YouSaid · the spoken record

Harris Kupperman

lines on the record: 74
first: 2022-10-18
most recent: 2022-10-18
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I also think that we're in the peak oil, right? The peak oil production, if we're not there, we're very close to it because look at that. You're not going to have another shale revolution come along, right? And in the US, there's three major shale fields that are all in decline already. And you look around the world and where's the incremental oil going to come from?”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Almost done now, but that put a lot of put pressure and option pressure on the price of energy. All these things are kind of dissipating. I think sometime in mid-November, early December, you're also going to see a lot of Europeans start burning fuel oil as opposed to nat gas because it's too damn expensive. And so I think a lot of these things are about to inflect sometime in the next 30 to 60 days, and oil is about to scream out of control. And I'd love to be told why I'm wrong about that, but I don't see how you can draw down five million barrels of global inventory every day and not have a crisis at some point soon.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“So that's another million or two. So you're somewhere in the 5.5 to 6.5. And then I don't want to be too alarmist. Maybe supply grows a million. Maybe they can unbottle neck the shale a little. Maybe some other stuff works out somewhere. Maybe Libya doesn't go offline like it seems to do every month. But let's just call it 5 million for a big round number. That's the deficit. We've never had such a large deficit. 5% of global supply is missing. We've never had such a big deficit really in the history of energy going back a long, long period of time. And it's interesting science experiment what's about to happen because it's all about to inflect. The SPR releases, if something that's unsustainable can't be sustained, they're going to end right after the election. I'm pretty sure that G is going to give up on these lockdowns as soon as he's made king for life. The Mexicans just hedged their annual put.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Aircraft travel and international travel, that's 2 million. You've got Russia, which will be down over a million in the next year, probably more like 2 million. All the U.S. Western firms left, and they don't know how to pump the oil. It's very technical oil. It's all in the Arctic. They're going to have freezes. I mean, their system might freeze and they lose it all. So they're definitely not replacing what they're drilling, and it's already in freefall. It's over $200,000 a month right now. So add another million. So you're at 1.5 plus 2 plus 1, you're at 4.5. Global demand grows one or two every single year because there's 6 billion people that want the same standard of living that we all have. And most of those guys don't have refrigerators or microwaves or air conditioning. And a lot of them don't even have cars or they might have a dirt bike and they're hoping to trade up to a Prius. And so those guys are in their S curve where when you hit about 3,500 of disposable income, your energy consumption explodes.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Sure. Let's just use some quick numbers. I mean, right now, supply and demand are roughly balanced, and I don't think anyone has any precise numbers on this, but it's give or take a couple hundred thousand a day, roughly balanced. We're dumping about 1,005 from the SPR every day between us and all of our OECD allies. So that's a million five. China is down by 2 million. That's because Xi is going around playing whack-a-mole and closing cities of 20 and 30 million people just arbitrarily. Chinese”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“The low end is much bigger than the high end, it's just the high end has more dollars, right? So you get what Jeff Curry talks about is the low end in terms of number of consumers consuming barrels of oil or gallons in the tank. It keeps demand high for longer.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“I would say one thing though is that in an inflationary environment the consumers they complain about the price of vegetables and everything but a lot of them have gotten wage increases especially on the lower end and as a result those guys live in a nominal world not a real world and they haven't really felt the pinch yet it's more kind of the middle class the upper class that is feeling more of that pinch because they haven't gotten you know the same wage increases I mean I eat a lot I love food I talk to the owners of these restaurants and you know it used to be $10 an hour for you know a dish guy now it's 25 or 30 if you could find a guy who wants to clean your dishes and so you know at the lower end there's just been massive inflation on the wages side so that guy who's cleaning dishes just tripled his monthly cash flow and his basket of goods isn't up as fast and so there has been a little torque there and I think that's one of the reasons why the US economy has stayed so strong”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Throw in one more conspiracy that I keep saying these days all my conspiracy theories keep coming true these days but The real inflation was much, much hotter than the CPI. You had house price inflation of 20% per year. Rentz basically did the same thing. It was never caught in the CPI. And so, yes, I would say real inflation is probably coming down a lot faster than what the CPI is showing now, but they lack them, right? They'll never catch up. And so it's permanent loss of purchasing power. American and Consumers, right”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“If they're so far, the inflation went past them a second time. And I don't think they can catch inflation now. For the life of me, I don't understand that there was a year-long period where my mom was calling me and complaining about the price of vegetables because she actually knows these things. And they were still doing, what was it, $100 billion a month of QE? They could have pulled back long ago. Biden didn't need an extra round of a trillion of stimulus. These guys could have all pulled back. And instead, they just let it rip and now they have no idea how to pull it back. And I mean, they dug this mess.