[Discussion] Will the Next one be the Worst Recession in History?

[Warhippy]

So Oil just took a huge body blow.  OPEC meetings failed to produce any results.  Had hoped for a 1.5% reduction in production.  Deal fell apart and as such the WTI saw an almost immediate 8% loss.  for any nation or...area of the world, depending on oil dollars.  This is a huge hit and another chip out of the foundation

 

Canada's oilpatch is bracing for the impact of plunging crude prices after OPEC and its allies failed to reach a deal aimed at cutting production as economies slow because of the novel coronavirus.

Prices began sliding after Russia refused to support deeper oil cuts to cope with the outbreak of coronavirus and OPEC responded by removing all limits on its own production.

 

Global oil prices fell more than eight per cent Friday as the development revived fears of a price crash similar to 2014, when Saudi Arabia and Russia fought for market share with U.S. shale oil producers.

The benchmark crude contract in North America, West Texas Intermediate, was also down more than eight per cent on Friday morning, dropping below $42 US per barrel.

Since the start of the year, global oil prices have dropped more than 20 per cent.

'Not good for governments reliant on oil revenues'

COVID-19 concerns and the impact on oil demand — plus the prospect of OPEC abandoning its role in trying to limit supplies — have the makings of a "toxic recipe" for oil prices, said Judith Dwarkin, chief economist at RS Energy Group.

"That's not good for oil producers; it's not good for governments reliant on oil revenues," Dwarkin said.

"It's generally not good for the Canadian economy, for which oil production and all the taxes and royalties and other revenue collected from that [are] an important part of the economy."

OPEC sources told Reuters that Russia, one of the world's biggest oil producers but not a member of OPEC, and Saudi Arabia, the biggest crude producer in OPEC, had failed to find a compromise despite several rounds of bilateral talks this week in Vienna.

As a result, the existing deal for output cuts will expire in March, so OPEC members and non-OPEC producers can in theory pump at will in an already oversupplied market, sources told Reuters.

OPEC members are responsible for about 40 per cent of the world's oil production.

Coronavirus is cutting world crude demand

Oil prices have dropped in recent weeks over concerns about the spread of the coronavirus. It's estimated the impact of the disease in China sliced about 900,000 barrels of daily oil demand from that country alone.

The impact has rippled out across global energy markets, including Canada.

On Friday, Calgary-based Vermilion Energy cut its dividend in half to deal with weakness in commodity prices and global economic fallout from the novel coronavirus.

Dwarkin said today's news might add to the incentive for oil companies to cut capital spending, if they were already moving in that direction and should the price spiral continue.

"We've seen the punch and the counter-punch today, the Russians and the Saudis," Dwarkin said.

"Let's see what emerges in the next few days on that front before you know it to declare this bout over."

Martin Pelletier, a portfolio manager with Trivest Wealth Council in Calgary, said he expects Canada's oilpatch to "batten down the hatches" with oil prices falling.

"You've got to manage your balance sheet," Pelletier said.

"Those who don't manage their balance sheet — if this sell-off continues — are not going to make it.

"This [situation] could be over in a week or two weeks, but it may not be over for a couple months."

[Gurn]

^ But people can still blame Trudeau, right?

[RUPERTKBD]

1 hour ago, Shift-4 said:

where else am I going to go?

Just so I have this straight.....you want me to tell you where to go?

[nuckin_futz]

On 3/6/2020 at 1:07 PM, Warhippy said:

So Oil just took a huge body blow.  OPEC meetings failed to produce any results.  Had hoped for a 1.5% reduction in production.  Deal fell apart and as such the WTI saw an almost immediate 8% loss.  for any nation or...area of the world, depending on oil dollars.  This is a huge hit and another chip out of the foundation

 

Canada's oilpatch is bracing for the impact of plunging crude prices after OPEC and its allies failed to reach a deal aimed at cutting production as economies slow because of the novel coronavirus.

