***Official*** 2016 Stock Market Thread

[theeedude]

The oil produces keep starting rumors to bump up oil prices. I don't think they'll agree on anything though. I mean Russia, Iran, Sunni states are fighting a proxy war with each other in Syria. But they are going to agree on oil cuts? Anyways, I think market bounces 5% higher from here. That will be the last exit this cycle. After that, hold on to your asses.

 

[Balt]

The oil produces keep starting rumors to bump up oil prices. I don't think they'll agree on anything though. I mean Russia, Iran, Sunni states are fighting a proxy war with each other in Syria. But they are going to agree on oil cuts? Anyways, I think market bounces 5% higher from here. That will be the last exit this cycle. After that, hold on to your asses.

Yeah, I'm not buying any rumors of production cuts until companies start going out of business. If you are a day trader you can probably make profit selling after every rumor that pushes oil above 30, and short-selling when the rumor turns out the be bullshit (and oil returns to less than 30). Unfortunately I don't have the capital or expertise to make those kinds of trades.

 

[Imp]

The oil produces keep starting rumors to bump up oil prices. I don't think they'll agree on anything though. I mean Russia, Iran, Sunni states are fighting a proxy war with each other in Syria. But they are going to agree on oil cuts? Anyways, I think market bounces 5% higher from here. That will be the last exit this cycle. After that, hold on to your asses.

I'm leaning more towards speculators and pump'n'dumpers leaking rumors. Producers know that fake rumors don't produce large enough price jumps or even ones that actually hold. A pump'n'dumper just needs it to jump for those 10 seconds so he can sell at a profit.

Seriously, Russia, Iran, Saudi Arabia, U.S. of A., Iraq, Venezuela, etc. sitting down and agreeing to cut back... The Saudis, in part, decided to give the finger to the world and fellow OPEC members because they wouldn't follow their quotas in the first place.

 

[Charmonium]

The US produces about 10M barrels per day and a huge chunk of that simply isn't economical at the current price level. It hasn't been economical since probably $60/barrel.

And despite the fact that rigs have been shutting down for months now, total production has barely changed. Eventually it will have to though. So if the US ends up producing just 10-15% less than they currently do, global supply will match global demand and you'll start to see an increase in price.

That will probably be muted by all of the oil currently in storage, but if we haven't seen the bottom yet, we should very shortly.

The thing I don't understand is how the high cost producers are still producing. I understand that they hedge a certain amount of their production so they're still selling some of their oil at inflated prices. But that eventually has to end. I just don't know enough about the actual mechanics to make a judgment.

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus2&f=m

 

[jpiniero]

The thing I don't understand is how the high cost producers are still producing. I understand that they hedge a certain amount of their production so they're still selling some of their oil at inflated prices. But that eventually has to end. I just don't know enough about the actual mechanics to make a judgment.

Mostly the hedges but part of it is I think that the existing wells are still OK to drill; it's just new wells that wouldn't make sense. Once the current wells dry up, it's default time.

 

[Imp]

The US produces about 10M barrels per day and a huge chunk of that simply isn't economical at the current price level. It hasn't been economical since probably $60/barrel.

The thing I don't understand is how the high cost producers are still producing. I understand that they hedge a certain amount of their production so they're still selling some of their oil at inflated prices. But that eventually has to end. I just don't know enough about the actual mechanics to make a judgment.

I think the equilibrium will eventually involve major producers (i.e. Exxon, BP, Chevron) subsidizing their own shale production with their own cheaper, conventional oil. Kind of like accessories at Best Buy or popcorn at movie theaters?

From what I've read, high cost producers are producing because the high breakeven costs may account for the entire cost of the well from prospecting to drilling to pumping. However, most of the money was spent before pumping. Once it's pumping, the costs are supposedly very low. And they supposedly have to do it just to have some cash flow to avoid bankruptcy.

 

[Charmonium]

Thanks guys. So the rigs that have been shutting down are ones that are basically tapped out?

 

[Imp]

On a related note, oil sands in Canada are supposedly in a similar situation: high start-up costs, relatively low production costs. There's one additional problem I've heard frequently and it's that restarting production costs a lot more than continuing production in general.

Kind of makes sense since it's "tar sands" oil and there's a big network of facilities needed to recover and upgrade that crap.

 

[JEDI]

Definitely nice to have lower gas prices again. Now WTF are food prices still high? Restaurants & supermarkets use the excuse of higher transportation cost during the $4/gal era. FYI I rarely ever eat out or buy organic. Paying $1/$2 per bell pepper is ridiculous. Sorry for the OT rant.

wha?!

time to grow bell peppers in my back yard.
$0.10 for a packet of seeds at walmart

 

[Charmonium]

On a related note, oil sands in Canada are supposedly in a similar situation: high start-up costs, relatively low production costs. There's one additional problem I've heard frequently and it's that restarting production costs a lot more than continuing production in general.

Kind of makes sense since it's "tar sands" oil and there's a big network of facilities needed to recover and upgrade that crap.

