YouSaid · the spoken record

Tracy Shuchart

lines on the record: 66
first: 2022-07-21
most recent: 2022-07-21
sittings or episodes: 1
sources: podcast

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“So it's intelligence quarterly.com. We have reporting from institutional investors to retail investors. There's also a lot of free information on that site, a lot of free write-ups on that site. So I urge you to go check it out. There's a good information there. And of course, that's where you can find my reports where you can subscribe monthly or yearly.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“I love solar panels. But I mean, rare earths are still used in a lot of other things other than most people just talk about renewables. So I definitely like that what I would like to see really is I would like to see a shift to out of China and not have to rely so much on China, even though they have the largest reserves. We still have, there's still a lot of reserves, untapped reserves elsewhere, you know, in the United States and Australia. And so I would like to see kind of, I would like it better if we could start seeing those reserves tapped. And then I would be really bullish on those particular companies.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“I obviously like rare earths if we're, you know, still, I mean, they have a lot of uses aside from just solar panels. I know you love solar panels.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“I love, well, I love lithium. I mean, I think we're going to need so much more lithium. I do have a report available on our website on lithium, actually. I mean, one of the largest lithium mines is in Australia called Greensfield. We're going to need 20 size, 20 of those if we really want to reach our 2035 and 2050 Paris Accord goals. So we need a lot more lithium too. And we need, because we need batteries. If you want to store intermittent power, if you want to store solar and wind energy, we need to build out battery technology. And so we need better batteries and we need more lithium. And for EVs and whatnot as well, obviously.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“But still, that market is hard to get off the floor. Markets just been that way, unfortunately. I do like uranium. I'm just saying it's a very difficult market to trade.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Uranium, everybody asks throughout uranium. I like uranium. The problem with uranium is it's such a difficult trade if you traded it. I mean, I've, you know, been in and out of that market for 20 years. It's such a difficult market. And most of the time it's not has not been really a money maker. The market's like quick. Like you make your money get out fast. But holding it is, I mean, it's just such a fickle market. And it's really hard, even though it looks like it should be bullish, you know, you just had Japan say they're going to restart nine new nuclear reactors. We had Germany say, okay, we'll consider nuclear green. So we are seeing a little bit turnaround. We're seeing a lot of building in Africa and in Pack Asia.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“So, well, yeah, exactly. And, you know, that's why I say kind of, you know, I don't know if this pullback's entirely done yet. I don't know where we're at kind of need, you know, want to look to the Fed and we need to have some more data come in because we're really just starting to get end of Q2 was really we were starting to see some weakness in Q2. So that's not really a long enough time horizon at this point to really say whether we are or not or the exact direction that we're headed in my opinion. So that's why I urge caution in the commodities markets. Right now”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Right. And I don't have a back test ready. But if I had a choice about whether to invest in commodities during a recession or not during a recession, I'd imagine that you want to invest in them not during a recession. So does the fact that you think we might already be in a recession, is that what's sort of giving your bullishness some caution?”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Well, I mean, I think we're probably, I think Europe's already in a technical recession, for sure. I think we probably already are either. I mean, you never know you're really in a recession until, you know, till you're almost out of a recession. Do you know what I'm saying? So I think we're probably in somewhat of a technical recession or at least headed there. And I think Europe is probably already there.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“That's huge. And we're seeing that in Germany too. And those are, and that's why they're talking about, we may have energy rationing this winter, right? France is talking about Germany's talking about it because those prices are so high and demand is somewhat inelastic, right? Businesses have to run. Because prices have expressed, they know that market's telling us that that market's very tight and we may have a huge problem somewhere. Now it could this winter, but that those prices obviously could come down if we flows remain the same or even more and they're able to fill those gaps in electricity market, we could see that those prices come down a little bit, but the forward market is telling you that this market is very tight. We don't have enough electricity. We've got a problem.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Again, in the short term, I urge caution in these markets, especially if you're a trader, if you're not a long-term investor, because this pullback probably is not done yet. That said, if you're a longer-term investor using these pullbacks to initiate some positions in the market, I think is a good opportunity.