Prices began sliding after Russia refused to support deeper oil cuts to cope with the outbreak of coronavirus and OPEC responded by removing all limits on its own production.

 

Global oil prices fell more than eight per cent Friday as the development revived fears of a price crash similar to 2014, when Saudi Arabia and Russia fought for market share with U.S. shale oil producers.

The benchmark crude contract in North America, West Texas Intermediate, was also down more than eight per cent on Friday morning, dropping below $42 US per barrel.

Since the start of the year, global oil prices have dropped more than 20 per cent.

'Not good for governments reliant on oil revenues'

COVID-19 concerns and the impact on oil demand — plus the prospect of OPEC abandoning its role in trying to limit supplies — have the makings of a "toxic recipe" for oil prices, said Judith Dwarkin, chief economist at RS Energy Group.

"That's not good for oil producers; it's not good for governments reliant on oil revenues," Dwarkin said.

"It's generally not good for the Canadian economy, for which oil production and all the taxes and royalties and other revenue collected from that [are] an important part of the economy."

OPEC sources told Reuters that Russia, one of the world's biggest oil producers but not a member of OPEC, and Saudi Arabia, the biggest crude producer in OPEC, had failed to find a compromise despite several rounds of bilateral talks this week in Vienna.

As a result, the existing deal for output cuts will expire in March, so OPEC members and non-OPEC producers can in theory pump at will in an already oversupplied market, sources told Reuters.

OPEC members are responsible for about 40 per cent of the world's oil production.

Coronavirus is cutting world crude demand

Oil prices have dropped in recent weeks over concerns about the spread of the coronavirus. It's estimated the impact of the disease in China sliced about 900,000 barrels of daily oil demand from that country alone.

The impact has rippled out across global energy markets, including Canada.

On Friday, Calgary-based Vermilion Energy cut its dividend in half to deal with weakness in commodity prices and global economic fallout from the novel coronavirus.

Dwarkin said today's news might add to the incentive for oil companies to cut capital spending, if they were already moving in that direction and should the price spiral continue.

"We've seen the punch and the counter-punch today, the Russians and the Saudis," Dwarkin said.

"Let's see what emerges in the next few days on that front before you know it to declare this bout over."

Martin Pelletier, a portfolio manager with Trivest Wealth Council in Calgary, said he expects Canada's oilpatch to "batten down the hatches" with oil prices falling.

"You've got to manage your balance sheet," Pelletier said.

"Those who don't manage their balance sheet — if this sell-off continues — are not going to make it.

"This [situation] could be over in a week or two weeks, but it may not be over for a couple months."

 

 

The drop in oil is just getting started.............

 

Saudi Arabia plans to increase oil output next month, well above 10m barrels a day

Sat 7 Mar 2020 23:27:47 GMT

 

Hard on the heels of Aramco slashing the price of its crude

• Saudi Arabia has slashed its oil price for all crude

Bloomberg report on the planned output cut citing "people familiar with the conversations, who asked not to be named to protect commercial relations"

• plans to increase oil output in April
• going well above 10 million barrels a day
• Saudi Arabia has privately told some market participants it could raise production much higher if needed, even going to a record of 12 million barrels a day

Current Saudi production is about 9.7 millions a day

 

"That's the oil market equivalent of a declaration of war," said a commodities hedge fund manager, asking not to be named due to the sensitivity of the situation.

 

*******************************

 

After the OPEC meeting failed to reach an agreement on output cuts. The Saudi's are going the other way and are going to flood the market and crush the price. They have essentially declared war on their fellow OPEC members and all non OPEC members.

Edited March 8, 2020 by nuckin_futz

[Gurn]

34 minutes ago, nuckin_futz said:

 

 

The drop in oil is just getting started.............

 

Saudi Arabia plans to increase oil output next month, well above 10m barrels a day

 

But this is still Trudeau's fault though, amirite?

