Invited to an investor YouTube call of Tyson Halsey’s, I discuss thoughts and trades that are top of mind related to energy, geopolitics and markets.
My commentary begins at minute 20 approximately to 30:30.
The world is more complicated and frustrated: high inflation, market volatility, geopolitical turbulence. All of this makes investing choices challenging…But I’m doubling down, finding the sound middle path. There’s excess noise and I’m cutting through it and modeling scenarios in my head. A few highlights:
• Highlight upcoming feature
• Discuss QQQ, tech world experience, and operationalizing strategy
• The eclectic investor
• Supply chain risk research. It applies to energy, NFL injury report analogy
• Hard assets
Subsequently, more of my comments about global energy markets and LNG are focal points after Gula’s excellent presentation:
Minutes 51:40-57:20
“Players are going to play…”
The war oil
Most importantly, Russian oil is being arbitraged with OPEC supply and keeping downward pressure on global crude prices. Essentially, 3 million barrels which would have been consumed in the Middle East country of note heads to Europe, a non-sanctions event. Discounted Russian oil then heads to said country.
Twenty-two coal-fired power plants have been brought online in Europe to provide energy. Shipments of coal from Columbia and Mexico have been needed to assist.
Adding this together, from additional coal imports to Europe which reduce fuel oil imports, alongside more LNG, and 3 million unaccounted-for-barrels, the trader expects prices to hover in the $90-100 range. Otherwise, we would likely see much higher oil prices. Russia is effectively discounting those resources 50%—a problem for everyone else. Discounted Russian crude to Asia is also keeping prices lower.
At minute 1:06, I sum it up:
“So the problem … the war oil is going through the back door … and to Asia …”
While the additional coal usage is considered temporary, as long as the war continues (and sanctions), the oil market will be under siege and not reflective of “typical” transparency or fundamentals.
In the call, a quote by Putin is cited. (I have not fact-checked but it seems right.)
“The economy of imaginary wealth is being inevitably replaced by the economy of real and hard assets.” —Attributed to Putin
This circles back to the many times I have discussed high tech and innovation (Seattle post), which I also do in this investor video. In one sense, human capital, to what is referred above, is the value of people in the life of the organization—and not to be underestimated.
Speaking about oil, energy, macro economy and challenges in investing