Global Debt Time Bomb explodes soon

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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Tue Mar 31, 2020 11:34 am

Wall Street Breakfast, a podcast, stated that the St. Louis Fed is projecting 47 million unemployed, or, an unemployment rate above 32%. I'd like some CDT clarity please.

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Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Tue Mar 31, 2020 1:13 pm

MPMalloy wrote:
Tue Mar 31, 2020 11:34 am
Wall Street Breakfast, a podcast, stated that the St. Louis Fed is projecting 47 million unemployed, or, an unemployment rate above 32%. I'd like some CDT clarity please.
I was thinking closer to 40% short term but I am spit balling. `
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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Sun Apr 12, 2020 1:41 pm

From CNBC: Economists say US in short deep recession, but consumers expected to keep spending despite job losses

From CNBC: Paycheck Protection Program aid opens for sole proprietorships and independent contractors

From WP: Depression (economics)

The D word is coming up more in my channels in the past couple of days. IIRC, depressions take time & last for a long time (2 years or more?) Since precious few people have 1st hand experience w/this in the US, I present the link, but not for "pessimism pr0n".

I don't want to have or start a negative outlook so, I've spoken my piece on this.

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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Fri Apr 17, 2020 12:15 pm

https://www.bloomberg.com/news/articles ... s-a-gallon

This is indicative of the overall market disruption occurring now. People staying home and not driving means an over supply of gasoline and storage capacity issues are popping up.

A point of reference the price is the "rack price" (i.e. 5000 gallon tanker load quantities f.o.b. storage yard with transport and road use taxes extra) the retail price at a minimum would increase by $.414 per gallon(23/gal for state & 18.4/fed) at a minimum. Transport would be an extra ~ .10 to .35 per gallon. So an all in price to the retailer (not retail price) would be ~ $.70 to $.88 per gallon.
In Fargo, North Dakota, cheap fuel has never been so unwelcome.

The Midwestern city is so awash in gasoline, the fuel last week sold for a record 12 cents a gallon at the rack -- its last stop before the pump. In better times, the price dip would be a boon for gas station owners looking to snag low-cost supplies. But with fewer customers every day, gas pumps are becoming little more than makeshift storage for ballooning inventories.
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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Mon Apr 20, 2020 12:03 pm

This is the market result of the above story from ND.

SInce airlines have basically stopped using fuel and consumers likewise are getting 3 weeks to the tank, the places to store both crude and refined products are about full. There is no place to store either. That and turning down the production of a refinery is not easy and in many cases the production was already as low as it could go short of a shut down.

Shutting down refineries is difficult and time consuming. That said shutting them down is easy compared to restarting them. This reduced demand will likely lead to several refineries and after a while a shortage of refined products with resulting price spikes. Add in the low price of oil and drillers have already been shutting in production wells. This means that the US E&P industry in the US will likewise be very seriously be impacted by job and capacity losses.

Whether you like or hate the oil industry is irrelevant; the industry provides jobs, purchases goods and services from all sectors of the economy and most of all provides reliable power for our economy and consumers. These problems in the supply chain can produce another instance of price shocks like the first oil crisis of 1973 that devastated the economy in the 1970's and triggered extreme inflation due to these disruptions of the markets.


https://finance.yahoo.com/news/coronavi ... 03744.html
“The steep fall in the price is because of the lack of sufficient demand and lack of storage place, given the fact that the production cut has failed to address the supply glut,” said Naeem Aslam, chief market analyst at Avatrade.

No oil at sub $10 is not TEOWAWKI; this may (or may not) be a short term blip.
That said do watch the news for oil refinery closures. That is the time to be concerned.

