Anybody Buying Yet? Where’s the Bottom?

[BigHornRam]

Everyone is living on borrowed money.

Sino File | There’s a time bomb in China’s economy. Coronavirus has lit the fuse

Beijing has a tough choice to make: tolerate an unprecedented slowdown or go for massive stimulus and risk explosive consequences.

www.scmp.com

 

[BigHornRam]

Wall Street star money manager says S&P 500 could plunge to 1,500 in worst case, with coronavirus fallout lingering for years

Scott Minerd is looking for opportunities to dip his toes into the coronavirus-stricken market. However, you may not find him wading into equities soon if...

www.marketwatch.com

 

[Trial153]

China has plenty of room relative of debt to GDP, they will prop it up on a limited basis until they see gobal demand pick up the they will go all in on stimulus. The main point the article leaves out is china debt ratios relative to debt ratios of its competition to meet global manufacturing demand.

 

[schmalts]

Wall Street star money manager says S&P 500 could plunge to 1,500 in worst case, with coronavirus fallout lingering for years

Scott Minerd is looking for opportunities to dip his toes into the coronavirus-stricken market. However, you may not find him wading into equities soon if...

www.marketwatch.com

"could plunge" I get it but the market is not always been driven by earnings. It used to be... I said it before, with interest rates this low the average 401k holder has very few options to use their money to earn money. I thought the same as this article in 2008 and missed out on some big gains by staying on the sidelines until 2010 because the economy still was not that great compared to the market. Again, the market went up because with low interest rates the average investor was told to join the pyramid scheme. I wish they would remove the age penalty for withdrawing out of a 401K as I would have did some real estate buying back then. The near future here may have some foreclosers again after the extended forgiveness runs out. What we need to figure out is how the market will be effected by the small businesses that will fold up. A lot of the small business earnings will be absorbed by big companies like Amazon as more people will be accustomed even more to shopping online.

 

[schmalts]

I bought Bank of america and Marathon at the opening bell. I talked with an accountant that happens to own this website and he mentioned something about how BOA was the only ones with their chit together to lend out all the cash for the stimulus. With the huge amount to lend, at the interest they will make that one was a no brainer for a long haul. Marathon was just a petro gamble, I made good returns on BP in the past and as I always say, big oil is not going out of business anytime soon. Plus the 11% div is nice if it is safe.

 

[SAJ-99]

Energy should continue to struggle unless we se an agreement on massive production cuts from SA and Russia. I wonder, why would they cut when it benefits US players the most? There is absolutely no production restraint in the US and it would be collusion for US producers to agree to cut. I guess we will overlook little things like anti-trust laws to keep them afloat.?
The market's bias is still up. There are a lot of people looking to get into stocks, despite the bad news that is to eventually come.

 

[VikingsGuy]

The market's bias is still up. There are a lot of people looking to get into stocks, despite the bad news that is to eventually come.

I am no expert, but this surprises me. I think there are some significant hurdles to restarting the US economy that have yet to show themselves. Add in the risk of a covid rebound in late fall/winter next year. Just seems like we have another 25% to fall over the next 45 days or so. But I would not take investing advice from me

 

[SAJ-99]

Add in the risk of a covid rebound in late fall/winter next year. Just seems like we have another 25% to fall over the next 45 days or so. But I would not take investing advice from me

Agree. The buzz is that NY is close to peaking regarding new cases and that is causing some short-covering. There is still a LOT of people in the "light switch" camp that argue we can restart the economy once we have a good grasp of the infection rate, the recovered/antibody rate, and enough capacity in hospitals. I really don't think it can be started like turning on a light, but if you do you have a new problem with some $4-5Trillion more in cash moving thorough the economy. How do you get that horse back in the barn? There are ways, but I'm not sure those don't cause a recession.

 

[schmalts]

I am no expert, but this surprises me. I think there are some significant hurdles to restarting the US economy that have yet to show themselves. Add in the risk of a covid rebound in late fall/winter next year. Just seems like we have another 25% to fall over the next 45 days or so. But I would not take investing advice from me

Read my post #464... I think it has to with what I said about rates making this pyramid scheme the only thing many see as an option with a 401K

 

[TOGIE]

There is absolutely no production restraint in the US and it would be collusion for US producers to agree to cut. I guess we will overlook little things like anti-trust laws to keep them afloat.?

i think this is where the outside chance is actually sitting right now

we all know after Trump smiled for the cameras with US oil execs they went behind closed doors for a not insignificant amount of time. then trump prepared his call to putin and salman

speculative, yes, if true, yes illegal.... but not out of the question

 

[VikingsGuy]

Read my post #464... I think it has to with what I said about rates making this pyramid scheme the only thing many see as an option with a 401K

Saw that, and I tend to agree that over time we will continue to "artificially inflate" the stock market via 401k weekly pump until large parts of the baby boomers really start cashing out in 10-15 years or so, but still think there are enough economic disruptions waiting in the wings over the next few months that will force this down in spite of the built in "pumps" you note. But as said before, I have no crystal ball.

 

[LopeHunter]

i think this is where the outside chance is actually sitting right now

we all know after Trump smiled for the cameras with US oil execs they went behind closed doors for a not insignificant amount of time. then trump prepared his call to putin and salman

speculative, yes, if true, yes illegal.... but not out of the question

Does the Defense Production Act allow for restricting oil production? I would not think so. I think that Act only allows for increasing production and changing priority of allocation of items produced.

