Financial Markets Meltdown

[Drewski Canuck]

Originally Posted by Jim Blake

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Bang on they just can't help themselves LOL! They will spin doctor it up to make this blend into the "green jobs" part of the recovery. As you pointed out things are lining up for additional large gains.

Now to find workers to make this happen.

well, we really DO NOT WANT to find workers to make it "happen". Reduced supply means increased price which means increased profit....


Drewski

[Dean2]

Bdub

You are spot on. The ****s that run funds talk ESG, diversity and evey other woke piece of dung to sound good, UNTIL the money is on the other side of their two faced rhetoric. Then they will find every way in the world to spin doctor their prostitution of their previous position. Reminds me of the joke, guy asks the girl, would you sleep with me for a million, she says yes immediately. He says would you sleep with me for a 1000. She says what do u think I am, a prostitute? His answer, we have already determined what u are, all we are doing now is negotiating the price.

[mac1983]

Originally Posted by bdub

wti over $79, nat gas over $6.25. Analysts are raising price assumptions for oil and nat gas as well as increasing price targets on producers.

From desjardin analyst's in the globe today.

"we are maintaining our us$70 per barrel wti forecast for 2022, which we now believe has considerable upside risk. Moreover, unlike natural gas prices, which we expect to hit their cyclical peak in 2022, we believe that conditions are ripe for even stronger oil prices moving into 2023, including a potential return to us$100 per barrel wti!”

with that view, desjardins recommends investors should be buying producer equities “with reckless abandon.”

target prices - arx $20, cnq $60, cve $20, su $41, tou $70.

5 Year charts of the above 5 companies.

ARX_2021-10-14_19-55-48.jpg ARC Resources Ltd. - ARX

CNQ_2021-10-14_20-06-27.jpg Canadian Natural Resources Ltd. - CNQ

CVE_2021-10-14_20-07-25.jpg Cenovus Energy Inc. - CVE

SU_2021-10-14_20-07-43.jpg Suncor Energy Inc. - SU

TOU_2021-10-14_20-08-04.jpg Tourmaline Oil Corp. - TOU

[fishtank]

Originally Posted by Drewski Canuck

well, we really DO NOT WANT to find workers to make it "happen". Reduced supply means increased price which means increased profit....


Drewski

For the bigs like Cnrl and suncor, The oils are in the ground they will pump more then the price is right and pump less when its low . either way its profit all the way to the bank

[flyrodfisher]

Originally Posted by fishtank

For the bigs like Cnrl and suncor, The oils are in the ground they will pump more then the price is right and pump less when its low

Unfortunately....it not quite that simple for a heavy oil facility.

[MooseRiverTrapper]

Originally Posted by fishtank

For the bigs like Cnrl and suncor, The oils are in the ground they will pump more then the price is right and pump less when its low . either way its profit all the way to the bank

That is not how it works.

Dividend increases, NCIB and huge free cash flow coming in Canadian E&Ps.

[elkhunter11]

Originally Posted by flyrodfisher

Unfortunately....it not quite that simple for a heavy oil facility.

It's nowhere near that simple, they have pipeline capacity pre-booked, they don’t have a great deal of extra storage, the plants like to run at certain rates, or they have issues, and they have to keep the employees working, so they prefer to keep refining and pumping at fairly similar rates, other than during maintenance outages, or when there are issues with the plants. And if the profit per barrel drops significantly because the price falls, and they reduce the amount of barrels per day significantly, by cutting rates, they could end up operating at a loss.

[flyrodfisher]

Originally Posted by elkhunter11

It's nowhere near that simple, they have pipeline capacity pre-booked, they don’t have a great deal of extra storage, the plants like to run at certain rates, or they have issues, and they have to keep the employees working, so they prefer to keep refining and pumping at fairly similar rates, other than during maintenance outages, or when there are issues with the plants. And if the profit per barrel drops significantly because the price falls, and they reduce the amount of barrels per day significantly, by cutting rates, they could end up operating at a loss.

Exactly...SAGD type facilities are even worse...just can't turn them on and off...

[mac1983]

BC is reviewing their royalty rates, when Ed Stelmach did that in Alberta in 2007 the oilpatch dried up. Sounds like some companies may be shifting there spending back to Alberta.

https://vancouversun.com/business/lo...royalty-system

[bdub]

Mac

Thank you for that. Gonna have some effect depending on how badly Horgan screws it up. Guaranteed they will be trying to get more revenue out of the industry. Definitely something to watch.

