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QuickHit: $70 Crude & $5 Copper are coming

Returning guest Tracy Shuchart graced our QuickHit this week with interesting and fresh insights about oil and gas. What is she seeing on the industry — is it coming back to the normal levels, or better? Why she thinks oil will reach 70+ USD per barel? What’s happening on copper and why does its price going up? And is she seeing any surprises under the Biden administration?

 

Tracy Shuchart is the energy and material strategist for Hedge Fund Telemetry and she is a portfolio manager for a family office. She’s pretty active on Twitter with a large following. Check out her on Twitter: https://twitter.com/chigrl

 

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This QuickHit episode was recorded on November 24, 2020.

 

The views and opinions expressed in this QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

 

Show Notes

 

TN: We’re seeing a lot happening in markets on the energy side and in things like industrial metals. We’re starting to see some life back into energy not just food but even in energy companies who come a fair bit off of their loads that we saw in Q2 and Q3. Can you help us understand what’s happening there? Why are we seeing, if we see people walking down again in the US and locking down in Europe, why are we starting to see life in energy?

 

TS: Part of that reason is we are seeing a little bit of that rotation into value from growth and the energy sector has been really beat up. It’s finding a little bit of love just from that kind of rotation. But also, we’re seeing these lockdowns and things like that, but what people aren’t really realizing, because of all these lockdowns and things of that nature, we’re actually seeing demand up in other areas where there really was not so much demand before.

 

So everyone’s talking about nobody’s driving anymore. Nobody’s flying anymore. When you know in fact, everybody’s online, e-commerce, we’ve got cargo ships full in the port of Los Angeles. They’re lined up there. That’s shipping fuel. And it’s not just in Los Angeles. Asia’s seeing the exact same thing. Singapore. Trucking has become huge if you you know look at the truck index. It’s basically exploding from 2019-2018 levels because you you have trucks that have to go from the port of LA to all the way to Atlanta. You have everybody ordering on Amazon so you have all sorts of trucking going on. And even down to the little things like propane. They’re actually seeing double propane demand right now merely because everybody’s dining outside and it’s getting cold.

 

So demand showing up in these little places that typically didn’t have as much demand before. Recently, they were talking about the airlines this holiday season. That air travel is picking up in the United States. Domestic travel is almost completely back to normal in Asia and in China, particularly. So things aren’t as bad as it seems.

 

TN: So when we talk about oil and gas companies, we’re really starting to see some of those oil and gas companies to come back as well. We’ve spoken over the past six or nine months a couple times and it seemed like there were fundamental operating issues with those companies. Are you seeing those oil and gas companies cycle through their issues?

 

TS: A lot of the Q3 calls that I was on, a lot of these companies are changing their tune a little bit. We’ve also had a lot of of mergers and acquisitions in this space. We’ve had a lot of bankruptcies in the space. That pile, it’s gotten smaller. Only stronger surviving and not that I don’t think that they’re 100 in the clear, but the bigger names and the bigger companies are finding a little bit of love right now especially you see that in refining right now, because heating oil is actually pulling up that whole sector right now. The whole energy sector. Refiners were the first ones to really take off because refining margins are getting better as oil prices get higher and things of that nature. So that kind of started leading and then of course, they’re the safe havens likePBX, XOM, BP, Equinor…

 

Once people see oil getting some sort of footing, they’re more likely to move into those stocks. They’re beaten up. If you’re looking for value stocks, you want to look for something that’s 80 percent off the ties. It’s a bargain.

 

TN: We had also talked about crude prices would stay depressed into Q2 or something of next year of 21. Does that seem about right, still? Do we still expect things to stay in the low to mid 40s until Q2? Obviously, we’ll see bouncing around. I’m not saying I’ll never go above that. But do you expect people will think to stay in that range for the next two quarters or has that moved forward a little bit?

 

TS: That’s moved forward a little bit. I remember when we spoke last, we were talking it to the end of this year and I saw the upper 38s. Obviously that averaged this quarter so far. We’ll be a little bit higher. So I think that we’re still in that range. We’re not going to see a huge bounce in oil. Not yet, but it’s coming.