Edited to add:
Note I stand corrected $5 a barrel...
https://www.cnbc.com/2020/04/20/oil-mar ... emand.html
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Re: Global Debt Time Bomb explodes soon

Post by Confucius » Mon Apr 20, 2020 1:35 pm

raptor2 wrote:
Mon Apr 20, 2020 12:03 pm
No oil at sub $10 is not TEOWAWKI; this may (or may not) be a short term blip.
That said do watch the news for oil refinery closures. That is the time to be concerned.
Marathon has shut down a few refineries (Martinez and Gallup so far). Everyone else is at minimum rates. Our plant has quite a bit of flexibility to pivot to diesel production, but even we'll run out of gasoline storage space in the not too distant future. That's what's really limiting everyone. Diesel demand is still very strong, gasoline and aviation turbine fuel are what has plummeted, and once you run out of places to put it, you don't really have an option but to shut the whole thing down. You'll hear about a lot more refinery shut downs soon unless people start driving like mad...


Also, WTI is trading below zero right now...


EDIT: $-37.63/bbl. That's... inconceivable, and I really have no clue what this means...

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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Mon Apr 20, 2020 1:55 pm

Confucius wrote:
Mon Apr 20, 2020 1:35 pm
raptor2 wrote:
Mon Apr 20, 2020 12:03 pm
No oil at sub $10 is not TEOWAWKI; this may (or may not) be a short term blip.
That said do watch the news for oil refinery closures. That is the time to be concerned.
Marathon has shut down a few refineries (Martinez and Gallup so far). Everyone else is at minimum rates. Our plant has quite a bit of flexibility to pivot to diesel production, but even we'll run out of gasoline storage space in the not too distant future. That's what's really limiting everyone. Diesel demand is still very strong, gasoline and aviation turbine fuel are what has plummeted, and once you run out of places to put it, you don't really have an option but to shut the whole thing down. You'll hear about a lot more refinery shut downs soon unless people start driving like mad...


Also, WTI is trading below zero right now...


EDIT: $-37.63/bbl. That's... inconceivable, and I really have no clue what this means...

That is good to know about your refinery and diesel. Also good news for refiners is that the price collapse for WTI has not yet extended to refined products.
https://www.bloomberg.com/energy

But yes WTI contracts for May delivery not only went negative but as of this post they are at a negative $29 a barrel. I would note that Brent crude is at a positive $25 a barrel. Clearly the refineries are driving the low price for the WTI crude.

Confucius wrote:
Mon Apr 20, 2020 1:35 pm

EDIT: $-37.63/bbl. That's... inconceivable, and I really have no clue what this means...
The contracts required physical delivery of the barrels if they were not cash settled today.

https://www.bloomberg.com/news/articles ... orage-woes

That still leaves me befuddled as to WTF this means long term or even short term. This has never happened...ever.

Note June and July gallons are also trading positive.

Edited to add:
A more informed article by someone familiar with these markets and derivatives. This is not worldwide price collapse that the headlines are claiming.

https://www.forbes.com/sites/simonconst ... 9b29d49e97

Blame Lack of Oil Storage
WTI May-dated futures contracts, which expire Tuesday, require futures buyers to take delivery of the oil in Cushing. But given that there is little if any storage space available in that location the traders are ditching their contracts, Burgansky explains.

"[O]il traders are selling tomorrow's futures to avoid taking a physical delivery," he wrote in a recent report. Instead, traders are now buying June-dated contracts, which recently were fetching approximately $23 a barrel.

None of these gyrations are happening with Brent crude futures. Brent crude can be delivered offshore to a variety of locations, explains Burgansky. If there isn’t much storage in one place then the oil can be delivered elsewhere.