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. Well, not over long term. Well, again, it's cycle. First of all, energy is everything, right? Energy is your major input cost for all of these commodities. You need energy to mine. You need energy to grow food. You need energy to grow livestock. You need, that's your major input cost if you're a producer of any of these commodities. And so what will help you aside what we have to watch what the Fed's going to do? How recessionary? What demand's coming off? But the thing is, is that. These pullback in prices are going to jumpstart in commodities because if you start seeing a pullback in energy prices, you're able to produce a little more or whatever which makes those companies look more attractive again.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, I think that I'm still not a huge fan of those stocks as far as the equities are concerned because we are seeing an uptick in prices for those just because we still have supply chain issues, right? We still have problems in China with shipping. We still have tariffs. Some of those tariffs could be, but we're still seeing costs of those particular renewables still etch higher, which means that companies are not making as much money on them. So still not a huge fan, still not a huge fan yet. I'll let you know though. Please do, Tracy.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“In line with the 70s, where you know he hiked us into a recession, we're in a recession, they had to stop hiking. We had fundamentals in the oil markets in particular take a hold and we saw inflation shoot much higher than before. I think we're on track to sort of have that same scenario, even though the circumstances are slightly different. You know, we have to see how these recessionary fears play out. We have to see kind of what central banks continue to do over the next six months in particular. And then I definitely can see prices going much higher than the current recent highs.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Think eventually, I think we're seeing a pullback and we'll see a pullback now, right? And I think we probably haven't seen the end of this pullback at this particular time. But overall, the Fed's going to have to ease up at some point, right? And they're not going to just hike forever. And again, it's kind of...”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“You know, I think again with the housing market, it's very. Geographic centric, do you know what I mean? Like, you know, I'm sure you'll see problems with home builders and you'll see problems with, you know, in the lumber market, which we're already seeing. But, you know, so I think it'll be depend on that particular area. But I don't think it's like it's a global phenomena, right? So I wouldn't say, yeah, you know, we may have lumber, copper, builders problems in, say, Australia, Canada, some in the United States. That's not really enough to move the entire global market as far as these particular commodities are. So I think it's a more local centric and obviously will depend on how big of a blow up it is.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“So, I mean, the lumber market, I would say, you know, that's really indicative of the lumber market. Prices are going higher, then you have more. Then people want to produce more. We've been watching the lumber market in particular for the last Six months because we've been anticipating a problem in the housing market. And that's coming to fruition, particularly in Canada right now, whereas they just had 100 base point hikes. And so I think I tweeted something out. You better be washing the housing market right now because you're going to have a lot of problems in the mortgage industry”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“I know you're a commodity bull. Yeah. But I want to give names, but I think you have to be, I think with mining stocks, you have to be very careful, right? So I would look at. Particularly at my new text, I actually like minors over front month futures prices. That said, you have to do a lot of research in those because there's a lot of minds that are Not really producing anything, you know, you kind of have to really look through, you have to really do your research and kind of hone through those minors to see really what are they producing, what, you know, what new finds do they have? Are they viable? Can they get to them? And the same thing for the energy sector as well.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“So, I like to look at companies that are hedged, but within reason, right? Because you never know how these markets can get very volatile. But definitely, I agree with you. Definitely look at kind of what kind of derivatives are they holding, what kind of hedges are they holding, particularly in the commodities markets, because you kind of want to know, do we have, you know, if we have an adverse move in this their entire supply is hedged? And it goes against them. That's bad news, right? They'll be sitting on a bunch of losses again. I do think you should pay particular close attention to that. I personally like. That are hedged, but again, not Not 100% 200%.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Think you have to have some kind of hedges on it, particularly because we are seeing a pullback, and so that's great. But you kind of want to look, yeah, a lot of companies that were that had like 100% of their product hedged when markets shut up, obviously they're sending on a bunch of losses, right?”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“And then, so we talk about coal, I think of Peabody Energy's hedging problems. And a lot of these, it's not just they're natural gas companies as well, where people tell me, oh my God, Jack, you got to look at this stock. They're just so much free cash flow. They're trading at two times free cash flow. And then I look at their net income statement and they've got $3 billion in mark-to-market derivative losses because they've hadged it out. Now, obviously, they produce more than that, so they should be good. But how do you think about hedging at this stage? Obviously, if you could go back in time, we would buy stock, you'd buy stocks that didn't hedge because of the explosive upside. But yeah, so right now, how do you think about hedging? And do you like companies that do hedge, hedge a lot, or don't hedge at all?”