 

TN: You say it’s coming. What brings that about? Is it demand? Is it supply? Is it a massive shortfall? Where’s the pressure that would bring about that 70 plus?

 

TS: We’re going to have a supply shock just like we had a demand shock this time. We’ll have a supply shock just because of the sheer lack of Capex in the market and the sheer amount of companies that have gone under. I don’t think that you’re going to see shale back at 13.5 million barrels per day anytime in the near future ever again. A lot of those wells are closed. They’re gonna open them up again. It’s just not cost effective. So we lost a lot of producing capacity just because that. So as we move on and we move forward in time and flights come back and we start having more and more demand, I think we’re gonna find a shortfall so I wouldn’t be surprised if we see 60, 70 dollars a barrel in 2022.

 

TN: We’ve seen copper have just a stellar few months and given the demand issues that we’ve seen in the markets probably a little bit surprising. So can you talk us through some of those dynamics and help us understand is this here to stay? Are these elevated prices here to stay? Or is this something that we’ll see for a relatively quick cycle then it will turn back?

 

TS: With copper, we really had a supply issue because a lot of the mines were closed during the summer. China by that time had already been pretty much back up and running and ordering what they normally order. That’s kind of lifted prices off of that like two dollar level initially because we had a supply problem and then I think the expectation is, there’s a lot riding on electric vehicles, which require a lot of copper.

 

Manufacturing is rebounding in a lot of places. Maybe not Germany. But it is rebounding here. It is rebounding in Asia, not just China. It’s rebounding in Australia. There is that anticipation of demand. We’re starting to get supply back online and yet you know prices are still going higher. I don’t think we’re gonna go straight to five dollars by stretching the imagination. But that’s kind of where copper lost its disconnect with the market. When you know markets started coming down, copper’s still shooting up because it’s generally considered a gauge of the health of the global economy. But that kind of correlation went out of whack when we had a whole bunch of supply problems.

 

TN: And based on copper prices today, I would think everyone was back to work, we’re all traveling, probably with disposable income. So there is that weird disconnect right now and I’m not sure that it’s necessarily an indicator that a lot of people really point to.

 

So we’ve just had a big change in the US as well with the election and some shifting around. What are you expecting over the next few months? Are you expecting big surprises, big moves or what are you looking at over the next few months?

 

TS: Everybody pretty much knows Biden. Everybody knows his voting record. I looked at it as an energy strategist, obviously. I’m looking at his voting record and went on his past history and is the new green deal going to dictate the markets or how is he prone to be? He’s been in the office since the 70s. So we already know him. All his picks so far have been in been in DC forever, right. Whether it’s in an Obama administration, etc. So I don’t think there’s really a whole lot of surprises, which is why I think the market is so calm right now, because the election’s basically over. We don’t have that anymore. We’ve got this vaccine and the people that are going to be taking office in January are people that everybody’s familiar with. So I think that’s also giving the markets a little bit of complacency at this point.

 

TN: Right. It does feel a little bit complacent to be honest. I think you’re right. I think you’re right. So let’s see if there’s a surprise over the next few months.

 

TS: Right? You never know.

 

TN: Tracy, hey, thanks again for your time. It’s always great to talk to you. We really appreciate everything you say. I just want to ask everyone watching if you could follow us on YouTube. We look forward to seeing you next time. Great! Thanks.

Categories
QuickHit Visual (Videos)

QuickHit: How healthy are banks in this COVID-19 era?

 

This week’s QuickHit episode, Tony Nash talked with Dave Mayo, CEO and Founder of FedFis, and an expert on banking, finance, and Fintech. This episode looks at US financial institutions like banks and how they are faring during the Coronavirus pandemic. Will new financial technologies help streamline the process of providing services like loans to medium and small businesses?

 

Watch the previous QuickHit episode on the Status of Global Supply Chain in Time of Coronavirus with the president of Secure Global Logistics, George Booth.

