads: *Floor 4 These men have jobs, love the Lord, love kids, are good looking and help with the housework.* "Oh, mercy me!" she exclaims, "I can hardly stand it!" Still, she goes to the fifth floor and sign reads: *Floor 5 These men have jobs, love the Lord, love kids, are gorgeous, help with the housework, and have a strong romantic streak.* She is so tempted to stay, but she goes to the sixth floor and the sign reads: *Floor 6: You are visitor 4,363,012 to this floor. There are no men on this floor. This floor exists solely as proof that women are impossible to please.* *Thank you for shopping at the Husband Store. Watch your step as you exit the building, and have a nice day!* Courtesy of https://upjoke.com/zimbabwe-jokes SD

Venereal disease and condoms ;) You'll always be in business! SD

When you get an opportunity, look at the MD&A risk management disclosure of a Cdn Sched-A bank. Not a lot different to any other major global bank, but you really need a PhD in Finance to fully understand the transactions/stress tests. You also need a CPA to understand that you are only reading what had to be disclosed. To buy the bank, is to bet on the quality of the governance structure within the bank, and within its regulatory oversight. To sell the bank is to anticipate a breakdown; hence euro-banks as a favoured fishing hole. Every time you use a forward curve to estimate today's value, you are essentially doing the same thing. It is well known that forward curves are useless predictors; less well known is that when using them - you also need to see the ongoing graph of actual vs prediction, and the stress tests. Ever seen that in the financial statements of a resource company? Enron, and others, just show investors what they want to see. Greed does the rest. And if you suspect early on that there is manipulation? It is very much in your interest to abet: keep on buying the shares (pushing price up), while also buying puts (profit on the way down). Not walk away, not short the stock in a rising market, etc. For most of these, look at the governance then make a decision. Is it an opportunity worth the risk? SD

The meaning is very precise. P2P NPV(10) is the Net Present Value of the future net cash flow of the proven and probable reserve, at the point-in-time price deck specified, at the specified 10% discount rate. It assumes the reserve is put into immediate runoff, the o/g is extracted at the proven (mostly last 12 months) historic cost/bbl, and is the un-hedged discounted cash flow at the well head. P2P NPV(10) is a requirement of all listed o/g companies, and is an independent appraisal of the NPV of the reserve, prepared by qualified reservoir engineers familiar with the geology of the various reservoirs being assessed. No different to the Auditors Report confirming that year-end numbers are fairly presented. 10% is the industry standard, as is the price deck. As a result, all Reserve Reports in the same year are directly comparable. The cowboys bitch is that it makes poor operation way too visible. Hence everyone screaming that the discount rate is too high, and the price deck is too optimistic/conservative - to avoid anyone looking too closely at their sh1te rock, and low inventory of high-quality drill targets. SD

My guess is that because you don't need the land for the reservoirs. You don't need nearby hills/elevations (to pump the water to). You can put it right next to the user (big factory, downtown core, etc). The 'patent' is the out-of-the-box solution. Sure people can/will copy it, but you will have the first leader network advantage; first on the 'go to' list, and the more copying and popular they become, the more your phone rings :) SD

There are a number of far cheaper solutions, that are already available. https://www.hydrostor.ca/toronto-a-caes-facility/ Hydrostor essentially pumps air into a bladder 180ft below the surface of Lake Ontario. Ancillary technical benefits are off-the-shelf technology, heating and cooling from air expansion and cooling, and storage primarily as a liquid versus a gas. Basically 4 businesses, 1) spread on the KwH, 2) centralized industrial HVAC (data centers and office towers), 3) centralized warehouse refrigeration, and 4) design/build/consulting. Hydrostor is typical of today's solutions; the only way you get their stock is either via a P3 partnership, or working for them. Point being that if your approach is to only buy/sell the shares of a publicly listed company, you are fishing in the wrong pool. Annual dividend ROE's are typically in the 15-26% range. SD

Ultimately it is SABC that wants your shares. Hence it is highly likely that they will work with their custodian/transfer agent to create a TRANSACTION SPECIFIC Euroclear facility. IB in turn, simply tendering the shares into the facility, as they would for any other share on Euroclear. However, the price will remain fixed, and the shares will be unencumbered. No market trading, no derivatives, no loans, etc. SD

As is well know, we had two nephews growing up in the UK. Everyone in the family is well versed in physics, chemistry, biology, etc; and my job was to teach the nephews 'business' and 'money management' - obviously as a former bootlegger, there are lots of opportunities. Everything went great until the youngest concluded there was way more money in making meth, and accidentally set off a flash fire in the basement - converting a home-made still that I'd quietly shown him how to build. Lots of drama, mostly first degree burns and some burnt hair, but that was the end of his business career. Be careful what you wish for, and keep your siblings thousands of km away! SD