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“I said the Fed is fucked. And I think that's actually like a technical term. I'd even go further than Porter and say that not only are they not going to catch inflation, but if you think of it like a race, inflation's already lapped them one.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Third, tricky spot. I mean, they're an awful spot, actually. Because they They've been so wrong for so long here, and they called the entire cycle incorrectly, and now at risk of blowing up the world. So, you know, I wouldn't want to be JPAL right at this point.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Quite a difference where at the beginning of this year, when we did our interview with Vinny, Vinny said that the vet has to hike rates, they're ridiculously behind the curve. Would you, Porter now say that the Fed is ahead of the curve? In other words, they're too tight. No, that would be a stupid statement, but I also said the Fed's never going to do QT. And while I'm not... Correct. I'm pretty close because they're not selling MBS, right? They were never going to sell MBS because it's extended the duration is probably extended five. To 15 years on this stuff, but they've extended a lot. And I don't think they're going to sell treasuries. They're just letting the notes roll off, the shorter term stuff roll off. No, the feds never stopped hiking rates when Fed funds rate is below inflation”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“I think they're going to have to accept that they'll never catch 2% inflation and the new benchmark might be 8% or might be 10% or it might be 20. They're going to do a white paper about it and say that this is now the new number and all the PhDs there will justify it. And then everyone will shrug their shoulders and life will go on at a different inflation rate. That's the only possible way that you can solve this and you're going to devalue the current debt stack with a lot of inflation. All roads lead to inflation, unfortunately.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“The government spending is up 20% year over year. We're handing out $400 million or billion dollars for student debt relief, $430 billion for climate change, trillion dollars in infrastructure, Ukrainian relief, right? The list goes on that we're digging when the rule number one when you're in crisis, you stop digging, right? We're still digging the hole, making it worse. I just don't know how we get out of this. That's my biggest worry is that, you know, how does the UK get out of what they're in? And sadly, I think the only answer is the US is going to have to reverse course probably fairly soon. I mean, I don't know if that makes me bullish or bearish, but they're going to have to reverse course. They're going to break everything else.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Agree. I mean, you combine the two factors of what drove the world for the past 10, 20 years was cheap energy and cheap rates. And those are gone. And I don't know how you put the genie back in the bottle. And the Japan, Europe, and the US have been running their balance sheet like an emerging market currency or old emerging market currency because the new current emerging markets actually run their balance sheet prudently because they haven't been allowed to run it like a bunch of idiots like we have. The US.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Well, marks and market losses are in the trillions. And so we look at the Federal Reserve. They have like 50 billion of equity. And 8 trillion of assets. I mean, what do you think the mark-to-mark is? They probably have like a trillion of negative equity, which is fine because you don't have to recognize that under banking rules. But you do have to recognize the billion or two a day of carry losses. I mean, they're losing a billion or two billion dollars a day right now. And as that debt rolls, I mean, it's going to get worse. And so that comes again as the balance sheet, which means the treasury has to put more capital in there to buffer it. But if you do QT, then you actually recognizing the losses. And that's where this gets really tricky because it doesn't take a lot of QT at down 20%, down 30% on your MBS portfolio. We're suddenly have no equity left at your bank. And I see the whole central banking system, including the insurance companies and everyone else that has this.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Just knock them off the map. That's what they're basically doing as they raise rates. They're knocking everyone off the map. I mean, look at the UK. I mean, there are best friends, but we already knocked them off the map too. And so that's what we're doing. We're basically trying to reduce demand by 5 million barrels because the Federal Reserve has no capacity to raise the supply side. And I think one, they're basically crushing demand or trying to. But what's odd is that they've not really succeeded at it. The other thing they're going to end up doing is bankrupting all the other central banks. And we see all these central banks now, central banking is like other banking. You're allowed to, you don't have to do mark to market. So, I mean, the central banks, they all did a bunch of QE at the top of the interest rate, the bond cycle. So they bought all these bonds in Europe, they got them all at negative yields. And now, you know, when you think of the duration and a lot of it's long duration because they're doing yield curve control,”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“What Porter's saying is right if