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. It's like a walking contradiction Germany is. But yeah, I mean, I like, I actually like coal in the near term. With coal, you have to be careful because there's a lot of disconnects in the market depending on kind of the grade of coal that it is. And so when you're looking at coal as an investment or looking at a particular company, you kind of want to know which kind of pole are they producing? Is it the kind of stuff that doesn't burn so well and heavier and kind of or is it very the cleaner coal? So definitely I'm actually bullish coal in the short term. I mean, over the long term, I think that it'll obviously be phased out a lot more. But I would urge caution in if you're looking at particular companies, look at exactly what kind of coal they are producing.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Everybody's using coal now. We should, I mean, again, goes back to the ridiculous energy policy that we have right now. I mean, Germany's shutting down their last three nuclear plants right at the end of the year and buying coal instead. And importing electricity.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Or something. I really do. I really like U.S. knack ass right now. Not actually U.S. nat gas as in the price-wise, but as far as the equities are concerned, because U.S. out of, after we finish building out our infrastructure this year will be the number one exporter in the world. And so I really like if you're looking at... Japan, for instance. And so I think if you're looking at equities in particular, I like producers that also have distribution capabilities. So for a longer term investment, you know, in natural gas realm, I really like that because right now, even though oil is very demonized, you know, there's kind of been a little bit of a switch on natural gas, right? We just saw in Europe they just decided to call nuclear and natural gas green. And so we're kind of seeing a little bit more of a shift towards”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“It's not really a one on one, but right, because we saw the dollar rise and oil rise all year. I mean, dollars at 110 and oil still at 96 today. So that's not like, even though we've had a huge pullback, I mean, still $96 oil, which is huge with a dollar at 110. So it's not necessarily a one-to-one correlation, particularly in the energy markets. We've kind of seen that correlation go in and out, but really it has to do with emerging markets and commodities producers, right? If we're looking at commodity, especially the major commodity producing companies, that's really where the dollar really starts to hurt, say things like production and whatnot.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“They are. In particular, I'm looking at if I'm looking at Africa because really there's a lot of commodities based continents. And so, you know, if we look at like Kenya, Ghana, Nigeria, those currencies are literally crashing right now. And that makes it all the more difficult to pay their USD denominated debts.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“It's definitely something that you should watch right now, because particularly the dollar, because the dollar is literally destroying emerging markets right now. If you look at emerging market bonds, emerging market stocks, ETFs, I mean, they look bad, really bad.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Well, obviously, and that's why I'm saying in the shorter term, I would be very careful in these markets. Over the longer term, it's very bullish and everything's cyclical. I think there's a lot of recession fears going on right now. Everybody's scared of the energy crisis. Is Europe going to completely shut down, right? Manufacturing-wise or, you know, and mining and smelting-wise when comes this winter. And so I think there's a lot of fears going around now. You know, everybody, you know, got a lot of rate hikes, priced in the market right now. People are kind of scared. We've got the dollar at, you know, we just hit 110 today, which is huge pressure on emerging markets right now. So a lot of that is putting on the commodities markets, at least in this near-time.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Is the commodity I'm least bullish on? That's a hard one. I mean, I think it would depend on, well, I think precious metals don't look so great here, don't kill me. Everybody, I think everybody should have some gold and silver and platinum. But, you know, right now, precious metals would just not see that much demand right now. And so it's not that I'm not bullish longer, longer term. It's just probably kind of in my side basket over there. Makes kind of sense.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“And so, you know, I think in the fall, we may see this pickup, and we're already seeing a lot of stimulus plans that have been recently announced. We're seeing a tiny bit of China credit impulse take up a little bit if you squint. So I would be watching that those markets probably closer to the fall.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“I mean, the supplies we're still seeing lower supplies in these markets. That said, really, again, I think that China is a main driver here because they've had all these lockdowns and because there's such a massive buyer of commodities because they produce more solar panels in the world than anybody else. They produce more wind turbines in the world than anybody else. And so there's such a massive consumer of this because we've seen their demand slack, you know, that's kind of got those market spooked. But in the long term, they're still, very bullish. We'll have to kind of see what happens in China as far as is demanding is concerned. We've got the People's Party Congress in October. I personally don't think it looks good for Ji to have his country on lockdown going into quote unquote elections for his third term.