Search Results for: fracking

Why The Next Financial Crisis Lurks Underground—-The Debt Boom Called Shale

Posted on by David Stockman

Some of fracking’s biggest skeptics are on Wall Street. They argue that the industry’s financial foundation is unstable: Frackers haven’t proven that they can make money. “The industry has a very bad history of money going into it and never coming out,” says the hedge fund manager Jim Chanos, who founded one of the world’s largest short-selling hedge funds. The 60 biggest exploration and production firms are not generating enough cash from their operations to cover their operating and capital expenses. In aggregate, from mid-2012 to mid-2017, they had negative free cash flow of $9 billion per quarter.

 

https://www.nytimes.com/2018/09/01/opinion/the-next-financial-crisis-lurks-underground.html

 

Swan Song Of The Central Bankers, Part 5: The Flat Line Does Not Spell Recovery

Posted on by David Stockman
The punk January industrial production (IP) report brought another reminder that the Fed has stimulated nothing at all on the output/employment prong of its dual mandate. Indeed, as they celebrate a purported “mission accomplished” full employment recovery and confidently prepare to plow forward with an epochal pivot to QT (quantitative tightening), our Keynesian central bankers have remained absolutely mum on this stunning fact: To wit, there has […]
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The Great Wall Street/Washington Con Job: Part 4 Of The Recovery Which Never Happen

Posted on by David Stockman
During the last few days we have been debunking the notion that Imperial Washington's massive monetary and fiscal stimulus caused the so-called "recovery". To the contrary, it has actually poisoned the regenerative powers of American capitalism by causing capital and resources to flow out of the main street economy and into the speculative casinos of Wall Street.
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Key Industrial Indicators Say US Is In Long Term Depression

Posted on by Lee Adler
Last week we reviewed the US industrial production (IP) and saw that it contracting for more than a year. The IP indexes represent the production of factories, mines, and utilities in unit volume, not dollar sales, both by total output and output by industry. While these indexes do not represent service industries directly, they do indirectly because electric power production and distribution feeds service business. Login or Join Now To Read More

Bankruptcy Bust: How Zombie Companies Are Killing the Oil Rally

Posted on by David Stockman
Their owners may be bankrupt, but the sprawling mines of Wyoming’s Powder River Basin are still churning out coal. It is the same story in oil fields along the Gulf Coast and with shale-gas wells in the Rocky Mountains.......Energy investors have long hoped that falling prices would solve themselves by driving producers into bankruptcy and stanching the flood of excess supply. It turns out that while bankruptcy filings are up, they have barely impacted fossil-fuel markets. Login or Join Now To Read More

Stockman’s Contrarian Portfolio

By David Stockman and Dan Amoss, CFA

The following is our basic recommended portfolio designed to survive and thrive through a crash of today’s central bank-fueled bubble, which we fully anticipate. We call it Stockman’s Contrarian Portfolio and it’s meant to be fully invested and turn very slowly.

As we write in July 2017, the portfolio has not performed well on a trailing-twelve-month basis. In short: the bubble has continued to inflate.

But we remain confident that many of the portfolio holdings outlined below will perform well in the months and years ahead.

All it takes for a surge higher in Stockman’s Contrarian Portfolio is a break in the consensus view that central banks can endlessly create wealth, and that governments can allocate resources efficiently. Both sentiments are delusional.

When bubble psychology breaks, the downside in stock and bond markets will be breathtaking. Popular portfolios will be mauled. Many of the portfolio ideas presented below offer ways to mitigate damage to conventional investment portfolios. If you carefully position these shorts and inverse ETFs (and fully understand the risks involved with each) the ideas below could deliver substantial profits while the global financial bubble pops.

The portfolio stated simply:

25% Gold
10% Short S&P 500
15% Short Chinese A-Shares
10% Short Junk Bond Market
20% Select Stock Shorts
10% Short EM Stocks
10% Cash equivalent

Our essential investor modules will help you understand why we recommend each of these components. You can access each of those modules by clicking here and selecting the one you want. For example, you can read the module on why you should own gold if you’re curious why we recommend owning a 25% allocation and in the form we do.

Below, you’ll find the specific recommendation we’ve issued to execute each part of Stockman’s Contrarian Portfolio. At the end, we show screenshots of the permanent portfolio, back-tested the S&P 500’s peak set on 8/15/16. At this point, we believe the latter date marked the top of the massive bubble the Fed and other central banks have been inflating since the crisis bottom in March 2009.

We’ve also modeled a bear market scenario, and what it might mean for the portfolio. In preview it shows an excess return that beats the S&P 500 by 92%.

Please read on…

25% Gold

A good choice for any portfolio’s allocation to gold is the Sprott Physical Gold Trust (PHYS). The closest thing to owning physical gold in your brokerage account is holding shares of the Sprott Physical Gold Trust (PHYS: NYSE, TSX). Sprott provides a secure, liquid alternative for investors interested in holding physical gold bullion without the inconvenience of storage.

The Trust’s physical gold bullion is fully allocated and segregated in a secure third party storage location in Canada.

If conditions get bad enough, and there is a run on physical gold, we could see a default in the gold futures markets; futures contracts would get settled in cash U.S. dollars, even as the physical gold price keeps rising.… Login or Join Now To Read More

More Bad Economic News From The Oil Patch

Posted on by David Stockman
At the end of August, the US Energy Information Administration reported that it had been overstating domestic demand for oil and energy products to a considerable degree. Using imprecise and lagging data, the calculations for the amount of product being exported overseas was understated by an average of 16%. That meant more output was being... Login or Join Now To Read More

The Crude Oil Price Recovery Is Over—–So Take The Money And Run

Posted on by David Stockman
“Technically Speaking” is a regular Tuesday commentary updating current market trends and highlighting shorter-term investment strategies, risks, and potential opportunities. Please send any comments or questions directly to me via... Login or Join Now To Read More