This shit gets little press. We are not talking about this guy:
No, we are speaking about this:
With 546 trillion Won ($456.5 billion) in assets, South Korea’s public National Pension Service is the world’s third-largest pension fund, behind Japan’s and Norway’s. It’s also become a part of the widening scandal surrounding impeached President Park Geun-hye.
(Source: Bruce Einhorn and Heejin Kim at Bloomberg Businessweek)
Greece is #49 on the GDP list. Korea (South) is #11. Pay attention.
Interesting moves in the crude oil futures madness yesterday as the EIA weekly showed a massive build of gasoline and distillates for the second week in a row. Unsurprisingly, prices rose on the news. Trading crude futures is not for the weak.
Tangents abound in import numbers and current supply/demand, but there could be some fantastic opportunities in the oil sector over the next few weeks for both skeptics and optimists.
Of course we have the OPEC “freeze” (at inflated record production) from an agreement in early December that is current support for prices above $50/bbl for WTI. But we also have the spectre of OPEC compliance which is shaky at best when you look at their history.
I am currently in the position of being long a few Petro-related equities while short crude futures. An interesting place to be unless you factor in timelines, which in my case stretch out years, not days. I am very skeptical of prices above $54 as that only encourages producer hedging. And anything higher will spur shale production.
The Golden Goose for the investor here is to determine the winners of two scenarios: One, OPEC reverts to form and cheats on the production agreement, thereby initiating a rout in crude futures. Two, compliance is seen, spurring prices to $60 and initiating a rapid ramping of production from unconventional sources.
An investor has opportunity here. My preference is long term bets on core Permian plays. Zero down into the Delaware Basin to find the core assets. (If you do not understand the potential of the Delaware Basin, you owe it to yourself to read up). The first of course is Apache but $APA has already had a huge run. $CVX comes to mind and has been a great play for fixed income. My favorite is $CDEV if you have some cash to invest and forget about for a few years. $CDEV, currently down 10% from it’s highs is an opportunity that to me is once in a lifetime, to get in very early on a spec play run by the best minds in the Texas oil business. Texas Tea, mofos. It is all about this guy:
If you do not know who he is, leave the conversation. Unless you are curious…much more info can be found here.
Yet when dealing with crude futures and their corresponding short-term horizon, one must be constantly aware of forces that are ready to smite you in seconds, depending on the day’s headlines.
The current price is subject to two primary forces: OPEC and “NOPEC”. The reality here is that there is a new sheriff in town, and he is from Texas. Some analysts believe that the Saudis (you do not speak of OPEC without the word Saudi) will be quite content at this point with WTI at sub-$60 as that will discourage shale production. This is a very valid scenario when viewed through the lens of the Arabians, who lost their market-share battle when shale production failed to implode.
There are now two swing producers, Saudi Arabia and the Republic of Texas. Place your bets.
As stated, I have positions in both crude futures and equities. Take my advice at your peril, buy me a drink if it all works out.
Don’t look now, but enthusiasm appears to be waning for participants in the Trump Rally. I am now 40% cash, hoping to get that to 50% by Jan 20. Enjoy your January Thaw.Comments »