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Copper production by 50 million tons, I think, which is more than we've produced from 1900 to 2021. So, you know, aside from the housing markets and things like that, which I definitely think you should be cognizant of and I definitely think that and China is the reason why these markets are very soft right now. But looking forward, if we want to reach these green goals, we need a lot more of all of these metals. So again, if you're a long-term investor, we're looking at supply deficits across nickel, lithium, copper. I mean, you name it as far as any of these basic industrial metals that are even steel.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Well, yeah, I mean, the housing market is definitely something to watch right now, but particularly in the United States and Canada and Australia right now, because they have particularly Canada and Australia have huge housing bubbles. And so as we hike, that's going to make things more and more difficult. But, you know, that's only a certain part of demand if we are going to see these green energy goals. Come to fruition like the West wants the EU and the United States and Canada have said that they wanted to do, we're gonna need 10 times the amount of basin industrial metals right now to get there. In fact, global S&P just had a report out today actually.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Be honest, like I said, I want to caveat that because anything can happen in this world, right? I mean, you know, we could have CBs hike us into a depression. Obviously, that would change the demand situation. So outside of, you know. Huge black swan events or global depression. I would be surprised to see below 80 or any, you know, maybe a spike below, but I mean, I would be surprised to see it hold there.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“I know they are. I would say at this point, I know they are. Everybody is, unless we saw we hiked us into a global recession or something catastrophic like COVID comes around again that just kills demand right off. I mean, I would be shocked if we see oil below 80 right now.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely, yeah. I mean, I think so. I mean, I think that, you know, I think if you're a longer term investor, some of these big pullbacks are very interesting because I think they're still going to do extremely well. If you're a shorter term trader, I would urge caution in the market because it's so volatile right now.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“So, this is humanities, and this is kind of exactly what the 1970s did. You see, commodity price is high, we have a recession, sell off, and then they rally again, right? And in particular during these times, oil has oil equities have performed very well, at least in the past. But this is exactly what if you took a chart from the 1970s, which I think I have somewhere in there. Kind of shows this exact pattern.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“I think that I have a chart up, but it's still, it depends on what the margins are at that particular day, how much that they make on that particular thing. But they're not out there trying to price goug you. And I did want to say one thing because I saw a lot of people on this on Twitter saying, what do you mean big oil owns all the gas stations, Exxon, there's so many ExxonMobil stations? Most of these are still franchised and owned by individuals. They're not actually owned by big oil as far as these gas stations are concerned.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“You know, that's kind of my feeling, and yes, they're making a lot of money now, but they've been through, they haven't made a lot of money in a long, in a very long time. So kind of demonizing these industries, particularly when you're begging for more oil, is kind of counterproductive at this point. Nobody's price gouging. The market decides how much a barrel of oil is. Oil companies don't decide. They don't just wake up one morning and say, we're going to charge this amount. The market decides, right? And this is what it's what the market is capitalism. It's what the market is willing to pay for a barrel of oil. And, you know, if we look at gas stations, which is the worst, gas stations literally make two to five cents per gallon on gasoline. They make all of their money on the...”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“They were in debt up to their eyeballs. Nobody seemed to care then that they were completely flailing. Yeah, a lot of bankruptcies in...”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“You know, for one thing, where were they in 2020 bailing out the oil industry when we had negative oil prices? I mean, we bailed out the airlines, right? Why not? And the cruise lines.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“So 321 crack spread means what you can get out of a barrel of gasoline, what you can crack a barrel of gasoline, right, a barrel of oil, pardon me, into heating oil. I mean, there's several crack spreads, but the most common one that people trade is heating oil, gasoline, what you can crack out of a barrel to make heating oil or gasoline, like a distillate. It's like a distillate gasoline. Kind of trade. And so when those spreads are very high, that means that refiners are making a lot of money because those margins are very high. So, you know, the higher they go, the more money they're making, that's great news for refiners.