Monday 7, February 2022

Qatar and the Philippines and the folly of US foreign and energy policy

I am a great fan of Doomberg. I have no idea of who he is, what his background is, how he makes a living. I just love reading his posts. The latest talks about how repressive nations like Qatar are feted by the US, but domestic production of gas is stopped, to appease the green lobby.

I think there is a problem with the world relying on fossil fuels, but current policies are the wrong ones. They are not joined up and will cause a terrible destruction of capital and result in damage to the productive capacity of the planet. Climate change is a difficult, technical topic. We know from how western governments handled the response to Covid that they are not very good at all at responding to these sorts of threats. They are probably not good at most things, but the evidence is clearer when the timescale and the nature of the threat are so circumscribed.

Wrap

Medium-dated oil futures continue to be strong. The Dec ‘23 95/100 call spread has been a great performer over the last month or two, and continues to be strong, even as near-dated oil futures were much weaker (near month down 0.8%). Other commodities were mixed, although precious metals and food and coal were strong. Nat. gas (in the US) was very weak: down more than 6%.

Bonds paused from their weakness of last week: the UST 10Y yield is now 1.92%. Eurodollar futures were marginally higher. This is still strongly negative in real terms. I don’t see how this will cause a global recession. AUD was strong, which is a risk-on indicator, so was the BRL.

The NDX was down, but equity markets again were subdued.

Overall, today felt like everyone is waiting to see what the ECB will do next. So many central banks are tightening now, surely the ECB cannot maintain negative rates for much longer.

Politics

The Johnson administration seems to be in meltdown. The Sunday papers were full of speculation on who will replace him. It’s been obvious to me for a long time that the man is a serial liar. It’s seems odd that the public somehow now seems to give a damn. Carrie Symons, the new Mrs Johnson seems to be undermining her own husband. Somehow she thinks it’s OK to communicate to the press (through unnamed ‘friends,’ which I understand is code for directly from the person concerned but off the record) that she’s fed up with her husband being PM and she’d quite like him to step down now and start his speaking tours of the USA. Where, the Sunday Times assures us, he will ‘command’ $250K a speech. I’d be reluctant to pay $2.50, myself.