April 2020

How does oil go negative? And what on earth does that mean for the rest of us? Well, earlier this week oil prices collapsed. Momentarily, futures hit -$40. But was that a true reflection of the market? I mean, if we look at Brent, which is another commonly traded sweet crude, their prices hit closer to 20. This does suggest that there's more going on here than just simple supply and demand. What on earth happened? Well, first there are two things. One, in Texas, just like everywhere else, it's very difficult to completely shut down an oil field. When you turn off the spigot, that pressure doesn't just dissipate It can cause damage to the field. Two, because of the collapse in demand in the United States and the fact that the rest of it must be exported, we have a scenario where no one can take the oil....

There are four phases to the cycle of the economic corporate and medical harm that's being done by the Coronavirus. This is a discussion of the four cycles; how we envision this playing out over the rest of the year. So the first phase was economic and corporate damage. Well, we've seen since this began, actually initiating in China, it was both supply and demand shock simultaneously, but often to different parts of the markets. For example, Apple has seen significant supply shocks from China, Taiwan - while other firms like the airlines, the travel industry, restaurants - I've seen enormous demand shock. So many parts of the economy have been damaged by this shock, and that damage is not going to end overnight. That's going to continue. Second, is we have what we call "financial contagion feedback loops." In the short term markets are emotional machines, in the long...