Here is the summary.

https://engage.gov.bc.ca/app/uploads...the%20province.

[Jim Blake]

Oil still roaring. Just about 84 bucks!! If pricing is holds even close to that, there is going to be some great balance sheets....including our Province.

[Dean2]

What I find really interesting is that even with Oil and Nat Gas prices as high as they are, the oil stocks are just starting to move. Once they get going they will roar ahead as the ETFs, and large institutional buyers are forced to buy in to maintain their weightings as well as to earn adequate returns. Like I said before., all the ESG talk will go out the window once the prices start ramping.

Inflation continues at a 5% a month pace, and that is artificially low reporting by design. With energy prices climbing, supply chain issues, shortages of workers in almost all areas, inflation is only going to get worse. The Bank of Canada is going to get forced into raising interest rates, whether they want to admit it or not.





Rob Roach, ATB Economics | October 18, 2021


Oil production in Alberta higher than ever
Oil production in Alberta over the first 8 months of 2021 totalled 865 million barrels for an average of 3.6 million barrels per day. This is the highest rate of production on record.

The oil sands accounted for 86% of total production over this period.

Year-to-date production in 2021 was 9% higher than in 2020 and 2% above 2019. Production was down last year due to the oil price crash and reduced global demand brought on by the early stages of the pandemic.

Previous and ongoing capital investment has enabled the increase in production—an increase spurred by rebounding global demand and robust prices.

On October 1, 2021, the completion of the long overdue Line 3 pipeline expansion project added 370,000 barrels per day of new export capacity from Alberta to Wisconsin. This, plus the transportation capacity that will be added when the Trans Mountain pipeline expansion project is completed, will help oil production in Alberta to keep rising over the short-term.

With both production and prices up compared to 2020, the dollar value of international crude oil exports from Alberta was 48% higher over the first 8 months of 2021 than the same period last year ($35 billion compared to $51 billion).

Answer to the previous trivia question: According to hotcars.com, and accounting for inflation, the Crosley Convertible holds the record for cheapest new car sold in the United States. The Crosley Convertible sold for $300 [USD] in 1939, the equivalent of just $5,585 in today's money.

Today’s trivia question: Which country is home to the longest crude oil pipeline in the world?

[MountainTi]

Originally Posted by mac1983

BC is reviewing their royalty rates, when Ed Stelmach did that in Alberta in 2007 the oilpatch dried up. Sounds like some companies may be shifting there spending back to Alberta.

https://vancouversun.com/business/lo...royalty-system

The oil sands players got pouty because they actually had to start paying royalties on high dollar crude. The time had come to start and Stelmach did it.

https://open.alberta.ca/dataset/b4e1...enuesgraph.pdf

[roper1]

What say gents, mebbe getting a bit toppy ?
Cash in a little or ride some more?

Thanks to everyone who contributes thoughts & experiences here, much appreciated!

[Dean2]

Originally Posted by roper1

What say gents, mebbe getting a bit toppy ?
Cash in a little or ride some more?

Thanks to everyone who contributes thoughts & experiences here, much appreciated!

In my base portfolio of long term hold stocks I buy quality, dividend paying stocks. They are intended to provide monthly income for living expenses over the short term and capital growth over the long term. All of the money that we live on in retirement is provided by the dividends from these stocks, CPP is barely beer money for a month and there are no other pensions. With inflation running at 15 or 20 percent, living on a fixed income would suck the big Megila and that is what you would be doing on most pensions. I never sell to lock in profits. The only time I sell a stock is if I decide to get out of a position all together.

There is a portion of my portfolio, like oil and gas, that I buy and sell short term for profit. The answer to your question is buried in whether the stocks you are talking about are trading stocks like oil or long term hold stocks like banks.

[bdub]

Originally Posted by roper1

What say gents, mebbe getting a bit toppy ?
Cash in a little or ride some more?

Thanks to everyone who contributes thoughts & experiences here, much appreciated!

What do you feel is getting toppy here? Are you referring to a certain sector, market, asset?

Inflation is running at 5% roughly on a yearly basis and ten year bonds around 1.6%. I want cash flow now, not 20 years from now in this environment. Thats how I try and think about it for what its worth.