[Arrow 1983]

On 1/13/2020 at 8:32 PM, I.Am.Ironman said:

I am in an interesting spot.. I am in my late 20s and going to be earning 'real money' this year for the first time and have paid off my debt from school. I have been thinking about where to put my money from an investment point of view. Weed stocks paid for most of my degree but that ship has sailed. I have been looking at more conservative options (Vanguard etc) but can't help but think a recession or at very least a correction is on the horizon. There is so much uncertainty at the moment I really don't know what

On 1/13/2020 at 8:38 PM, Warhippy said:

My wife and I are also in unique positions.  A household income over $120,000.  Zero personal debt and zero debt tied to my business.  Over $140,000 saved.  Investments paying well and almost zero risk.

 

For a family of 4, we're in a highly unique position to act in any event.  But with such looming uncertainty we're not sure what to do as of yet.

 

I felt this would be a decent topic to discuss those issues and positions

to do. Great topic hippy, I am excited to see everyone's opinions.

I just saw this post right now I don't usually venture into the off topic forum but I clicked on this one and I read your guys post.

 

Around the time this thread was made I pulled all my money out of stocks and sat on cash. Cash sucks but right then it was all I could do. Yes you could buy gold but as some as this virus goes away the market is going to move up again and once that happens gold will devalue. So I decided to lock it up in a 1 year GIC at 2.3% interest this was late January. I hate GICs but I hate cash sitting around even more doing nothing. My reasoning on a 1 year GIC is this yes I could have done 90 days or 120 days GIC but the problem is that's 1 %. Nothing is worse more then 1% other  then zero % at 2.3% I at least keep up with inflation. But their is one other reason for a 1 year GIC. The election, until a president is chosen the market is going to fluctuate like crazy. Biden won super Tuesday and the market goes up. The Virus hit 100k it goes down. If the Virus hits 10k death toll the market is going to look like someone took a dump on it and everything is going to get flushed. 

 

If 10k die of this Virus that means we will have over 300,000 affected. 300,000 will mean we have a full breakout on our hands, which means all of the western world will be dealing with closures of every single sector of our economy including and the worst part the supply chain. If the Supply chain collapse the Market collapse and it will take years to recover back to where we were before this started.  Compounding the issue is that this is an election year for the US, this wouldn't be a huge deal except for the fact that Trump is the president and how he deals with this issue is completely a guess by anyone ( all of this creates the one thing markets hate the most uncertainty).

 

Look at where the Virus is now we are at 95 countries with cases, over a 100k affected. Virus start slow and exponentiate, by the end of this week we could have 10k death toll. by the end of the month we could have a million affected. 

 

2021 will be the year to buy, because you won't be able to buy lower. Here is the thing, even if this Virus doesn't get to worse case scenario, the election will still keep it from fully recovering and 2021 will still be a good year to buy stocks.

[Boudrias]

5 hours ago, Arrow 1983 said:

I just saw this post right now I don't usually venture into the off topic forum but I clicked on this one and I read your guys post.

 

Around the time this thread was made I pulled all my money out of stocks and sat on cash. Cash sucks but right then it was all I could do. Yes you could buy gold but as some as this virus goes away the market is going to move up again and once that happens gold will devalue. So I decided to lock it up in a 1 year GIC at 2.3% interest this was late January. I hate GICs but I hate cash sitting around even more doing nothing. My reasoning on a 1 year GIC is this yes I could have done 90 days or 120 days GIC but the problem is that's 1 %. Nothing is worse more then 1% other  then zero % at 2.3% I at least keep up with inflation. But their is one other reason for a 1 year GIC. The election, until a president is chosen the market is going to fluctuate like crazy. Biden won super Tuesday and the market goes up. The Virus hit 100k it goes down. If the Virus hits 10k death toll the market is going to look like someone took a dump on it and everything is going to get flushed. 

