US $30 Trillion debt visualized in cashI like this video below to maintain perspective, also knowing that this debt has to be repaid at some point as they keep kicking the can down the road. Every kick, the can gets bigger.
Great discussion about all this, and the videos guys thanks. I learned things from it as well, especially about the Federal Reserve. It likes to have inflation.
So far, oil and most commodities, although off peaks, are still relatively strong and should have crashed by now. Employment has not yet felt the sting either. This divergence in leading indicators is somewhat of a relief, as if the pace of an overall global economic contraction is slow, I think oil prices should still continue to remain strong as supply shrinks without much disruption, even with a slightly lower demand.
We had a big options expiry day Friday. It usually rebounds the next week, but with the Fed this week, I'm not so sure. I have been in and out of SQQQ lately with the volatility, and I'm playing a negative market bias, entering whenever it rallies using stops for easy money.
Some bullish oil thoughts to consider...
After last Tuesday's CPI print, and the general market drop, it has already priced in a good part of the expectations of a big hike on Wednesday. However, I don't expect any big upward moves in 3 days.
The European winter is coming. Now they just barely made it through the summer, with many industrial plants, and metal smelters closed due to high energy costs. Their winter energy supply will be tight, possibly manageable if warm, but not if cold. Remember, historical gas inventory levels always relied on a continuous substantial flow of Russian natural gas throughout the entire winter season, never with the gas stopped with zero flow. It is in Putin's strategic interest to squeeze Europe as much as possible right now.
We are weeks away from the Chinese congress, then the end of the SPR releases, followed by a Russian oil cutoff, and who know what potential escalations and events in between.
Chengdu lockdown in China is over, so millions getting back to normal life. I'm looking for signs of more relaxation of rules before the upcoming Chinese congress in October. More economic activity and people movement = more oil. China is increasing crude oil purchases now as well.
VIX has risen, along with negative market sentiment. Even those on this board have been very bearish, so you know the fear guage is up. A contrarian would say it might be a good time to get ready to go long in oil if you are not already.
I'm seeing Dr. Copper in trouble, although inventories are down and dropping. What's up? A major Chinese player in the copper market is in trouble, and liquidating. He had a hand in 25% of the Chinese market. He was long copper, and long Chinese real estate. Suffice to say, it is complex. Remembering what happened to copper last time we had a downturn, it was a great time to go long. If all this transition infrastructure and EVs are to be built, we are set to have a substantial copper shortage. We just won't make it with current stockpiles and production.
Shortages mean higher prices for wiring, motors, as well as a higher price of aluminum for cars and panels. This results in a slower and costlier transition, so oil will be needed for much longer than anticipated. This prolongs existing demand along with the additional demand coming from new markets, meaning higher oil prices.
I'm watching, and considering taking a copper position soon, perhaps in miners, will see.
Happy Sunday.