[Dean2]

The was a BNN poll. So the question that goes with this is, why would you vote back in a government that created out of control inflation that is making it hard to afford even groceries. Even the media keeps trying to sell inflation as temporary, it isn't! We are going to see rate hikes in Canada that are going to add to peoples problems as lending rates increase.

The rising cost of goods is taking its toll on Canadian households with almost half (46 per cent) of all respondents in a recent survey stating they have some difficulty covering their grocery bill.

More than one-third (37 per cent) of Canadians polled by the Angus Reid Institute said it’s been "difficult" to afford enough food to feed their household during the pandemic. Nine per cent said it’s been "very difficult".

The poll's findings come on the same day Canadian inflation data is due for the month of September. Canada’s annual inflation rate hit an 18-year high of 4.1 per cent in August, according to Statistics Canada. As well, federal support programs related to the COVID-19 pandemic, including wage and rent subsidies, are set to expire on Saturday.

Meanwhile, the majority of the survey's respondents don’t see their wages increasing fast enough to offset increases to consumer prices, even if they're just transitory – or temporary – as many economists maintain.

When asked if their earnings increased enough to offset a higher grocery bill, 37 per cent of respondents said “No, not enough”, while 42 per cent said, “No, not even close”.

Survey respondents were given a choice as to which issue is of greater concern: the rising cost of living, or losing income or employment. Nearly nine out of 10 people polled (87 per cent) said the rising cost of living was their main concern.

Despite the struggles with living costs highlighted by the non-profit’s research, two-in-five respondents said it’s time to end pandemic support programs.

Even among those who have received some form of pandemic support themselves over the past 20 months, 29 per cent said these programs have run their course and should end as scheduled on Saturday.

5,011 Canadians were surveyed for this report between Sept. 29 and Oct. 3. The results have a margin of error of plus or minus two per cent 19 times out of 20.

[Jim Blake]

The OECD are advising countries to "look through" what they called temporary inflation and be careful not to end stimulus spending too soon. Temporary my azz!!

What a recipe for disaster!!

Trudeau and his Cult are on track to destroy our economy!!

[bdub]

Canadian infaltion numbers out this morning showing we are at an 18 year high. Canadian inflation year over year in September at 4.4%. Up again from 4.1% yoy in August.
Last week the US inflation rate came in at 5.4%.
The Eurozone inflation is tracking around 3%, Germany at 4.1%.

The "transitory" phase of this bout of inflation is getting a bit stretched.

[CMichaud]

I follow you guys on this thread but admit to knowing next to nothing about all this money stuff.

With the uptick in inflation, what is the fall out eg. savings in bank being worth less, investments etc.

Is there a better place to shelter?

Sorry for the stupid sounding question but am curious what the options are to plan ahead.


Thanks

[flydude]

Originally Posted by CMichaud

Is there a better place to shelter?

Thanks

Potatoes, beets and rice.

[Dean2]

Originally Posted by CMichaud

I follow you guys on this thread but admit to knowing next to nothing about all this money stuff.

With the uptick in inflation, what is the fall out eg. savings in bank being worth less, investments etc.

Is there a better place to shelter?

Sorry for the stupid sounding question but am curious what the options are to plan ahead.


Thanks

I posted this earlier in this thread.

I have said parts of this on a couple of other threads but thought I would post this here. PAY VERY CLOSE ATTENTION to what is happening right now. Gas is up 80% from a year ago, food 40%, Lumber 400%, copper 200%, housing is going up 30% a month in some places, even Edmonton and Calgary are seeing prices rising and short supply. There are severe shortages of everything from electronic chips to fresh produce. Despite what we see every day, the Fed tells us inflation is under 2%. Bank of Canada has changed its tone on interest rates, signalling possible rate hikes much sooner, and the liberal government has started knee jerk reactions to increase revenue and cool the Eastern Canadian and B.C. housing markets. If interest rates get to 5% it will take nearly all of the taxes raised from income tax just to cover the interest payments on our current National Debt. Income tax is still double what is raised on GST so increases to GST is not out of the question post the next election if the Liberals get in.

