https://twitter.com/RealTianZeng/status/1250979087079878656
The writers decided we need a good Finance Bro conspiracy theory.
Oil at $15. Insane.
Don’t worry it clearly means nothing to investors. In fact, it’s good it’s so cheap as demand will increase 5 fold in Q3 instead of 4 fold and also Jerome Powell will just buy it all himself and dump it in the ocean.
$11 oil now. Wow.
Good time to top off the US strategic reserves, if they’re not already full.
$11 oil? WTF
Every single bit of storage world wide is full I suspect.
time to start my own strategic oil reserve with some barrels of oil in my basement
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yep, take a look at tanker stocks
I mean… the only way equities stay where they are is if the dollars they are denominated in are worth way way less right?
I’m sorry but out here in the real world nobody is going to survive this without the fed AND congress literally putting entire industries on a financial IV drip.
I can only see trucking in real time, but what I’m seeing there is pretty crazy. Spot trucking is significantly cheaper right now than it was in '08/'09 if my data sources are accurate.
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A random tweet said Canadian shale oil is at negative 70 cents.
Correct, except those dollars being “worth way way way less” will be counter acted by massive, unprecedented deflationary forces. So either the two will counteract each other and we roughly stabilize, or things break and some wild shit goes down.
I suspect the fed is capable of printing enough money to push past the deflation… but yeah I’m seeing insane deflationary pressure IRL. Truck rates have gone from 2.25/mile to 1.00/mile over the last 2 weeks. Trucking is a hilarious % of GDP. Diesel could be free and 1.00 a mile wouldn’t be profitable unless drivers, equipment, and maintenance get a LOT cheaper. It won’t blow my mind if we see all three.
At some point the debt is going to be an issue. This thing could easily add 10 trillion or more to the debt, taking us to roughly 2x GDP. That’s a lot of debt.
What about Japan? And if every other country is in similar or worse shape does it matter?
My thoughts exactly. Isn’t the US still economic dictator of the world so they can do whatever they want and if they are fucked then the rest of the world is more fucked?
I mean I know you know this… but obviously the solution to this is to make the dollar worth quite a bit less. This solves a lot of problems globally actually. Think of all the countries and companies who owe money in dollars… those promises aren’t going to be kept, and devaluing the currency has a lot of potential value.
Does it screw the people who held dollars and dollar denominated debt? Yes absolutely, but I don’t see any other options here. It’s that or the people they lent money to default completely.
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A competent administration would be pushing for the issuance of 100-year treasuries. If we can guarantee that long-term debt servicing costs are manageable, I think that’s far more important than the level of debt or current debt/GDP ratio.
Haven’t fifty years been issued in the past with little to no interest in them from investors?
edit: apparently not issued, the idea was floated and shelved because the Treasury dept said there wasn’t sufficient demand.
That’s true (considered, not issued), even recently:
https://www.bloomberg.com/news/articles/2020-03-03/mnuchin-says-50-year-bonds-shelved-after-little-market-interest
U.S. Treasury Secretary Steven Mnuchin said the government has shelved plans to issue 50-year bonds because there’s little interest among investors, but may reconsider extremely long-term debt if there’s demand in the future.
“We went out to a large group of investors and solicited feedback from our Treasury borrowing committee and I was somewhat surprised that the result was that there’s some interest in this but perhaps not enough that it would make sense to issue those bonds at this time,” Mnuchin told the House Ways and Means Committee on Tuesday.
That’s a little hard for me to understand, to be honest - the idea that investors are willing to take 0% for 10-years and 1.25% for 30-years, but don’t want 50-years at like 2%? Still, pushing out a ton of 30-years at <1.5% seems pretty great to me, too.