Read the WSJ front page article today. Big surprise, the IEA is saying what I have been for the last few month.
virginCFAhooker Wrote: ------------------------------------------------------- > <<> > > The fed printing money like madmen to bail out all > the fools who use statistics instead of simply > looking at balance sheets… THAT causes > inflation. > > All the bankers are saying "look at the oil > speculators… " so no one will look at their > insane write downs and crazy sales antics. > > It reminds me of college… we used to go into > 7-11. One of us would go to the far corner and > freak out (distraction) while others would grab > the cigarettes. You know, I have heard of this “printing money” thing, but nobody has been able to prove that they actually printed more money. Please provide evidence, or drop the hyperbole. I am pretty amused that somebody on this board would ignore the other components of inflation, only to blame “printing money” on the current woes. Consumer prices have a huge feedback into inflation, as does wages, yet people think that only “printing money” causes inflation. So are you telling me that oil raising and other commodities shooting through the roof, even in terms of other foreign currencies where they haven’t “printed money”, causing worldwide inflation pops, is just a figment of the world’s imagination? No, what this is akin to is desperate investors looking for the next “big win” and jumping all in. Inflating yet another bubble in the search for alpha. However, each successive bubble they jump into is far more dangerous.
spierce Wrote: ------------------------------------------------------- > > Joey and Virgin, don’t you guys hate when the Fed > bails out banks for making stupid decisions? > > What happens when this bubble that you’re now > defending with “fundamentals” blow up? Are you > going to put your own salary into paying for the > inevitable bailout the Fed will have to do? You > hate it so much, yet you defend the action. > > Just like many defended housing before it happened > and decried it in hindsight. Whaaa? I just got here. I haven’t had my coffee yet and somehow I’m defending the oil bubble with “fundamentals”? I’ll let buddha do that since he clearly knows more about it than me. I will defend derivatives markets while at the same time recognizing that price discovery in futures (and other derivatives) markets has a speculative dark side. At the end of the day, macroeconomics always eventually wins. In this case, it seems that both oil demand and supply are pretty inelastic. How can we blame oil speculators for taking advantage of inelastic oil demand? It might take awhile, but if there were real tangible signs that oil demand was dropping due to high oil prices then oil prices would come down. So far, not happening. Oil is not tulip bulbs (tulip bulbs were not useful for anything and had nothing to do with econmic growth) or Enron (which was all about outright fraud). I don’t know what the fundamentals-based price is of anything nor do I think that price movements need to be justified by movements in the fundamentals or even uncovering information about movements in fundamentals. Every market in the world experiences volatility that cannot be explained by fundamentals. There’s a market-clearing price and derivatives markets are supposed to help us find it. Anyway, spierce, I think you are a smart guy with lots of good points to make and even some fine trading insights. I think if you make them less stridently, your points will be taken more seriously. In particular, the point that capital markets might be causing a problem here is well-taken. Using obscenity to discuss it probably doesn’t help.
buddha Wrote: ------------------------------------------------------- > SPierce the only answer you have given me to my > point of excess demand has been it has been known. And all you have presented is that fundamentals that have been known for decades have suddenly caused a 620% appreciation in 7 years and a 70% appreciation in 4 months. Your tune is old and broken. I would have thought people would’ve learned after the .bombs and housing that “OMFG, new fundamentals!” is nothing but an alarm that “investors” are doing stupid things again. Somebody once said in a thread that you know it’s a bubble when people try, at all costs, to rationalize a huge appreciation in prices over a short term to keep prices appreciating. are you willing to lay a wager on this?
There’s a massive market out there willing to lay a wager on this. Short miners mate.
MY approach to this too…
spierce Wrote: ------------------------------------------------------- > buddha Wrote: > -------------------------------------------------- > ----- > > SPierce the only answer you have given me to my > > point of excess demand has been it has been > known. > > And all you have presented is that fundamentals > that have been known for decades have suddenly > caused a 620% appreciation in 7 years and a 70% > appreciation in 4 months. > > Your tune is old and broken. I would have thought > people would’ve learned after the .bombs and > housing that “OMFG, new fundamentals!” is nothing > but an alarm that “investors” are doing stupid > things again. > > Somebody once said in a thread that you know it’s > a bubble when people try, at all costs, to > rationalize a huge appreciation in prices over a > short term to keep prices appreciating. > > are you willing to lay a wager on this? Hmmm what to do? Buy some more E&P for my PAs? have more buy recommendations for E&Ps for our funds? Buy some USO? …or wager a stranger on a forum that I frequent from time to time. PS You knew about china consuming 6+ mbdp decades ago?
again, I’m not perpetually bullish on oil, I have a sharp eye on any signs that chinese demand wanes. (another interesting stat is that chinese compromise 83% of incremental oil demand). Or if santos basins like finds continue to happen. But with the current set of fundamentals handed to me. I find it hard to see how supply can meet demand.
