Money Sense

[Anonymous]

Could this happen. Stay tuned.



Someone is betting that oil will soar to a record US$200 per barrel

https://www.bnnbloomberg.ca/someone-is-betting-that-oil-will-soar-to-a-record-200-a-barrel-1.1659692?fbclid=IwAR1tFrl9Prk99bpc-E93NaGgjKTD1a6JyypPf4pMtLcVdZdL_R8vO8kTXoI">https://www.bnnbloomberg.ca/someone-is- ... R8vO8kTXoI">https://www.bnnbloomberg.ca/someone-is-betting-that-oil-will-soar-to-a-record-200-a-barrel-1.1659692?fbclid=IwAR1tFrl9Prk99bpc-E93NaGgjKTD1a6JyypPf4pMtLcVdZdL_R8vO8kTXoI



Could the energy crunch get so bad that oil prices hit US$200 a barrel? One options trader thinks so.



Brent US$200 calls for December 2022, options contracts that would profit a buyer from a rally toward that level, traded 1,300 times on Wednesday. While the contracts don't expire until October next year, they could profit from any sharp spike in prices this winter or next summer.



In a market where a single cargo of crude would currently fetch about US$160 million, the US$130,000 wager on oil reaching an all-time high is tiny. However, it reflects the fact that a growing number of options traders are betting that an energy crunch this winter may see prices rip higher.



It's not just US$200 calls that have been trading in recent days. Holdings in Brent US$100 calls through to the end of next year have climbed by 20,000 contracts this month.

That can't be good.

I would think so. And I worked in upstream oil and gas my entire life.



I want to read what the Seoul brother has to say about this.

[Anonymous]

Could this happen. Stay tuned.



Someone is betting that oil will soar to a record US$200 per barrel

https://www.bnnbloomberg.ca/someone-is-betting-that-oil-will-soar-to-a-record-200-a-barrel-1.1659692?fbclid=IwAR1tFrl9Prk99bpc-E93NaGgjKTD1a6JyypPf4pMtLcVdZdL_R8vO8kTXoI">https://www.bnnbloomberg.ca/someone-is- ... R8vO8kTXoI">https://www.bnnbloomberg.ca/someone-is-betting-that-oil-will-soar-to-a-record-200-a-barrel-1.1659692?fbclid=IwAR1tFrl9Prk99bpc-E93NaGgjKTD1a6JyypPf4pMtLcVdZdL_R8vO8kTXoI



Could the energy crunch get so bad that oil prices hit US$200 a barrel? One options trader thinks so.



Brent US$200 calls for December 2022, options contracts that would profit a buyer from a rally toward that level, traded 1,300 times on Wednesday. While the contracts don't expire until October next year, they could profit from any sharp spike in prices this winter or next summer.



In a market where a single cargo of crude would currently fetch about US$160 million, the US$130,000 wager on oil reaching an all-time high is tiny. However, it reflects the fact that a growing number of options traders are betting that an energy crunch this winter may see prices rip higher.



It's not just US$200 calls that have been trading in recent days. Holdings in Brent US$100 calls through to the end of next year have climbed by 20,000 contracts this month.

That can't be good.

It's a disaster in the making. Record spikes in the cost of energy affect everything. It couldn't happen at a worse possible time.



Trudeau and Biden are contributing to the problem with their absurd opposition to domestic energy prodution.

[Anonymous]

Shares of Merck & Co surged on positive clinical trial results of its experimental antiviral COVID-19 pill while high-flying stocks of vaccine companies and makers of other coronavirus therapies were bruised.



Merck shares jumped as much as 12.3 percent and hit their highest level since February 2020 after data showed the company's pill molnupiravir could halve the chances of dying or being hospitalized for those most at risk of contracting severe COVID-19.



Meanwhile, shares of vaccine makers such as Moderna Inc, Pfizer Inc, and partner BioNTech SE crumbled. Moderna shares fell 13 percent in midday trading, while Pfizer, which is developing a COVID-19 pill of its own, fell 1.3 percent. U.S. shares of BioNTech dropped 11 percent.