The views and opinions expressed in this QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

Show Notes

 

TN: Hi, everybody. This is Tony Nash. I’m the founder and CEO of Complete Intelligence. This is our Quick Hit where we talk to industry experts about issues in markets and in industries.

 

Today we’re with Dave Mayo. Dave is the founder and CEO of FedFis based in Texas. Dave, thanks for joining us, I really appreciate it.

 

Can you tell us a little bit about FedFis? And then I’d really love to jump into how you’re helping out the financial services sector.

 

DM: Sure. We’re a unique company. We sit as a layer above banking, we call FI fintech, and then fintech. From the banking side obviously, we are a data company and provider and intelligence. From the FI fintech side, those would be the vendors to the institutions like their core mobile offering. And then FinTech, that’s the new stuff, right? That’s the sexy stuff, like the Chime and the SoFis and those types of companies that used to be alt banking and now they’re joined back to banking again. So we help all of those different layers in one way or another through a data set that we have and intelligence.

 

TN: With everything going on in the wake of Coronavirus, there’s been a lot of talk about fiscal stimulus coming out of D.C. and stimulus through the Fed and other things. What is the health of the banking sector from your perspective? Because back in 2008 the banking sector was the worry, right? Is that the worry now? Is that something we should be worried about?

 

DM: I think our banking industry is based on a level of faith. It always has been, right? Now that said, this is a completely different situation. Banks are very well-capitalized. Banks are not the cause of the problem. We don’t have a systemic banking problem or issue. We’re very, very healthy right now. When you talk about a stimulus being put into the economy, the more money flows in and out, the more people spend and buy and purchase, the better things are. That’s just the way the banking industry is built.

 

TN: How do you see banking and FinTech really helping? Obviously we know how they help big companies with big placements and debt and these sorts of things. But how do you see them helping small and mid-sized companies with this economic gulf that we have right now, where the economy’s effectively been turned off for a period of time, which is a bit weird? How do you see, what you’re doing, and banks generally, really helping out there on the smaller and midsize level?

 

DM: I think there’s a big gap in education in our country when it comes to banking. People are like, “I don’t like banks” or “I like banks.” When there are the big banks, the big four: the B of A, Wells Fargo, Chase, Citi. And then we have community banks.

 

Community bankers all across the country, they’re the life of our banking system. They’re the heartbeat. It’s actually a lower touch point for consumers and FinTech with the dramatic decline in a number of community institutions that has really opened up this opportunity for a FinTech. And the reason being is it’s a direct touch point.

 

So if you were to say “I want to use my mobile device” or “I want to use my online to do banking without having to actually drive to an institution and deal with all their policies and all of the things that go with it,” it’s a faster connection point. And I think we’re probably going to see a lot of that in these business loans the PPP loans through the stimulus plan.

 

TN: How do we actually execute that from the Treasury to the small business owner or to the individual that needs help? So, do you think that some of these FinTechs are kind of non-banks? I mean, would you consider them kind of non-banks within this system? Do you think they’ll be able to do this stuff faster? And I don’t mean this as a negative to banks. Banks are highly regulated. Do you think some of these FinTechs will be able to do some of this stuff faster?

 

DM: It depends on which way you look at it. Because here’s the deal: so when we talk about banking and then we talked about FI FinTech and then FinTech. So a bank is a chartered institution and FI FinTech is a technology arm of that like online banking, mobile banking. A FinTech is something that looks like a bank, talks like a bank, but it doesn’t have a charter. It’s not really a bank. So they have to partner with an existing bank to charter. So there’s a bank behind every FinTech company. So when you think of Chime and companies like that, there’s an actual bank behind that company that’s doing the regulatory side of this to protect consumers.

 

TN: You guys track a lot of data around banking and real estate and consumer stuff and industry stuff. Are you seeing any data that’s really talking about or raising your worries about the velocity of money about how quickly people are spending? Are you seeing that data? If it’s worrying you, when does that worry end for you? Do you see us going back in to say a quasi-normal situation within the next two months or something?

 

DM: Predicting the future I’ve never really been a big proponent of. That’s your business. But for us, what we look at are key components.