That's something I've been curious about too - the quality of shale oil. Apparently it needs to be processed before it can be refined so I assume that it's not going to get light sweet crude prices.

https://en.wikipedia.org/wiki/Shale_oil#Upgrading

 

[Imp]

[/B]
wha?!

time to grow bell peppers in my back yard.
$0.10 for a packet of seeds at walmart

No no no... You want to get into saffron farming.

http://www.express.co.uk/news/uk/531867/essex-farmer-growing-saffron-uk-for-first-time-200-years

It's toxic or something so I'm skipping.

 

[KB]

I'm leaning more towards speculators and pump'n'dumpers leaking rumors. Producers know that fake rumors don't produce large enough price jumps or even ones that actually hold. A pump'n'dumper just needs it to jump for those 10 seconds so he can sell at a profit.

Seriously, Russia, Iran, Saudi Arabia, U.S. of A., Iraq, Venezuela, etc. sitting down and agreeing to cut back... The Saudis, in part, decided to give the finger to the world and fellow OPEC members because they wouldn't follow their quotas in the first place.

Yeah i think cuts are a long way off. I own one oil company, Total, because they are a full process oil company and losses from pumping can be offset with their refining.
This may be tin foil hat territory but i think saudi arabia has many reasons to keep oil low. They want to reduce the money raised by ISIS, they want to reduce the influence of Iran and perhaps from direction of the US, they want to hurt the Russian economy. They also want to kill alternative energy and keep us addicted to oil. The Saudis are digging in for the long term, having already reduced subsidies for gas and electricity and added taxes to its people.
I wouldnt believe any of the cutting nonsense until the saudis come out and say it themselves.

 

[theeedude]

Looks like a bounce is coming this week. I think it will be the last exit. Once gas runs out on that one, it's going to go downhill fast. Especially if China devalues. That is going to be a bloodbath.

 

[JEDI]

You got the first part right (getting out of stocks), but will you get back into the stocks at the right time?

I moved 5% of my portfolio from Healthcare to TIPs.
10% swing to safety.
(other 10% was 5% from Total market to Total bond fund.)

healthcare funds are -17% year to date.
when it reaches -20%, I'm moving 5% from TIPs back to Healthcare in my 401k.

 

[JEDI]

Looks like a bounce is coming this week. I think it will be the last exit. Once gas runs out on that one, it's going to go downhill fast. Especially if China devalues. That is going to be a bloodbath.

so wait till Healthcare funds are -30% instead of -20% to buy back in?

 

[Imp]

Looks like a bounce is coming this week. I think it will be the last exit. Once gas runs out on that one, it's going to go downhill fast. Especially if China devalues. That is going to be a bloodbath.

Maybe. There's maybe one or two bounces left before some massive drop.

Not sure what the catalyst will be because I don't know of anything big coming... unless Fed hikes rates in March, which they probably won't.

 

[brianmanahan]

i'm kind of relieved things are a little lower now than they were a month ago, because i had TLH'd some VTSAX/VTIAX lots into VLACX/VFWAX. now i TLH back into the original funds and not give up any capital losses.

 

[holden j caufield]

I don't follow the asian markets but what is going on with the Nikkei. It's up 1000+ today.

 

[FelixDeCat]

I don't follow the asian markets but what is going on with the Nikkei. It's up 1000+ today.

Nasdaq also up 1%+

 

[Imp]

I don't follow the asian markets but what is going on with the Nikkei. It's up 1000+ today.

GDP data came out today in Japan... -0.4% in Q4.

Must be time to celebrate.

Edit: Also, Iran is apparently sending 4 million barrels of oil in the next few days to Europe. Time for oil to rally 20%.

 

[brianmanahan]

I don't follow the asian markets but what is going on with the Nikkei. It's up 1000+ today.

yeah, up %7, i haven't seen swings that big since 2008/2009

 

[Kwatt]

Will this cause the oil price to fall,stabilize, or rise.
http://scroll.in/latest/803361/uae-to-store-crude-oil-in-india-and-offer-two-thirds-of-it-for-free


If the price keeps dropping for gas at Kroger with the points they will have to pay me to haul it off soon....


.

 

[Udgnim]

GDP data came out today in Japan... -0.4% in Q4.

Must be time to celebrate.

Edit: Also, Iran is apparently sending 4 million barrels of oil in the next few days to Europe. Time for oil to rally 20%.

oil rally could be due to SA / Turkey getting louder about Syria

who knows what the market saw in Japan

 

[Charmonium]

Will this cause the oil price to fall,stabilize, or rise.
http://scroll.in/latest/803361/uae-to-store-crude-oil-in-india-and-offer-two-thirds-of-it-for-free

6M barrels is a lot of oil but it's less than one day of production in the US so I can't see it having much of an effect.

 

[Kwatt]

6M barrels is a lot of oil but it's less than one day of production in the US so I can't see it having much of an effect.

I was thinking more about them having to give the oil away just to have a place to store some.

I suppose it may be cheaper to pay in oil though. Paying 2 barrels to store 1 sounds kind of high. When did oil become more expensive to store than pump and ship?

.