In simple terms, the flexibility of the Brent futures contract means that lack of storage in one place isn't forcing traders to dump futures contracts in the way that it is with WTI futures.
Duco Ergo Sum


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Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Mon Apr 20, 2020 5:22 pm

Is that price delivered? I might be interested in a few barrels. They could take delivery fees out of what they would owe me.
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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Mon Apr 20, 2020 5:58 pm

Stercutus wrote:
Mon Apr 20, 2020 5:22 pm
Is that price delivered? I might be interested in a few barrels. They could take delivery fees out of what they would owe me.
Things are just *I*N*S*A*N*E* these days. I'm still sober, so I guess I have to believe it :clownshoes:

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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Tue Apr 21, 2020 10:03 am

MPMalloy wrote:
Mon Apr 20, 2020 5:58 pm
Stercutus wrote:
Mon Apr 20, 2020 5:22 pm
Is that price delivered? I might be interested in a few barrels. They could take delivery fees out of what they would owe me.
Things are just *I*N*S*A*N*E* these days. I'm still sober, so I guess I have to believe it :clownshoes:
When I saw this. it initially made no sense until i found out that these contracts are physical delivery not options.

Here is the deal...you have to take delivery in Cushing, OK, today, in million barrel lots. You have pay the pipeline fee (which is nominal and more than covered by the ~$30 a BBl they will pay) which then is connected at some point to a storage tank (or tank farm more likely) that has enough capacity to take quantity pumped into it. Then you have to pay the monthly storage fee for the use of the tank space until you can sell it. Ideally you have a VLCC that is sitting idle some place offshore (cheapest way to store crude right now is at anchor or drifting 12 miles out) until you find someone who wants the crude. Even if they gave you the crude and paid you $40 a barrel without the storage you can do nothing unless you have a few empty million barrel tanks sitting around connected to a pipeline.

https://www.wsj.com/articles/saudi-oil- ... 1587478831
https://www.reuters.com/article/us-glob ... SKBN2230I3
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Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Tue Apr 21, 2020 3:54 pm

Even if they gave you the crude and paid you $40 a barrel without the storage you can do nothing unless you have a few empty million barrel tanks sitting around connected to a pipeline.
So much for the "alternative uses for a swimming pool" plan.
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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Tue Apr 21, 2020 4:23 pm

Stercutus wrote:
Tue Apr 21, 2020 3:54 pm
Even if they gave you the crude and paid you $40 a barrel without the storage you can do nothing unless you have a few empty million barrel tanks sitting around connected to a pipeline.
So much for the "alternative uses for a swimming pool" plan.
Nooo! Do not do that. Crude that is not proper containers is classified as hazardous and needs a very, very expensive clean up.
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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Tue Apr 21, 2020 5:53 pm

In case you are wondering who wins from the oil price decline...2 guesses

https://finance.yahoo.com/news/china-th ... 29312.html
“The biggest winner is China since it is the world’s largest energy importer,” noted research firm Jefferies on Tuesday. “A rough rule of thumb is that a 0.5% drop in oil imports to [gross domestic product] is equivalent to a rise in 0.25% in output.”
I suspect that they can build a lot of oil storage facilities quickly and on the cheap.


Mean while this is what Goldman sachs is saying:
https://finance.yahoo.com/news/oil-set- ... 36833.html
“As storage becomes saturated, price volatility will remain exceptionally high in coming weeks,” Courvalin said. “But with ultimately a finite amount of storage left to fill, production will soon need to fall sizably to bring the market into balance, setting the stage for higher prices once demand gradually recovers.”

“This inflection will play out in a matter of weeks, not months, with the market likely forced to balance before June,” he added.
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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Wed Apr 22, 2020 11:48 am


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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Wed Apr 22, 2020 7:49 pm



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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Thu Apr 23, 2020 12:22 pm

No surprise here. I actually thought they would be higher but I assume these are as of the last week of March or first week of April since these stats tend to be trailing.
https://apnews.com/e928d091f81f75b9bc8830c7370f41fb
Unemployment in the U.S. has swelled to levels last seen during the Great Depression of the 1930s, with 1 in 6 American workers thrown out of a job by the coronavirus.

More than 4.4 million laid-off workers applied for unemployment benefits last week, the government said Thursday. In all, roughly 26 million people — more than the population of the six biggest U.S. cities combined — have now filed for jobless aid in five weeks, an epic collapse that has raised the stakes in the debate over how and when to lift the state-ordered stay-at-home restrictions that have closed factories and other businesses from coast to coast.