 

One way to measure things right now is to look at a mortgage note on a 15 or a 30. What is the spread between, what we would call in the old days, prime and what is the asking rate on that loan So you’re generally looking at above 3 percent. And as long as you’re looking at that, that’s a strong indication that there’s a lot of refis going on right now. And so the spread is there. That’s an adequate spread for banks to make money. There’s a huge volume of it going on. And as long as we see that volume and people continue to go to the bank, cash their checks, direct deposit always helps.

 

When we use our debit cards, when we go out and do the things that we do. Changing our mechanism of spending money whether it’s through Amazon as opposed to going through the mall doesn’t change the fact that you’re still spending money. Those are all positive things.

 

But I think the one thing we want to keep an eye on is the volume of lending. Everyone in a situation like this is going to have a tendency to kind of climb up a little bit. And, as long as that continues to flow, and one of the primary things that I’d be looking at is refis and other lending types of loan, etc.

 

TN: Are there any specific indicators you’re looking at on the commercial side to see if people are climbing up?

 

DM: I don’t really see anything from that perspective. I don’t think people are running out there right now at a time like this. It’s fairly obvious. You wouldn’t want to run out and start a new construction project or something like that. Those are gonna have an impact. There’s no way around it, but there again that’s what stimulus is there to offset.

 

Right now, I would say we’ve got a very healthy banking system. We’re coming out of a very healthy economy and so what’s our time frame of a bounce-back is it going to be a v-bottom or is it going to be spread out? I think it’ll be a little more spread out than a V-bottom and I think they’ll probably be multiple cycles of this that go on to some degree.

 

But starting from a really healthy position in our banking system and in our economy, this will pass. And when it does, here’s the thing I think is so interesting, unprecedented levels of stimulus and, the old saying you don’t fight the Fed, right? So does the market go up and we have a stimulated economy? Of course it does. And with this level of pent-up demand and stimulus, will there be a bounce back? Yeah, there’ll be a bounce back. The question is how huge will it be and how fast?

 

TN: That’s great Dave. It’s a huge source of optimism. Thank you so much for that and I really appreciate that you’ve taken the time to join us today. So really appreciate your time and and thanks very much for, for all that you’ve shared with us today. I really appreciate it.

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Visual (Videos)

U.S. blacklists Chinese entities over human rights concerns

Yahoo! Finance

 

The Trump administration placed 28 Chinese entities on a blacklist, citing alleged human rights violations against Muslim minorities in the country. Firms on the list include surveillance companies and artificial intelligence startups. Tony Nash, Founder & CEO of Complete Intelligence, joins Akiko Fujita on The Ticker to discuss.

Watch the whole interview at Yahoo! Finance.
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Visual (Videos)

China’s Belt and Road Initiative: What it means to the world, what it means to OSU

Oklahoma State University Global Briefing Series

 

The Oklahoma State University School of Global Studies and Partnerships, in collaboration with the College of Engineering, Architecture and Technology, presented the first OSU Global Briefing Series event of 2018, titled China’s Belt and Road Initiative: What it means to the world, what it means to OSU, on Tuesday, April 24, at 6 p.m. in Room 108 Wes Watkins Center.

The event included an overview of the Belt and Road Initiative by keynote speaker Tony Nash, the founder and CEO of the data analytics firm Complete Intelligence. Nash also discussed the potential consequences for both the global economy and geopolitics.

Following Nash’s talk, there was a panel discussion with OSU College of Education, Health and Aviation Associate Professor Stephen P. Wanger; School of Civil and Environmental Assistant Professor Joshua Li; and Ph.D. student Tong Wu from the College of Education, Health and Aviation. The panel provided additional depth and context to the project and identify potential areas for OSU collaboration.

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Podcasts

What is the Future of Investing?

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8 July  2019 | Money FM 89.3

Tony Nash, CEO of Complete Intelligence shares what is the future of investing and how investors can deal with recent economic concerns including the US-China trade war, and how they can position themselves to come out on top.

Listen in Money FM 89.3
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