globalization was deflationary for 40 years, then putting that all in reverse is inflationary. It's just logical. And the Fed doesn't control trade policy. They don't control energy policy. I mean, they don't control any of these things. What they're going to do and what they've basically said they're going to do. And think of it in terms of energy, okay? So let's say next year we have a $5 million barrel deficit of oil, okay? What they're effectively saying is America, we're rich, we have money, we could afford energy, we're going to go around the world and play whack-a-mole, and we're going to get rid of 5 million barrels of demand. But we don't want to do it to Americans because they vote for us. So we're going to do it. We're going to go to India. We're going to grab a couple hundred thousand barrels there because they're poor and they're having currency crisis. We're going to go to Pakistan. They're almost bankrupt. Let's just take all their energy demand. Let's go to Turkey. They're massive importers.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“So, a lot of those inflationary themes, energy, reshoring, geopolitical issues, that's outside of, largely outside of the remit of the Federal Reserve. The Federal Reserve has some impact on car market or housing because it's very interest rate sensitive and the Fed does control short-term interest rates. But what do we get when the Federal Reserve has hiked interest rates from zero to 3%, soon to be 4%, maybe 4.5%, maybe higher? And the reason that they're doing that is to crush demand, stop demand in order to reduce inflation. But if that's not the true cause of the inflation, what ends up happening?”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“You know, you get to a point where you stop being able to pull stuff out of the ground. And then the people who are around and can survive, returns go up a lot. And conversely, my short book, I'm short, a lot of the things where all this capital plowed into tech. And it's shockingly still plowing into tech if you look at the flows year to day. It's almost entirely large cap tech. And we didn't need the 45th food delivery service, the 45th payments online payment system, right? It went too far. And, you know, a lot of these things are still just really stupid, silly valuations. EV car companies, you know, like Lucid and whatever, they just $25 billion, they don't make cars. It's ridiculous.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Have all these unions. I think it's at Amazon and Starbucks and then the railways. You know, they're all pushing for higher wages. And if you look at wages as a percentage of corporate profits of 70 or low. And I think finally you've hit the bottom of that and starting to head back up, right? And then just the politics of war is inflationary, right? And you can't move stuff the way you did before. And then you just have the call the ESG idiots who've killed everything. And they are the reason that energy is where it is. And I'm a big believer in this book called Capital Returns, right? And it's the capital cycle. And if you don't invest for a long time.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Agree with a lot of those thoughts. I mean, I think I would add a couple more on top of that in terms of I think the last time I was on this podcast, I was talking about how the inflation was going to go a lot hotter and a lot higher than people thought and the market was going to go a lot lower. And lucky or good, that's happened. And I think a lot of other structural things in there that just won't, I don't think will bring inflation down to where they want, right? First of all, we've had physically over, right? So not over, but 90% of everything we have in this country is made from China. And that's going one way, right? And so when you repatriate a lot of these manufacturing processes, it's a lot more expensive. And you need more labor, right? So then labor is stickier for longer, right? And you have... Uh...”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“And I don't think they're going to catch it. In the end, I think energy is going much higher and they're not going to ever, ever catch it. And it's kind of like the Fed, they like to pretend that, you know, oh, we're targeting the CPI and we turn the knob a little here on QEQT or a little here on interest rates. And they forget that when you have a multi-million barrel deficit each day, they don't control that. They like to pretend they do and maybe they'll crash the global economy and destroy enough demand that eventually the price of energy comes down. But outside of that, I mean, energy is the captain now, I like to say. Porter, what do you think?”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Well, I mean, the Federal Reserve has been chasing inflation basically since they realized there was inflation. And it's kind of funny, really, because in Q1 they were still printing money with QE. And I had my mom calling me up and crying about the price of broccoli and zucchini and stuff. And I've never bought broccoli in my life. I couldn't care less. But even she knew there was inflation. She was telling me, oh, it's 19 cents more this week. And then it's 20 cents more the next week. But no one at the Fed ever goes shopping or uses money. So they just had no idea the less people know everything. But then effectively a lot of the inflation we're seeing is being caused by energy. Owner's equivalent rent obviously is a big piece of the puzzle, as is wages. But those are kind of like the good inflation, you know, wages going up helps the middle class. Everyone likes that. Owner's equivalent rent going up means that the middle class makes them some money. That's kind of the give and take. But they hate food and energy. And so effectively, the Federal Reserve has been chasing energy around on the screen.”
2022-10-18 · Forward Guidance · Oil Will Dethrone The Fed (Here’s Why) | Harris Kupperman & Porter Collins · IDENTIFIED FROM THE TRANSCRIPT