Then there is this?!
https://cnsnews.com/commentary/terence- ... nding-bill
The U.S. Senate on Tuesday passed a $483-billion spending bill to further aid Americans during the COVID-19 pandemic---with only six members of the 100-member Senate participating.The bill was approved by the “unanimous consent” of senators—most of whom were not there when that approval was given.

Snark aside this bill provides more PPP funding.
That includes $321 billion for the Paycheck Protection Program, $75 billion “to reimburse health care providers for expenses or lost revenues that are attributable to the novel coronavirus;” $25 billion “to develop, purchase, administer, process, and analyze tests for COVID-19;” and $62 billion “for salaries and expenses for loan programs of the Small Business Administration.”
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Re: Global Debt Time Bomb explodes soon

Post by RoneKiln » Thu Apr 23, 2020 11:10 pm

raptor2 wrote:
Tue Apr 21, 2020 5:53 pm
In case you are wondering who wins from the oil price decline...2 guesses

https://finance.yahoo.com/news/china-th ... 29312.html
“The biggest winner is China since it is the world’s largest energy importer,” noted research firm Jefferies on Tuesday. “A rough rule of thumb is that a 0.5% drop in oil imports to [gross domestic product] is equivalent to a rise in 0.25% in output.”
I suspect that they can build a lot of oil storage facilities quickly and on the cheap.
And we are not currently allowed to build any storage facilities. Or do repairs on them. I've seen several tank projects go on hold in mid construction. Which will make all the paperwork even messier to clean up at the end.

The aluminum smelter in my area is also shutting down.
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Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Sun Apr 26, 2020 4:24 pm

In news of the counterintuitive hospitals are struggling and some are losing money hand over fist. It is a near perfect storm of lack of customers, increasing costs, being preyed upon by Chinese suppliers of medical supplies and equipment (as well as government backed fraudsters).

The latest round of QE from the government printing press includes $100B for hospitals.

https://www.cnn.com/2020/04/22/perspect ... index.html

https://www.hhs.gov/about/news/2020/04/ ... -fund.html
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Re: Global Debt Time Bomb explodes soon

Post by JayceSlayn » Mon Apr 27, 2020 7:43 am

Stercutus wrote:
Sun Apr 26, 2020 4:24 pm
In news of the counterintuitive hospitals are struggling and some are losing money hand over fist. It is a near perfect storm of lack of customers, increasing costs, being preyed upon by Chinese suppliers of medical supplies and equipment (as well as government backed fraudsters).

The latest round of QE from the government printing press includes $100B for hospitals.

https://www.cnn.com/2020/04/22/perspect ... index.html

https://www.hhs.gov/about/news/2020/04/ ... -fund.html
Anecdotal evidence here: A good number of hospital administrative staff have been furloughed, and a few patient-facing functions and attending physicians have been included (e.g. triage nurses, friends-of-friends physicians). Obviously, resident responsibilities have been expanded to cover these missing positions, since they are the least expensive, most flexible resources the hospitals have. :P

It is another thread in the complicated web of collateral damage: All elective surgeries and most routine/non-urgent visits have been postponed indefinitely, and those income streams are major profit centers for the hospitals. Hearsay to this effect from a local hospital: the expected stimulus packages to-date are only expected to cover about 10% of their lost revenue. White collar/coat jobs are not immune to the world of hurt coming down the pipe...
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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Wed Apr 29, 2020 3:32 pm

Expect to see more tax hikes like this.

https://www.newschannel5.com/news/mayor ... ty-recover
Mayor John Cooper filed his recommended budget for the 2021 fiscal year with Metro Council. The $2.447 billion budget includes raising the city's property tax by almost 32% to recover from the financial impact of the March tornado and the COVID-19 shutdown.
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