 

If 10k die of this Virus that means we will have over 300,000 affected. 300,000 will mean we have a full breakout on our hands, which means all of the western world will be dealing with closures of every single sector of our economy including and the worst part the supply chain. If the Supply chain collapse the Market collapse and it will take years to recover back to where we were before this started.  Compounding the issue is that this is an election year for the US, this wouldn't be a huge deal except for the fact that Trump is the president and how he deals with this issue is completely a guess by anyone ( all of this creates the one thing markets hate the most uncertainty).

 

Look at where the Virus is now we are at 95 countries with cases, over a 100k affected. Virus start slow and exponentiate, by the end of this week we could have 10k death toll. by the end of the month we could have a million affected. 

 

2021 will be the year to buy, because you won't be able to buy lower. Here is the thing, even if this Virus doesn't get to worse case scenario, the election will still keep it from fully recovering and 2021 will still be a good year to buy stocks.

My biggest fear is that the virus causes a full blown credit crisis. The world is awash in debt both personal and government. Most people do not have the resources for sustained layoffs or unemployment. Governments need tax revenue from economic activity to stay solvent. At some point governments will not be able to print more money without massive inflation. I thought we were a couple of years away from this last the virus might cause it now. 

[Arrow 1983]

8 minutes ago, Boudrias said:

My biggest fear is that the virus causes a full blown credit crisis. The world is awash in debt both personal and government. Most people do not have the resources for sustained layoffs or unemployment. Governments need tax revenue from economic activity to stay solvent. At some point governments will not be able to print more money without massive inflation. I thought we were a couple of years away from this last the virus might cause it now. 

This is why  countries including ours has quarantine procedures. These procedures are part of our health mandate. If we quarantine the country or a province for 2 weeks the virus can be beat of course this is worst case scenario and only the old and ill are affected by this so quarantine procedures can be altered to protect the most affected. The health authorities would lock down nursing homes old age homes and parts of the hospitals like the ICUs.

For the rest of us, truth is it's not that bad and catching it would mean once we have overcome it our bodies will have immunity to these type of virus down the road.

Or at least are bodies will be ably to fight virus of different strains much easier 

[Boudrias]

23 minutes ago, Arrow 1983 said:

This is why  countries including ours has quarantine procedures. These procedures are part of our health mandate. If we quarantine the country or a province for 2 weeks the virus can be beat of course this is worst case scenario and only the old and ill are affected by this so quarantine procedures can be altered to protect the most affected. The health authorities would lock down nursing homes old age homes and parts of the hospitals like the ICUs.

For the rest of us, truth is it's not that bad and catching it would mean once we have overcome it our bodies will have immunity to these type of virus down the road.

Or at least are bodies will be ably to fight virus of different strains much easier 

Hopefully all true. Credit and debt are such a confidence game. I doubt two weeks solves the problem. Many people and businesses do not have the means to survive much of a turn down. Combine this with preexisting debt and the snowball effect could be unstoppable. 

[Tortorella's Rant]

On 3/6/2020 at 8:21 AM, Boudrias said:

No one knows and that is what creates a market. Even today during a sell off there are buyers. I am one of those old guys and focus on blue chip stocks to hold over the years. Some I have owned for 20 years. Build your core group, establish a cash flow in the portfolio and market timing becomes less of an issue. 

 

The issue that haunts every investor is whether this time it is different. We have been thru 10 years of up markets and complacency can happen. I like to think of myself as a value investor, a quant guy, That makes a lot of sense at a market PE 14 but does it ar PE 21?

At some point equilibrium reestablishes itself. 

So do you do a lot of energy stock buying or is that just 'play around money?' Because as mentioned I do mostly ETFs. It's a 60/40 portfolio - but it's a little more equity because of all my Enbridge and AltaGas shares. Portfolio was doing well until weeks ago. But I've always been interested in taking $1000 and 'playing around with it,' buying cheap energy shares and that sort of thing. I was looking at Northland Power in Ontario in 2018 and I mentioned this in the Investment thread and kind of wish I had put money there because the price has done well since then. And of course the dividend wasn't bad either. 