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“This past year or the past seven months, six months, seven months or so, and I think, you know, people are kind of realizing that, you know, ESG is just not there yet, right? We still need fossil fuels. We still need fossil fuels to, you know, if you want to make solar panels or wind turbines, that requires a lot of fossil fuels, a lot of metals, a lot of mining, which requires another, a lot of fossil fuels, a lot of plastics, which require a lot of petrochemicals. And so there's really no way to get around fossil fuels at this juncture.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Of people involved in these markets. Not overly bearish, it's not overly bullish. It hasn't been at all. We do see some buying on the back end, but still there's just not a lot of interest there, regardless of the tightness of the physical markets. And that probably could be because in the United States and Canada and EU, we see governments continuously bashing on fossil fuels, right? And so that kind of makes it difficult. You know, the green energy transition, whatever. So they kind of dissuades people from wanting to invest, as well as, you know, we haven't seen a lot of banks over the last couple years decide not to invest in oil and gas because ESG is the thing. We are seeing that change a little bit where we're seeing interest in ESG go down over”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, no, that's exactly it. All I was going to add is, see, if you're an investor, right, you're a fund manager or something like that, you're looking at the oil market, if you want to look to invest, you know, you like backwardated markets because you will buy in the back end in hopes that you're that oil moves up in the future and thus your investment gains value. Obviously in Kantango, nobody wants to be in that market because that means if you buy on the back end, your investment is going to lose value over time. So that's why backward date and markets tend to be very bullish also for an investor fund standpoint. Again, the thing is that we're seeing this front month, these front months are just there's no OI, which is open interest, meaning there's not a lot of...”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Yes, so the physical barrel of oil, that's right now. And then there's oil in a month, there's oil in two months, oil in three months. That's all a financial contract. And when oil that's closer to the present is more expensive than oil in the future, that's called backwardation and it's seen as a bullish sign because everyone wants the oil right now. Whereas when future oil is more expensive than current oil, that's Kantango. And that is seen as a bearish sign or just definitely not bullish. It's a sign of not a tight market. Most corrections see a market go from backwardation to contango or from contango to bigger contango. But this time the spreads have remained tight, which is quite interesting. Sorry, go ahead.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“Well, again, Russian risk premium taken out of the market, which is totally understandable. But also we have to look at open interest. Open interest is on a huge decline right now. Liquidity is very low. It's very easily pushed around. There aren't, you know, there's just not a lot of interest in the market. That said, and that's why I always stress, go look at the spreads, right? Go look at the calendar spreads. And then if you're looking at, you know, refiners, then you want to look at the 321 crack spreads. So what we've seen is even though we've seen this huge pullback in the price of oil in that front month price, the spreads have barely moved. So that tells us that the market is still extremely tight. The physical market.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“So, I mean, as far as the SPR, I think we've jarred down to like 400 million. But by the time this whole ever, you know, there were three SPR dura releases, right? And so by the time these are all finished, and a lot of them don't need to be repaid. Some of them need to be repaid, but not until later. And some of them, the last 45 million doesn't even need to be repaid. So by the time from the height of the SPR to the end of, you know, as soon as we draw all of this, we will be at 25% of what we were at the height.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“So we're at the lower edge of the five year range, and crude oil stocks, but we have to think that this particular chart does not include the SPR, which we are draining quickly. So we also have an SPR draw problem. And, you know, the thing is that I think that's, you know, the SPR draw is helping kind of keep things steady right now, but that's set to run out. I mean, and there's only so much in it. I mean, by the time that we're finished with this allocated SBR draw, we're only going to have 25% left in the SPR, which is very frightening because if we ever have an actual emergency, we don't have a buffer now.”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT
“You're talking about a structural supply deficit, that just means that demand is set to outstrip supply, which is already happening right now, right? We're seeing, well, there you go. You can see global inventories are drawing much faster than we thought. That means demand came back much faster than we thought. And that what we're not seeing is that it's CapEx to rebuild those across any of these. I mean, everybody hates metals. Everybody hates mining. Everybody hates, you know, nobody wants to invest in this. We have a $750 billion CapEx problem deficit in the oil industry just to keep things level right now. So when I say structural supply deficit, I mean, this is going to, supply is going to continue to decline as demand is going to increase. And even if demand just...”
2022-07-21 · Forward Guidance · Why Are Commodities Crashing? | Tracy Shuchart · IDENTIFIED FROM THE TRANSCRIPT