On STNG, they decided to put scrubber in most of their ships. Now hsfo vlsfo diff is about 80$, while they counted on 200+. A lot of money was invested, but chances are they won't see the expected return for that.
As such, it would seem better to avoid them in favour of other tankers.
I to work with a gentleman who was the first wave of Marines sent to Vietnam. He told me if your are ever in a crisis during a battle your first reaction is probably wrong. You have to sit back and try to evaluate your options. By the way after fulfilling his obligations to Marines and grad school he worked with Gus at GS on their arb desk.
When you talk about buying these stocks, relative to your personal portfolio, what percentage are you allotting for each? I subscribed because I’m looking for information and guidance....oh, and because you’re entertaining.
One thing this event has really ingrained in me is how important narrative is and that no matter how screwed everything looks, you need to consider whether you may have missed the move.
I got short in this market a few times when we were already 20% down and unfortunately it was too easy to shake me out on fear of a reverse at that point - so I've gained naff all being short even though we dropped further. A lesson learned for cheap thankfully, but an important one; don't be an a$$hole and chase.
If we still had naive governments I'd be all in short, but I think this has been a fantastic lesson in showing what happens when fundamentals disappear and the general risk narrative is the focus point of the market. I spent a lot of time last year wondering why the market went up when the fundamentals were weakening. How little I knew. I was one of those who actually hadn't a clue about how markets work - thinking the data is all that matters. This crisis has taught me some serious underlying market lessons; the main one being what you said in a previous post that sums it up well; 'by the time you've seen the data, it's too late'.
The government stimulus part of your thesis makes sense but to get this through requires Congressional approval which is the opposing party. What incentive do they have to pass it? I remember in a previous post, you mention that government will only act if we get a financial crisis. Has your view changed?
Kevin, with the market has gone from "Buy the Dip" to "Sell any Rally", do you see that construct as being completed already? Would appreciate thoughts. Also as one of your other commentators detailed it would be good to have indicative sizing so it's clear how convicted (or not) you are and to shape context on the overall post. Hope this feedback helps.
You had a post about energy debt a while back when the Saudis and Russians decided to wage an oil price war. Wouldn't the upcoming defaults and potential downgrades put a dent in your bullish thesis?
I would be very cautious in here. Maybe you get a bounce. Am sure you are aware Fed did not extend a CL to Central bank of China. You have the Saudis getting nailed to the wall with a strong $, and weak oil prices. With the BBB credit issue out there plus whatever is out there in PE boggy land, I hate to say this but I believe there is a lot more to come to the downside. Psychology of market has changed, little faith in the powers that be. I personally think the more the governments do the worse it gets. They are inciting panic. There needs to be a time out, let the volatility burn itself out. What the Central banks / politicians are unintentionally doing is pouring gas on the fire. Truly amazing the incompetence being exhibited. What is going on in the market should not be a surprise to anyone. I have maintained the virus simply exposed the flaws , deficiencies that were masked by the ultra low rates. The virus was the catalyst because it could not be controlled by the government and obviously and it effected the entire world. Kevin nailed when the Yen broke. That was when all the algo correlations broke down.
Great post. Always tough to be booolishhhh when most are bearish AF. My .02c, the hard V isn't in play as we're looking at some form of recession. Personally, I think we will bounce back in more of a U shape. A 'V' recovery assumes infections peak during next 4-6 weeks, but god for bid they don't, all bets are off. Another thing that worries me is Europe is so ugly right now, US mkt is expensive on a relative basis. With that said, I agree, the Fed is clearly saying game on. The yield action is really interesting, 10Y above 1% not-not bullish. When we do find a bottom, I also love the home builders. Check out OSB CN - - dual listed, NYSE and TSX, report in USD, FY 2019 sales of $1.7bn. 90% of their capacity is directed towards Oriented Strand Board (OSB) which is used in new home construction / repair and remodel. I am bullish the stock on account of weekly re-fi rates in the US, weeklies are spiking hard (MBAVREFI INDEX on Bloomie). With lower-for-longer rates, borrowing to buy is not out of the question in a U-bottom + any slip up in housing activity will only be a blip (if there is one). Interestingly, US housing starts have been below the LT average for some time now, not to mention fiscal spending shot in the arm.
No offense but I feel like you've been leaning long since this new format started. As I said before that's what makes a market but you're first and last sentences were kind of funny b/c most of your articles have been bullish. I think my indicator to go long will be when you write a bearish article (saying that tongue and cheek, not to be offensive). Not a big fan of indicators but take a look at the monthly for the DOW and drop RSI on there. Go back to 2008 and you'll see we 'could' have quite a ways to go until we've bottomed on that sentiment. Another good write up but I'm still on the other side of things.
The virus is so far from settling down in main streets around the world (actually just getting going in many) that it's hard for me to think that we've hit a market bottom. Maybe you're right though as the shock value wears off.
In any case, here's a question about IVOL that you wrote about some time ago. Given the record volatility we're going through, why is it still just sitting there?
Kevin, when you wrote this post, you said: "In terms of single homebuilder names, I love CCS. I will go into more detail when I write up this theme, but I am buying the builders down here." Not sure when you are planning to write that up but would love to hear even in a few words why CCS is superior. I when you wrote it, I looked at the chart and then opened a smaller position. I'm wishing I'd taken on more and am considering sizing up a bit.
You were spot on regarding government panicking. There has definitely been a bounce. Do you think it is a small bounce as in a bear market rally or a larger bounce to continue the bull market trend?
