Monday, March 30, 2020

Saudis not backing down on oil production

Saudi Arabia isn't backing down from the oil price war for market share, pledging another increase in its crude oil exports starting in May, despite a growing global glut amid crashing demand. “The Kingdom intends to increase its crude oil exports, starting from May, by about 600k barrels per day, bringing the total of Saudi petroleum exports to 10.6m barrels per day.” Today the rumor is about federal aid for the oil patch. Throwing public money at a chronic problem with no economic redemption is a fool's game.
At current crude prices Canadian producers aren't worth saving. In 2014 it was estimated $65 WTI per barrel crude was required to break even. Today that break-even price may have fallen to the $45 WTI per barrel range.

A massive taxpayer bail-out is doomed as there is no case possible to 'protect' jobs that serve no economic function. The 'aid' would need to be permanent and that makes even less sense. Demand is falling off a cliff, and a quick recovery seems unlikely.

Tuesday, March 24, 2020

Dead cat bounce

A dead cat bounce is a brief recovery in a declining market. Derived from the idea that even a dead cat will bounce if it falls far enough, the phrase is applied to any case where something experiences a brief resurgence during or following a severe decline.

The DJIA is showing key components of a dead cat bounce. 1) stocks rising on stimulus, 2) record-high outflows from investment firms, 3) the coronavirus outbreak that hasn't peaked and 4) fear and a rush to safety.
More bad news is the only certainty. The US expects to report over 1m jobless on Thursday.
This space again looks to label the problem, is it acute or chronic. Until Covid-19 is brought under control it is a chronic problem, one that MIGHT be resolved in months, not weeks. A body avoids chronic problems. Buying into a dead cat bounce is a recipe for disaster and a sure fire way to compound losses. That goes double for speculative venture garbage.

Tuesday, March 17, 2020

Volatily and fear off the charts

The VIX, a gauge of stock market volatility, spiked 43% to 82.69 on Monday. Feeding the volatility is the thinning out of markets. Open orders for S&P 500 futures have plunged about 90% to record lows since the start of the Covid-19 panic.

Observers say investors have 'woken up' to the fact the economy is inevitably heading towards a severe global correction. Things were much more uncertain of this a scant 2 weeks ago.

Friday, March 13, 2020

Bitcoin loses half of its value in two-day plunge

Bitcoin, the world’s first and most widely held cryptocurrency dropped 50% over the past two days.

It fell more than 30% Friday to its weakest level since March 2019. Other cryptocurrencies also dropped this week. Eethereum fell 46% this week while XRP lost nearly 40% of its value.

Tuesday, March 10, 2020

Taseko (TKO.t) for Dummies revisited

Things have not been going well for the good ship TKO. Copper prices are sewering again, now around the $2.51 level and that guarantees multi-millions in operating losses for these terds. The nearly ten year rubbish regarding the Florence copper IS operation continues and this observer says it ought never happen ever because it will corrupt potable water in Florence forever. The news on that is still MIA.

Most recently the boys announced a whooping net loss of $68.6-million (28 cents per share). The HDI group are world famous for attempting to pound square pegs through round holes and believers likely get what they deserve.

Saturday, March 7, 2020

Carnival Corporation & plc - CCL.n

Carnival Corporation & plc is a British-American cruise operator, the world's largest travel leisure company, with a fleet of over 100 vessels across 10 cruise line brands. Revenue was 18.8b in 2018 with net income of $3.1b.
This example of implosion demonstrates this space's approach to market 'beta'. Is the crisis acute or chronic? In other words can one expect the flow of bad news to stop relatively quickly or is it going to continue for an extended period? If it's the later (likely) one doesn't go anywhere near CCL.n right now at any level.

Wednesday, March 4, 2020

Canopy Growth (WEED.t) shutters B.C. grow ops

Canopy Growth (WEED.TO) has closed greenhouses in Delta and Aldergrove, B.C. The company says it no longer plans to open a greenhouse in Niagara-on-the-Lake, Ontario. Canopy Growth CEO David Klein said in a statement that the B.C. facilities are “no longer essential to its cultivation footprint.”

Tuesday, March 3, 2020

US Fed cuts rates in panic - Dow down major

The U.S. Federal Reserve cut interest rates in an emergency move designed to shield the world’s largest economy from the impact of the coronavirus. The central bank said it was cutting rates by a huge half percentage point to a target range of 1% to 1.25%. U.S. stocks indexes initially surged on the news, but have fallen off significantly.
25,917.41-785 (-2.94%) 

Monday, March 2, 2020

Vancouver Condo owners cry as insurance skyrockets

Stratas in B.C. are receiving huge increases for insurance. Renewals have increased from 50% to 300% and deductibles have increased from $25k to as high as $250k. Condo owners facing huge increases in strata fees are demanding government 'do' something.
Increases are passed onto owners, with renters also getting dinged. Fees largely depend on how well a board maps out future maintenance costs.
A number of reasons are given for the increase in insurance. A key one is that the number of claims has increased. The jump in claims comes from aging, poorly maintained buildings from the 1970s and 1980s, along with an increase in the number of stratas with the condo boom. Strata owners are notorious for 'cheaping out' when it comes to building maintenance. They turn down major upgrades or any attempt to boost a building’s contingency fund. Despite being warned to take depreciation reports seriously, and after a 12 year bull run on prices, some citizens believe they require government assistance.

The median Greater Vancouver condo is priced at about $764 per square foot, down 8.3%. In the City of Vancouver, the median condo was selling for around $1,044 per square foot, down 6.3%.

Sunday, March 1, 2020

'A giant floating petri dish' - Cruise Ship industry in trouble deep

Carl Goldman thinks about cruise ships differently. “It was a giant floating Petri dish” he says of the Diamond Princess. The American was one of hundreds who contracted the COVID-19 virus during quarantine.
At least 705 of the 3,700 passengers were infected; six have died.

While the cruise ship industry is an obvious casualty of COVID-19, nobody can possibly say what impact the virus will have on other global industries, most notably tourism, conventions, and events. This is not the time to be inside ships, cars, trains or aircraft and it is time to avoid crowds. That means a recession of global scale that might take years to recover from.
The word 'pandemic' is no longer verbotten. Travelers must avoid Iran, Italy, China and South Korea. There are now 50 countries reporting cases. It seems inevitable that no country will be spared.