I find it really hard to take a view on this one. I see buddha’s arguments about supply/demand imbalance, 15 squillion Chinese starting to consume etc. But I also see that demand is inelastic only in the short term, and there are macroeconomic headwinds to oil demand. People losing their jobs (so not driving to work), not taking as many holidays (GBP falling off a cliff at the moment - I think we’re going to reach GBP/AUD parity soon!) has to create a fall in demand at some point. It does feel a bit like 2004/5 again to me - I was convinced that house prices in the UK had to fall. They did have to fall, but the catalyst didn’t arrive until 2007 and the price falls till this year. Other than that, it seems more like the 70s (eek).
Something that just occured to me are you Michael Masters (or more likely someone who just happened to read/listen to his testimony to the senate)? I find it amusing that people like you and him think that massive taxation and restrictions on commodities trading is the best way to find the FAIR VALUE of such investment. If the govt does inact some sort of tax/restriction on oil, you are probably right oil does go down to $80, but not because it should be there, but because someone forced an inefficient market through the use of taxes
chrismaths Wrote: ------------------------------------------------------- > I find it really hard to take a view on this one. > I see buddha’s arguments about supply/demand > imbalance, 15 squillion Chinese starting to > consume etc. > > But I also see that demand is inelastic only in > the short term, and there are macroeconomic > headwinds to oil demand. > If the chinese govt continues to have fixed gasoline prices. Demand elasticity won’t make a diffrence.
Are certain aspects of this starting to smell like the dot-coms in the late 90’s? Analyst sets a “12 month price target” and the stock hits the price in 5 days. Oil is a completely different animal, but it seems that every time Goldman or whoever revises their price target, oil races up to catch it. I hope that high oil prices persist long enough so that we make permanent and significant changes to our energy policy. If the bubble pops, we won’t learn a thing and Hummers will be all the rage again… until the next time.
Oil is a bargain. If you have a car, you can buy a gallon of gas for $4 and drive yourself 20-40 miles in less than half an hour… what other product combination offers you that value? Compared to other bubbles… A dotcom stock didn’t pay dividends or have earnings. For the same money, you could buy a stock or a bond with cashflow and hard assets. Houses were ripoffs cuz you could rent for 1/3 the cost.
Where are the oil speculators keeping all of the barrels of oil that they are purchasing?
In their underground bunkers in the storage room adjacent to the 5 year supply of food and water.
gamblingeconomist Wrote: ------------------------------------------------------- > Where are the oil speculators keeping all of the > barrels of oil that they are purchasing? The same place that the govt hides the plans for the missles that knocked down the twin towers, the alien carcasses and that where the second JFK shooter is hiding out. THE EARTH IS FLAT!
CFA_Halifax Wrote: ------------------------------------------------------- > gamblingeconomist Wrote: > -------------------------------------------------- > ----- > > Where are the oil speculators keeping all of > the > > barrels of oil that they are purchasing? > > > The same place that the govt hides the plans for > the missles that knocked down the twin towers, Thermite cutting charges in the basement took down the towers. > the > alien carcasses No carcasses because they aren’t dead. >and that where the second JFK > shooter is hiding out. All JFK shooters were killed around the time Oswald was killed. >THE EARTH IS FLAT! Of course it’s not.
JoeyDVivre Wrote: ------------------------------------------------------- > CFA_Halifax Wrote: > -------------------------------------------------- > ----- > > gamblingeconomist Wrote: > > > -------------------------------------------------- > > > ----- > > > Where are the oil speculators keeping all of > > the > > > barrels of oil that they are purchasing? > > > > > > The same place that the govt hides the plans > for > > the missles that knocked down the twin towers, > > Thermite cutting charges in the basement took down > the towers. > > > the > > alien carcasses > > No carcasses because they aren’t dead. > > >and that where the second JFK > > shooter is hiding out. > > All JFK shooters were killed around the time > Oswald was killed. > > >THE EARTH IS FLAT! > > Of course it’s not. Oh, so 9/11 WAS an inside job!!! GWB just called up a few of his idelouge frat buddies from Skull & Bones!!! Aparrently John Kerry had a sailing match or something LOL
Google Alex Jones to find out all about govt conspiracies. I’m on the fence about 9/11 after some of the things I’ve read. Put option activity on airlines was through the roof days prior to 9/11…
I remember meeting the Chief Exec of the FSA (the uk regulator) in late 2001 after 11/9. He was going on about how they were spending all their time looking for evidence of suspicious trading activity ahead of 11/9. It did amuse me that they thought that a) Multi-Millionaire Osama bin Laden woke up one morning, called his broker in the WTC, bought a load of put options on airlines then ordered his crazies to fly into his broker. b) that they thought money motivated these people. c) that the FSA thought they would be able to separate those people who bought put options because the US and Europe were tipping into recession and there were too many unprofitable airlines around from people with foreknowledge. From talking to him, it seemed they were just doing what Washington were asking them though. Amusingly, Enron then went bust and there were a load of old fashioned accounting scandals - something the FSA should have been worrying about instead of chasing smoke and shadows.