On STNG, they decided to put scrubber in most of their ships. Now hsfo vlsfo diff is about 80$, while they counted on 200+. A lot of money was invested, but chances are they won't see the expected return for that.
As such, it would seem better to avoid them in favour of other tankers.
I to work with a gentleman who was the first wave of Marines sent to Vietnam. He told me if your are ever in a crisis during a battle your first reaction is probably wrong. You have to sit back and try to evaluate your options. By the way after fulfilling his obligations to Marines and grad school he worked with Gus at GS on their arb desk.
When you talk about buying these stocks, relative to your personal portfolio, what percentage are you allotting for each? I subscribed because I’m looking for information and guidance....oh, and because you’re entertaining.
One thing this event has really ingrained in me is how important narrative is and that no matter how screwed everything looks, you need to consider whether you may have missed the move.
I got short in this market a few times when we were already 20% down and unfortunately it was too easy to shake me out on fear of a reverse at that point - so I've gained naff all being short even though we dropped further. A lesson learned for cheap thankfully, but an important one; don't be an a$$hole and chase.
If we still had naive governments I'd be all in short, but I think this has been a fantastic lesson in showing what happens when fundamentals disappear and the general risk narrative is the focus point of the market. I spent a lot of time last year wondering why the market went up when the fundamentals were weakening. How little I knew. I was one of those who actually hadn't a clue about how markets work - thinking the data is all that matters. This crisis has taught me some serious underlying market lessons; the main one being what you said in a previous post that sums it up well; 'by the time you've seen the data, it's too late'.
What a great, fun to read post. That’s all. Great job.
Kevin, you´re probably way too early...
The government stimulus part of your thesis makes sense but to get this through requires Congressional approval which is the opposing party. What incentive do they have to pass it? I remember in a previous post, you mention that government will only act if we get a financial crisis. Has your view changed?
Kevin, with the market has gone from "Buy the Dip" to "Sell any Rally", do you see that construct as being completed already? Would appreciate thoughts. Also as one of your other commentators detailed it would be good to have indicative sizing so it's clear how convicted (or not) you are and to shape context on the overall post. Hope this feedback helps.
You had a post about energy debt a while back when the Saudis and Russians decided to wage an oil price war. Wouldn't the upcoming defaults and potential downgrades put a dent in your bullish thesis?
I would be very cautious in here. Maybe you get a bounce. Am sure you are aware Fed did not extend a CL to Central bank of China. You have the Saudis getting nailed to the wall with a strong $, and weak oil prices. With the BBB credit issue out there plus whatever is out there in PE boggy land, I hate to say this but I believe there is a lot more to come to the downside. Psychology of market has changed, little faith in the powers that be. I personally think the more the governments do the worse it gets. They are inciting panic. There needs to be a time out, let the volatility burn itself out. What the Central banks / politicians are unintentionally doing is pouring gas on the fire. Truly amazing the incompetence being exhibited. What is going on in the market should not be a surprise to anyone. I have maintained the virus simply exposed the flaws , deficiencies that were masked by the ultra low rates. The virus was the catalyst because it could not be controlled by the government and obviously and it effected the entire world. Kevin nailed when the Yen broke. That was when all the algo correlations broke down.
Just to be clear, didn’t the world experience a pandemic in 1918?
Great post. Always tough to be booolishhhh when most are bearish AF. My .02c, the hard V isn't in play as we're looking at some form of recession. Personally, I think we will bounce back in more of a U shape. A 'V' recovery assumes infections peak during next 4-6 weeks, but god for bid they don't, all bets are off. Another thing that worries me is Europe is so ugly right now, US mkt is expensive on a relative basis. With that said, I agree, the Fed is clearly saying game on. The yield action is really interesting, 10Y above 1% not-not bullish. When we do find a bottom, I also love the home builders. Check out OSB CN - - dual listed, NYSE and TSX, report in USD, FY 2019 sales of $1.7bn. 90% of their capacity is directed towards Oriented Strand Board (OSB) which is used in new home construction / repair and remodel. I am bullish the stock on account of weekly re-fi rates in the US, weeklies are spiking hard (MBAVREFI INDEX on Bloomie). With lower-for-longer rates, borrowing to buy is not out of the question in a U-bottom + any slip up in housing activity will only be a blip (if there is one). Interestingly, US housing starts have been below the LT average for some time now, not to mention fiscal spending shot in the arm.
No offense but I feel like you've been leaning long since this new format started. As I said before that's what makes a market but you're first and last sentences were kind of funny b/c most of your articles have been bullish. I think my indicator to go long will be when you write a bearish article (saying that tongue and cheek, not to be offensive). Not a big fan of indicators but take a look at the monthly for the DOW and drop RSI on there. Go back to 2008 and you'll see we 'could' have quite a ways to go until we've bottomed on that sentiment. Another good write up but I'm still on the other side of things.
The virus is so far from settling down in main streets around the world (actually just getting going in many) that it's hard for me to think that we've hit a market bottom. Maybe you're right though as the shock value wears off.
In any case, here's a question about IVOL that you wrote about some time ago. Given the record volatility we're going through, why is it still just sitting there?
Kevin, when you wrote this post, you said: "In terms of single homebuilder names, I love CCS. I will go into more detail when I write up this theme, but I am buying the builders down here." Not sure when you are planning to write that up but would love to hear even in a few words why CCS is superior. I when you wrote it, I looked at the chart and then opened a smaller position. I'm wishing I'd taken on more and am considering sizing up a bit.
You were spot on regarding government panicking. There has definitely been a bounce. Do you think it is a small bounce as in a bear market rally or a larger bounce to continue the bull market trend?