Between rampant inflation, higher taxes, and higher interest rates the financial health of many is going to take a real beating over the next 5 years. The advice I am giving the people I consult for, make sure your money is in assets that will increase with inflation and that you get as much debt paid down as possible, even debt where the interest is tax deductible. Assets that earn income are a far better choice than straight cash in a savings account. Best of luck all.

Some even earlier posts, and for the record, as of today the TSX is over 21,000, so it is up over 5000 points or 30% from the high in Feb 2020 prior to the big dump in March 2020. So money in the bank is worth 80 cents of the buck it was two years ago in Oct 2019, that same dollar in the market is worth $1.40 today, minimum.

Getting to a basic level of competency in money is not all that hard, it just takes a little study. Good start is the book "The Wealthy Barber". If u don't take the time to develop at least a mid level of knowledge you have to rely on others and have no ability to evaluate whether they know what they are doing until it is too late.

Below is the First post I made on this thread Feb 25 and my last post prior to this on Nov 11th. Was looking at the indexs and various stocks today. DOW over 30,000, NASDAQ at record highs and the TSX is very close to the High of Feb this year. Except for Oil and Gas, Travel and REITs almost all other stocks have come back to their previous levels or even exceed them.

It was interesting to read through this post from the beginning this morning and see just how much stuff has happened since the thread started. It is also very interesting to see just how wrong and how pessimistic the expectations were in March and April. Considering the second wave of Covid is far worse than the first in Case count but not in severe outcomes, the fact the market continues to roar ahead as a result of the massive infusions of free cash tells you that fundamentals are important and liquidity is a fundamental issue. Hope everyone has a great Santa Rallty happening to them and a Merry Christmas.


Nov 11, 2020


Quote:
Originally Posted by Dean2 View Post
Figured it was time to awaken this thread. So, NASDAQ is at an all time high, from previous high to low back to record high in less than 5 months, qualifies as the shortest bear market cycle in history. TSX is back to within 1400 points of its previous high of 18,000 mid Feb this year and is 200 points above the 16,400 it was at Aug 2019.

So, anyone that sold out in the drop fearing it will drop more and are still on the sidelines, you missed the window big time. Those that sold out in Feb and are still sitting on the sidelines, you missed out to but your rational is you are probably waiting for the next big drop to buy back in because it is going to crash again this fall don't you know. How are you feeling about earning 1/4 of a percent interest in an environment where real inflation is still clipping along above 2%. Hope you don't need income from your investments to live on.

For those that had quality stocks and gutted it out, you are back to where you were, TSX at 16,600 now, versus 12 months ago when the TSX was at 16,400 and closing in on where you were Feb 20th before the drop. In addition you have collected your dividends for the past 6 months and if they were in a DRIP you were buying more of that stock at depressed prices.

For those that sold out prior to Feb 20th and bought back in in late March early April, my hat is off to you, you are the truly rare breed that can time the market perfectly.

Feb 25,2020


Quote:
Originally Posted by Dean2 View Post
I know Justfishin has all his stuff in tax free accounts like RRSP and TFSA so getting in and out may make sense if he can manage to get back in somewhere near the bottom. For the majority of the long term buy and hold investors the tax consequences means getting in and out doesn't work.

Let me see if numbers can make the case more simply.

If I am holding 100,000 in ENB stock and my cost on that stock is 30,000 ($16.50 cost on what is now a $55 stock, that is also yielding me 19.7% dividend on my original investment, paid quarterly), I pay the government $17,500 in tax on the gain. That is a 17.5% drop in capital and I also lose the 20% dividend. Dividend income, because of it preferred tax treatment is a very effective form of earning money. A couple can basically earn $84,000 a year tax free if all their income comes from dividends. Not something you want to give up.

Even if ENB drops 20% from today's price, I will basically have broke even with having sold out and paid the tax. The problem with selling out and paying the tax is, I now only have $85,000 to buy back in with. No matter how you cut it, selling out your gains costs you a min of 25% of the gain, and that is a permanent reduction in capital. It also means that when you buy back in at $43, you will have another taxable position on that gain as the stock climbs back to $55, so the whole theory of avoiding downdrafts does not bear out unless everything you are transacting is in tax free accounts.

I do however have some cash on the side to deploy as some top quality stocks are going to be a deal as this market drop keeps up.

[bytchtyts]

Originally Posted by Dean2

The advice I am giving the people I consult for, make sure your money is in assets that will increase with inflation and that you get as much debt paid down as possible, even debt where the interest is tax deductible. Assets that earn income are a far better choice than straight cash in a savings account. Best of luck all.