[Boudrias]

8 minutes ago, Tortorella's Rant said:

So do you do a lot of energy stock buying or is that just 'play around money?' Because as mentioned I do mostly ETFs. It's a 60/40 portfolio - but it's a little more equity because of all my Enbridge and AltaGas shares. Portfolio was doing well until weeks ago. But I've always been interested in taking $1000 and 'playing around with it,' buying cheap energy shares and that sort of thing. I was looking at Northland Power in Ontario in 2018 and I mentioned this in the Investment thread and kind of wish I had put money there because the price has done well since then. And of course the dividend wasn't bad either. 

I use a asset allocation sheet with the stocks I have in each sector marked down by % weighting. Then I extend out to get CF. I try to keep in perspective why I am in the stock and what it is paying me. Getting older so growth is not as big a deal as it was. I want 25% of my port in USA $. I tend to keep my USD stocks in technology and health as Canada is weak there. Capital gains in USA $ rather than dividends because of taxation. 

 

Northland has bonafide creed and not as much a gamble. I am happy with TRP and ENB. My oils are PXT, SGY and ARC. My play around money was Ivanhoe but sold at decent profit. Only one left is SDX which delisted and moved to LON exchange. Oil and gas in N.Africa. Down big time but will wait. 

 

Awful wordy sorry about that.

[Warhippy]

How bad is it you ask?

 

https://markets.businessinsider.com/indices

 

As of 2:09 PST

 

Ouchie bud

 

 

 

 

 

Edited March 9, 2020 by Warhippy

[Warhippy]

TSX down 1600

DOW down 2000

WTI and energies took an absolute ripping today

 

Watching for panic from major banks before making any kind of move or??

[Ryan Strome]

1 hour ago, Warhippy said:

TSX down 1600

DOW down 2000

WTI and energies took an absolute ripping today

 

Watching for panic from major banks before making any kind of move or??

Discussion] Is the Next Great Recession Already Underway?

yes, yes it is.

[nuckin_futz]

24 minutes ago, Ryan Strome said:

Discussion] Is the Next Great Recession Already Underway?

yes, yes it is.

I doubt it. Central banks have all but outlawed recessions. If we do have one it'll be mild and it'll be met with tons of cheap money. To make it go away as quick as possible.

[nuckin_futz]

1 hour ago, Warhippy said:

TSX down 1600

DOW down 2000

WTI and energies took an absolute ripping today

 

Watching for panic from major banks before making any kind of move or??

This entire sell off has been amazingly and annoyingly orderly. I haven't seen any real panic selling yet.

 

In addition that that the volume today was lackluster. I am of the opinion that we won't bottom until we truly  puke on high volume.

[nuckin_futz]

31 minutes ago, nuckin_futz said:

I doubt it. Central banks have all but outlawed recessions. If we do have one it'll be mild and it'll be met with tons of cheap money. To make it go away as quick as possible.

Here's some of that wallpaper right on schedule.........

 

Coronavirus - US President Trump says he will discuss payroll tax cut with Congress

 

Mix that in with some rate cuts and you make a lot of bad stuff go away.

[Ryan Strome]

5 hours ago, nuckin_futz said:

Here's some of that wallpaper right on schedule.........

 

Coronavirus - US President Trump says he will discuss payroll tax cut with Congress

 

Mix that in with some rate cuts and you make a lot of bad stuff go away.

Trump might have the virus.

[King Heffy]

3 minutes ago, Ryan Strome said:

Trump might have the virus.

Send him to broker a deal with his friends in SA.

[Boudrias]

5 hours ago, nuckin_futz said:

I doubt it. Central banks have all but outlawed recessions. If we do have one it'll be mild and it'll be met with tons of cheap money. To make it go away as quick as possible.

Pumping money into a failing system is not a solution. At some point it will lose credibility and  confidence or what is left will be gone.