European Energy burning bright?

Published: Thu 18 February 2021
Updated: Tue 22 November 2022
By steve

In markets.

Crumbs

  • A good way to play energy is options on SXEP, according to JPM’s Kolanovic (h/t The Market Ear). There is a lot of talk about oil/commodities supercycles. Certainly, commodities have been fairly strong recently, and it’s not difficult to explain: a long period of under-performance, frantic money printing and fiscal stimulus. The problem is to explain why these factors are not already in the price.
  • Rush Limbaugh, the original shock jock, has died. Where he lead, in offering highly polarized content, many others have followed. The world is not a better place, although I have a certain sympathy for him.
  • the Bear Cave fingered $TRIT, $ROOT, $CELH: Triterras (blockchain-enabled trade finance), Root Insurance (insurance), Celsius Holdings (energy drinks). These have been on my radar for a while, but in a WSB reddit world, shorting may lead to electrocution.
  • David Waddill writes in the FT to argue that the big Asian countries have been artificially holding down their currencies by buying lots of Treasuries, suppressing domestic demand with high interest rates, and generally saving too much. He argues that the US Treasury should act to force them to do their bit to reflate the world economy. He mentions Japan and China as big offenders. It’s about time we saw JGB rates rise.
  • article in the FT saying that the new boss of Total ($FP) had said that his rivals (BP, but not named) were paying way over the odds for green investments for greenwash purposes. This is probably true, but it doesn’t mean that there will be a bull market in Green Ponzi for a long time yet.
  • Torchlight Energy Resources a sell according to White Diamond Research. It’s a reverse merger play to get a listing.
  • Inflation is coming, according to Bridgden. He expects that after enduring some pain in the markets, the Fed will throw in the towel on the idea of Fed independence and keep monetary policy accommodative in the face of rapidly rising inflation to avoid social unrest. according to Taps Coogan’s summary. A purging dose of inflation is clearly the only way to pay for the levels of deficit spending that western democracies are now engaged in. It’s remarkable that so many people are in denial about this. It was how the Second World War was paid for, and it is how the war against SARS-Cov2 will be paid for.
  • Ken Griffin’s alternative reality

Wrap

Generally risk off. US initial jobless claims were 861e3 vs 773e3 expected. This pushed US yields down very slightly. Yields elsewhere were up, but not by much. Germany 10 year paper was trading at -0.37%: an insanely low number, but higher than it was yesterday. Commodities were generally hammered: oil was down 1.8%, nat. gas 5.6%. Expectations seem to be that curves will continue to steepen.

Chart of the day

The OAS is a measure of the market measure of economic risk. Note how this exploded in 2008. It’s imperfect but is very up to day, and it clearly shows how the market was still considering that the risk of the economy coming off the rails as being minimal. Until this turns, stonks will go up … probably!

Reflections

Super Mario is going to rescue the Italian economy. He’s going to do this by rebalancing the economy geographically, and sectorally, he’s going to create all the Green jobs that will be created by having a wind turbine on every street corner, he’s going to fix the problems with the education system so that all school leavers will be good enough at coding to get a job with Google, he’s going to cut waste and eliminate tax avoidance, and fix the demographic cliff and generally make Italy productive and prosperous.

But, of course, he’s not. Because all incoming governments say they’ll do some variation of these things, in every country, and in every case they discover that it’s a lot harder to do these things than they thought. But, how could they have known? It’s not as though anyone had tried these things before …

Comments !

links

social