Trump invokes wartime authority of Defense Production Act to speed coronavirus aid. What is it?

President Trump invoked the Defense Production Act, a wartime authority that allows him to direct industry to produce critically needed equipment.

www.usatoday.com

 

[TOGIE]

Does the Defense Production Act allow for restricting oil production? I would not think so. I think that Act only allows for increasing production and changing priority of allocation of items produced.

Trump invokes wartime authority of Defense Production Act to speed coronavirus aid. What is it?

President Trump invoked the Defense Production Act, a wartime authority that allows him to direct industry to produce critically needed equipment.

www.usatoday.com

well, i wasn't actually referring to anything that would be "allowed", per se

 

[npaden]

It's pretty easy to see a significant reduction in U.S. production without having to put on tinfoil hats. There is a LOT of production that isn't even break even at $30 oil. Quite a bit that isn't break even at $40 oil. Limiting production isn't just something that would be done to help with the price, it is something that can be done to reduce the cash bleed.

 

[TOGIE]

It's pretty easy to see a significant reduction in U.S. production without having to put on tinfoil hats. There is a LOT of production that isn't even break even at $30 oil. Quite a bit that isn't break even at $40 oil. Limiting production isn't just something that would be done to help with the price, it is something that can be done to reduce the cash bleed.

very true, there is some incentive to cut production already.

but a reduction beyond what the economics would dictate could perhaps serve to lighten putins mood

it's fun to speculate, i have no idea if what i theorized even happened (not that it's my theory), but I wouldn't be surprised that it did. further, and more importantly, if it did, i would think that putin cares more about kicking american oil in the groin, and then again while it's on the ground, than he cares about getting global oil prices back up for the sake of russian profits. but when it comes to money it seems everyone has a line they draw somewhere

 

[SAJ-99]

It's pretty easy to see a significant reduction in U.S. production without having to put on tinfoil hats. There is a LOT of production that isn't even break even at $30 oil. Quite a bit that isn't break even at $40 oil. Limiting production isn't just something that would be done to help with the price, it is something that can be done to reduce the cash bleed.

These companies have to pay the interest on the debt. It is also costly and time consuming to shut off a well. Basically, the economics change. These companies aren't worried about turning a profit, they are just trying to keep from drowning in the debt. Interestingly, the problem here isn't a supply problem, it's a demand problem. Latest stat I saw showed gasoline consumption in US was cut in half. Normal oil storage is full and the offshore floating tanks will fill up quick.

 

[Sytes]

Investors should prepare for a coronavirusinduced vicious spiral more than twice as bad as the financial crisis says JP Morgan - MarketWatch

There is a significant chance the global economy experiences “a vicious spiral, which is typical of recessions, between weak final demand, weaker labor markets, falling profits, weak credits markets and low oil prices.”

www.marketwatch.com

 

[Deleted member 28227]

Energy should continue to struggle unless we se an agreement on massive production cuts from SA and Russia. I wonder, why would they cut when it benefits US players the most? There is absolutely no production restraint in the US and it would be collusion for US producers to agree to cut. I guess we will overlook little things like anti-trust laws to keep them afloat.?
The market's bias is still up. There are a lot of people looking to get into stocks, despite the bad news that is to eventually come.

SA and Russia IMHO are much better able to play this game of chick then we are; a state owned company can ride out years of poor returns a lot public companies cannot.

It is not collusion, in fact OPEC is actually based on a US model, the Texas Railroad Commission, which has enforced quotas and prorated production in the past. Most notably after the 1930s oil boom up until the 1950s.

The commission is already set to meet to discuss enforcing quotas. (The Oklahoma Corporation Commission has similar powers)

"The state has not imposed production limits since 1972, but has the authority to do so, said Sitton.
“For 90 years someone has been setting the price of oil in the world,” he said, referring to Texas in the 1930s and later to the role of the Organization of the Petroleum Exporting Countries. “I don’t see why we can’t at least be part of the discussion right now.”

Oil pipeline, producer standoff prompts new call for Texas shale curbs

As a weekend standoff over oil shipments emerged between Texas pipeline operators and shale producers, a state energy regulator has renewed his controversial call for mandated cuts to address a growing crude glut.

www.reuters.com

It is also costly and time consuming to shut off a well.

Not true at all, we do it all the time. If you have a pad of producing wells, and an adjacent operator is going to frack their wells you typically shut in all wells within a specific, geology dependent distance. This allows the well to build up pressure and will protect them from taking a "frac hit", if you don't do this it's possible to have your well killed by those fracking operations. I would say at any given time we have half a dozen wells shut-in for these reasons.

Now if your shutting in all your wells for 2 years... yeah that's different. That being said decline curves on well are steep enough that for most larger operators just laying down their rigs for 6 months well probably have the desired effect.

 

[Trial153]

With over 1.5 trillion in private equity sitting side lined there are lots of balls to be put into the game. Swing for the fences

 

[schmalts]

But as said before, I have no crystal ball.

Well if and when do do get one, be sure to let me know, I will pay a hefty sum to borrow it.....