[Anonymous]

The Commerce Department's report showed that the 12-month rate of inflation edged up in August from 4.2% to 4.3% — the highest rate since 1991, when George H.W. Bush was president, according to MarketWatch.



"Stagflation is here," Bank of America global research analysts concluded following news of the report.



"This is the first week that markets realized that global growth could be weak and inflation more persistent," Athanasios Vamvakidis, BofA's global head of G10 FX strategy, told MarketWatch. "Energy-price increases were a wake-up call for markets, and the scenario that's now more likely to develop is one in which we get higher inflation and weaker output."



"We could easily see inflation at 3% to 4% for a while," added Gang Hu, a managing partner at WinShore Capital Partners. "We are not at the end of this supply-side destruction and are entering a period where nobody knows what transitory inflation means."



Wharton finance professor Jeremy Siegel, who is known for his accurate market predictions, told CNBC over the weekend, "We're headed for some trouble ahead."



"Inflation, in general, is going to be a much bigger problem than the Fed believes," he warned.

[Anonymous]

The financial woes of Evergrande have rippled through global financial markets, while investors are bracing for more volatility as Evergrande's situation unfolds. So, what is Evergrande, why is it in the news, what went wrong, and what might happen next?



What is Evergrande?

Evergrande is a behemoth of a property developer in China. It owns 1,300 projects in more than 280 cities and is China's largest property developer by sales.



But it does a lot more than property development. Its business has expanded to include theme parks, electric vehicles, financial services, mineral water and it even owns a soccer team (Guangzhou Evergrande FC).



Why is it in the News?

Evergrande is estimated to have an eye-watering $300 billion of debt and is now struggling to pay its creditors. On Sept. 23, Evergrande had $83.5 million in interest payments due on dollar-denominated bonds. The Wall Street Journal reported that investors did not receive the funds. Evergrande could be declared bankrupt if the interest payments aren't met within 30 days of the due date.



The ratings agency Standard and Poor's (S&P) has deemed an Evergrande default as "likely."  As investors lose faith in the solvency of the company, Evergrande's share price has tumbled 80 percent year-to-date.



As the company scrambles to find funds, construction has stalled on its projects putting the future of the 1.4 million properties it committed to building in doubt. The situation has sparked protests at Evergrande headquarters in Shenzhen. Protestors included contractors owed money by Evergrande, and those who have paid for a home that may now never be delivered.



But the problem extends beyond the people Evergrande owes, and it could have far-reaching effects. Property plays a major role in China's economy. It accounts for around 25 percent of gross domestic product and is also the single largest source of household assets (accounting for around 60 percent of household assets). Thus how Evergrande's predicament unfolds could have major domestic and global consequences. A disorderly collapse of Evergrande could trigger a downward spiral in China's property market, which could derail domestic and global growth, and bring about social unrest as citizens see their wealth evaporate.



What Went Wrong?

Various regulatory, business, and economic factors have brewed the perfect storm that has resulted in Evergrande's financial troubles.



Over the years, Chinese authorities have enjoyed the benefits from a booming property market but have more recently become increasingly concerned about the risks the property market poses for financial stability. The Chinese Communist Party (CCP) has introduced different regulatory measures over the years designed to curb property prices. It even created a slogan to discourage property investment: "Houses are for living, not for speculation."



As part of this crackdown on property investment in August 2020, Chinese authorities directly targeted developers with their "three red lines" policy. This policy limited the amount of leverage that developers could have, and required developers to have sufficient cash to cover short-term debt.



These measures significantly stunted Evergrande, whose business model relied on aggressive borrowing to purchase land and build housing. To comply with these measures Evergrande has been forced to find ways to cut its debt and raise cash, but in March of this year Evergrande was still non-compliant with the "three red lines" and judged to be in the "red zone."



On top of all this, the pandemic-related lockdowns in 2020 effectively froze the property market for months, bringing down property sales leaving Evergrande strapped for cash.