While I've always been of the opinion that paying down debt is a great thing to do - if we get into a real hyperinflationary period, isn't long term debt not necessarily a bad thing?

[Dean2]

Originally Posted by bytchtyts

While I've always been of the opinion that paying down debt is a great thing to do - if we get into a real hyperinflationary period, isn't long term debt not necessarily a bad thing?

Debt where the interest rate is locked in for 7 to 10 years is one thing, debt that is variable or on short term fixed could get dramatically more expensive over the next few years. Further, there is no such thing as good debt where the interest is NOT tax deductible.

[bdub]

Originally Posted by bytchtyts

While I've always been of the opinion that paying down debt is a great thing to do - if we get into a real hyperinflationary period, isn't long term debt not necessarily a bad thing?

You are exactly correct if we were in a hyper inflationary situation. You would borrow and buy cash flow producing assets and pay back the debt with cheaper currency in the future.

But we are miles and miles away from anything like hyper inflation. Not to say it couldn’t happen here. Anythings possible.

If you are borrowing to invest do not do it in your tfsa or rrsp. Use your unsheltered investing account where the interest is deductible, any capital losses can be used to offset your gains, and do not get out over your ski’s. I wouldn’t recommend it unless you have no other debt, no mortgage, auto, credit card etc. But for some folks in the right situation (like 2008 or 2020) it can be a good strategy to add some leverage.

[Dean2]

Originally Posted by bdub

You are exactly correct if we were in a hyper inflationary situation. You would borrow and buy cash flow producing assets and pay back the debt with cheaper currency in the future.

But we are miles and miles away from anything like hyper inflation. Not to say it couldn’t happen here. Anythings possible.

If you are borrowing to invest do not do it in your tfsa or rrsp. Use your unsheltered investing account where the interest is deductible, any capital losses can be used to offset your gains, and do not get out over your ski’s. I wouldn’t recommend it unless you have no other debt, no mortgage, auto, credit card etc. But for some folks in the right situation (like 2008 or 2020) it can be a good strategy to add some leverage.

You make some great points and your answer is far more complete than mine. Good job!

[bdub]

Bank of Canada surprised with an end to its quantitative easing program today but left the benchmark rate at 0.25%. Signal from them is to start raising rates starting next year, perhaps three times. Instant pop in the CAD$. They are getting worried about inflation.

[Twisted Canuck]

Originally Posted by bdub

Bank of Canada surprised with an end to its quantitative easing program today but left the benchmark rate at 0.25%. Signal from them is to start raising rates starting next year, perhaps three times. Instant pop in the CAD$. They are getting worried about inflation.

Yeah, I'm watching Tiff now. Don't anybody worry, it's all gonna be ok, he said so. Vaccine is gonna save us, inflation is still transitory, they can and will keep inflation under control, blah blah blah.

They have started shuffling the deck chairs on the Titanic. But, look at that view! And just listen to that band play!

People with variable rate mortgages better start getting ready for a surprise. Several good sources are expecting a full 200 basis point increase in the next 8 quarters or sooner.

As for seniors on fixed income, oh boy. That is going to be a disaster.

[fishtank]

Originally Posted by bdub

Bank of Canada surprised with an end to its quantitative easing program today but left the benchmark rate at 0.25%. Signal from them is to start raising rates starting next year, perhaps three times. Instant pop in the CAD$. They are getting worried about inflation.

Will be a whole different ball game next year , as the inflations number continues ticking up . Will be more pain for lots of people and small business.

[Dean2]

I am glad I am heading out hunting for two weeks on Friday. Watching the gaggle of lying government MOFOs, from bank of Canada, to Freeland has got to the point where it is as bad as watching coverage of Covid. The fact that everyone knows they are lying through their teeth, and none of the mainstream media is calling them on it, is even worse. Inflation is ramping up, it is not transitory and the supply chain issues are not improving.

We already have 40% of Canadians saying they are having trouble covering their grocery bills. Over the winter this is going to get worse, and they are going to have rising costs of heat, electricity, gasoline, higher interest on their loans/mortgages and added inflation on everything else piled on top. Trudeau and his village of idiots is working very hard to makes Canada into another Venezuela.