RE:RE:Harbinger?Thanks retiredgeo. I'll start watching Crescat. I'm starting to read more commentary saying that inflation cannot be solved with monetary policy because the root cause of inflation is a growing scarcity of food and natural resources. So you cannot keep prices stable by reducing demand with higher interest rates when supply is declining at a faster rate than demand is. In fact, lots of analysts say that rising Fed, BofC bank rates are actually creating more inflation as higher finance costs ultimately get passed through to the consumer.
There's a thing called a "term risk premium" that I first learned about yesterday. The premium is to hedge against inflation for the term of a loan. Let's say a Fed prime dealer bank gets money from the Fed to lend out. They will add a term risk premium on top of the Fed rate, plus other risk premiums before offering the loan to borrowers. Up until a few months ago the term risk premium was negative meaning that lenders expected inflation to be contained. Last month it went strongly positive meaning that lenders expected inflation not to be contained and to persist for decades or until there's some precipitous drop in demand.
Yet another analyst pointed out that history shows that during the great depression the only economic sectors that went through it relatively unscathed were food and energy because everybody needs to eat and nobody wants to freeze to death.
Anyway I see that you follow the USDX. The Canadian dollar is at 1.37 Canadian dollars buys 1 USD this morning. Traders are betting on no more rate hikes by the BofC because the Canadian economy is stalling. This increases the likelyhood that the Canadian dollar will continue to weaken relative to the USD meaning that bte will report higher Canadian dollar esrnings for every USD that they make in Eagle Ford. So the stars may be lining up for strong performance by bte if investors move into energy as a hedge against inflation while getting an extra pop from FX conversions into Canadian dollars.