What's Next?

This crisis is unlikely to be resolved quickly. Outside of the interest it owes immediately, Evergrande has debt that runs over many years. For just next year it has $7.6bn in bond payments due. Managing these debt obligations will be complex and challenging.



The authorities in Beijing are likely to step in on some level, but according to many analysts a total bail-out appears unlikely. A report from S&P Global Ratings also predicts that a bailout is unlikely, claiming Evergrande "is not too big to fail." Chinese authorities appear committed to their policy stance of discouraging property investment and lending, and bailing out Evergrande would undermine this agenda. But Evergrande's sheer size, profile, and interconnection with global and domestic financial markets will test their resolve.



This week, the regime's central bank vowed to protect homebuyer's interests, signaling that it may step in to cushion the blow from a potential fallout.



Chinese authorities could use their tight grip over the Chinese financial and banking sector to engineer some form of controlled debt restructuring. Market commentators believe individuals who have pre-bought their homes will be protected, with possibilities including getting other property developers or even local/regional authorities to take over unfinished projects.

[Anonymous]

West Texas Intermediate is trading close to eighty bucks a barrel this morning. OPEC+ failed to reach an agreement to get the kind of production increases Biden wanted, but will not permit in his own country. All the major North American indices are up significantly on early trading today.

[Breakfall]

You know, Fash, this site is becomes an exceptional site, well organized, diverse, good people, good ideas, good posting



You just came up with another winning addition

You must be the forum brown_noser! How droll.

[Anonymous]

You know, Fash, this site is becomes an exceptional site, well organized, diverse, good people, good ideas, good posting



You just came up with another winning addition

You must be the forum brown_noser! How droll.

That is the Seoul brother. But, he is actually an alright guy.

[Breakfall]

You know, Fash, this site is becomes an exceptional site, well organized, diverse, good people, good ideas, good posting



You just came up with another winning addition

You must be the forum brown_noser! How droll.

That is the Seoul brother. But, he is actually an alright guy.

The CC character? I was just asking Fash about it. Sounds like an uptight female. Lol

[Anonymous]

You know, Fash, this site is becomes an exceptional site, well organized, diverse, good people, good ideas, good posting



You just came up with another winning addition

You must be the forum brown_noser! How droll.

That is the Seoul brother. But, he is actually an alright guy.

The CC character? I was just asking Fash about it. Sounds like an uptight female. Lol

I've posted with cc for many years now..



She's a very smart lady, passionate in what she believes in..



When she takes a stand about something she makes sure she can back up her arguments..



Any forum would like to have her exceptional wit and intelligence.

[Anonymous]

Ceec is a sharp gal.

[Breakfall]

You know, Fash, this site is becomes an exceptional site, well organized, diverse, good people, good ideas, good posting



You just came up with another winning addition

You must be the forum brown_noser! How droll.

That is the Seoul brother. But, he is actually an alright guy.

The CC character? I was just asking Fash about it. Sounds like an uptight female. Lol

I've posted with cc for many years now..



She's a very smart lady, passionate in what she believes in..



When she takes a stand on something she makes sure she can back up her arguments..



Any forum would like to have her exceptional with and intelligence.

Exceptional wit and intelligence could be arguable, but I'll take your word for the moment.

[Breakfall]

Ceec is a sharp gal.

I'm a sharp man.  ac_dance

[Anonymous]

You must be the forum brown_noser! How droll.

That is the Seoul brother. But, he is actually an alright guy.

The CC character? I was just asking Fash about it. Sounds like an uptight female. Lol

I've posted with cc for many years now..



She's a very smart lady, passionate in what she believes in..



When she takes a stand on something she makes sure she can back up her arguments..



Any forum would like to have her exceptional with and intelligence.

Exceptional wit and intelligence could be arguable, but I'll take your word for the moment.

You'll like cc.

[Anonymous]

Ceec is a sharp gal.

I'm a sharp man.  ac_dance

I have no reason to doubt you.

 ac_smile