Excellent read on the next 6 months for inflation, further recessionary pressures and of course the oil economy. This guy most often gets it right.
https://www.zerohedge.com/geopolitical/ ... -inflation
Fed will tank the economy for CBDC
Re: Fed will tank the economy for CBDC
Cut from the article:
Inflation is not going anywhere anytime soon, however. The underlying problem of energy prices needs to be considered as they contribute to further supply chain stress.
Think about this for a moment: The current reduction in oil prices and energy is artificial and government driven, not supply and demand driven. Oil prices in the US are being kept down by Joe Biden’s constant supply dumps from the strategic reserves. Eventually Biden is going to run out of oil to drop on markets and he will have to replenish those reserves at a much higher cost.
Furthermore, oil and energy prices are being kept down because of China’s suspiciously bizarre Zero Covid policy, which is slowing their economy to a crawl and reducing oil usage to a minimum. With public riots escalating, the CCP will probably seek to ease conditions as a means to placate dissent, playing a game of release the steam valve. A reopening by early next year is on the way, with a number of controls still in place of course.
As soon as China reopens, oil prices will skyrocket once again on the global market.
Then, there is the war in Ukraine and the ongoing sanctions against Russia. Europe is about to face the worst winter in decades with natural gas supplies severely limited and the cost of power for manufacturing no longer tenable. Their only hope is for mild temperatures for the rest of the season. If the current trend continues, production in Europe will be throttled, causing chaos in the global supply chain.
High energy prices and supply chain disruptions will mean ongoing inflated prices in goods and services well into 2023, even with a contraction in jobs markets and stock markets.
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MY TAKE: All of the companies in our three model portfolios have used free cash flow to significantly lower their debt. They are therefore somewhat insulated from higher interest rates. Most of them can fund future growth with cash flow from operations, even if oil dips to $50/bbl (which I do not expect to happen).
Inflation is not going anywhere anytime soon, however. The underlying problem of energy prices needs to be considered as they contribute to further supply chain stress.
Think about this for a moment: The current reduction in oil prices and energy is artificial and government driven, not supply and demand driven. Oil prices in the US are being kept down by Joe Biden’s constant supply dumps from the strategic reserves. Eventually Biden is going to run out of oil to drop on markets and he will have to replenish those reserves at a much higher cost.
Furthermore, oil and energy prices are being kept down because of China’s suspiciously bizarre Zero Covid policy, which is slowing their economy to a crawl and reducing oil usage to a minimum. With public riots escalating, the CCP will probably seek to ease conditions as a means to placate dissent, playing a game of release the steam valve. A reopening by early next year is on the way, with a number of controls still in place of course.
As soon as China reopens, oil prices will skyrocket once again on the global market.
Then, there is the war in Ukraine and the ongoing sanctions against Russia. Europe is about to face the worst winter in decades with natural gas supplies severely limited and the cost of power for manufacturing no longer tenable. Their only hope is for mild temperatures for the rest of the season. If the current trend continues, production in Europe will be throttled, causing chaos in the global supply chain.
High energy prices and supply chain disruptions will mean ongoing inflated prices in goods and services well into 2023, even with a contraction in jobs markets and stock markets.
-----------------------------
MY TAKE: All of the companies in our three model portfolios have used free cash flow to significantly lower their debt. They are therefore somewhat insulated from higher interest rates. Most of them can fund future growth with cash flow from operations, even if oil dips to $50/bbl (which I do not expect to happen).
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Fed will tank the economy for CBDC
The Titanic sinking was not an inspiring lead into this article! I was hoping to be on the sidelines before Brandon killed the economy. Last few days have caught me holding the bag.