US oil prices collapse; US economic activity sinks; Japanese exports dive; China cuts benchmark interest rates, adds huge new stimulus; Virgin airline toast; UST 10yr yield at 0.64%; gold up; NZ$1 = 60.7 USc; TWI-5 = 66.9

Exactly, but the May contract expires 21/04/20 and June, the new front month WTI contract trades`~$21.00 a barrel . Whole strip

There's a lot of oil in the middle of the US and remote to any port. That oil cannot go anywhere and there is no storage.

I used to design oil storage long ago and it takes a lot of engineering design and time to construct storage sites. I bet oil producers are wishing they were back in the days of $120/barrel.

Until there is an excess of renewable energy here, gas priced here (and to a certain extent coal prices) set the marginal price of electricity. Gas prices here will still be pretty high due to the governments decisions. Electricity use will probably stagnate for the next few years.
So there are various factors at play here.

The reality isn't nearly as spectacular as the headlines would have you believe. It was only the spot price that went negative, oil out of June is US$22 and September is US$29 per barrel. By early next year we are at $33 p/b. This is a futures expiry and short term storage issue.

More importantly - if you bailout one carrier, you have to bailout the other.
This isn't only a bailout for Virgin; it will inevitably result in Qantas sticking their hands out, too.

I dont have a lot of sympathy for bailing out businesses built on debt.

Please governments of the world let the charlatans of the world be found out.

Let the ants that hoarded for a rainy day not have to carry the grasshoppers that sat around playing with sparkly toys and saying look at me look at me.

Richard Branson is a UK tax exile , who sued the NHS, there is very little appetite from the UK tax payer to give him a bail out, perhaps he should ask the BVI for a bailout instead.

Debt!!!! its a killer

I would be picking half of all airlines around the world gone inside of 6 months but on a positive note the remaining shall be able to slowly build back up.
AIR share price will be interesting to watch price target 50-75cents and more loans and layoffs to get company down to 30 percent of 2019 size but this will happen over next 2-6 months as most staff have rather large redundancy payments and they will wait as long a spossible just in case of a miracle drug/vaccine.

A supportive factor for crude is today's surge in the crack spread to a 1-3/4 year high, which encourages refiners to purchase crude to refine into gasoline.

Egotist nut job. They are likely looking at hundreds of thousands of deaths as Trump encourages his dumb supporters to gather and protest. And all he can concentrate on is his own self delusions!

Anything with CNN attached to it, is taken with a heap of salt.

Depending on how much the FED buys up is the key to everyone else.
I am still picking 6000 points NZX just needs some reports showing how screwed our economy now is so give it 1-2 months and max on the first sign of chaos and fear people will sell down even faster that the first time.

From what I've been watching on social media, there have been a lot of 'new investors' jumping into the market after the crash. 'I've never purchased shares before, whats the best way to do it'. Perhaps we've seen the worst, but I personally don't believe it yet.

BW, there is merit in your general view about the increasing role of government in economy and the real prospect of more nationalized businesses. I also find your theory about why Air NZ prices are where they are and the significant role of NZ government convertible loan facility in that relation, very informative. However, for the life of me, i do not understand why you keep referring to a state owned enterprise as example of nationalization? What NZ government will achieve by owning 100% of the shares that it is unable to achieve now? what will motivate the government to do it?

Interesting theory, but surely the Government putting 51% of the issued shares up for sale will collapse the share price so a bit counterproductive.

Also, that loan facility is just that, a facility. Not sure if any of it has even been drawn down yet. Anyone know?

Truth please.

For the last decade I have been pointing out that society cannot afford oil beyond a certain 'price'. If we factor debt-repayment in properly, that price is probably south of $80/barrel.

I thought like Goldman Sachs back in '08, I've learned since that economists don't understand that energy underwrites 'the economy' 100%. We will NEVER see $200/barrel. Our 'economy' can't afford it.

Which has serious ramifications for (a) reducing EROEI remaining stocks, and (b) renewables.

But don't misquote me, eh? Lets stick to fact. :)

Can be found at 162.9 in Napier today...

Agree. Something smells fishy and it’s not NZF this time. The cheapest 98 is $2.26 locally.

Because the petrol being sold was purchased before the lockdown - greatly reduced consumption - for my wife and I from about $100pw to $0 - cars parked and getting dusty. If my theory is correct expect pump prices to decline late next week.

Because oil prices make up less than 1/3 of our pump price: https://www.aa.co.nz/cars/owning-a-car/fuel-prices-and-types/how-petrol…

The 30-year US Treasury Bond plus some USD in paper.

If you have taken it out of the bank then it must be in cash? We have taken rates and insurance off periodic payment and paid in a lump sum for the year. We are struggling to get cash out of ATMs in good volume (BNZ ATM wouldn’t do more than $300 yesterday) but are aiming for six months expenses held in folding. The rest is going into Kiwi Bonds as it comes off TD. Luckily we didn’t renew the TDs for as long as previously. I’m hoping this is a huge overreaction and we will look like muppets because if it isn’t then NZ is fubar.

Unintended consequences? Overplayed their hand? Or by quite intentional design?

All sources of tax have dramatically decreased. Fuel taxes, GST and all forms of income tax. There will be pressure to both fund projects but also cut any fat out of government departments (and there's a lot of fat in those). Expect downsizing and cost cutting along side spending.

Generally the bad times are the right time for government borrowing, and reducing the debts in the good times. This is contrary to how the US government operates where they borrow record amounts in the good times and even more in the bad times. That is causing a massive problem in the bond market that the Federal Reserve is trying to solve, but that's a separate topic.

What we may see in action is more of Ray Dalio's approach to deleveraging in the US in the link below. Some of the principles will be applied here depending on how bad everything gets.
https://www.youtube.com/watch?v=PHe0bXAIuk0&t=2s

Any organisation tends to be run primarily for the benefit of its management. The government bureaucracy is particularly talented in this regard. Thus working for them is seen as safe. Cutting government jobs is not usual at all, as management prestige is measured by how many underlings you have. We need more of them to look after us when things go wrong.

The world looks different depending whether you are in the government bubble or in the private sector bubble.

Some say it will delay renewables, but the chances are that there will be questionings of 'investment' in the likes of tar-sands, too.

Almost never does the prior paradigm return following a hiatus. It's a bit like buying a blacksmith's in the 1930's.

Ahh. So the goalposts have now changed?

First it was "We only have a finite amount and its consumption is growing exponentially."
Now it is "Oh, actually, we are going to run out because of the lack of demand."

You two crack me up.

Yvil- I subscrible to a couple of US macro economics sites. Plenty of comments from them on Twitter this morning. Have asked your question So will let you know if a response comes through. Was wondering the same thing myself.

Right now you would not want to take physical delivery of oil. It's a worthless commodity and you need direct processing capacity and a supply chain to make use of it. Therefore investing or trading for profit would be by using options. The following video is George Gammon interviewing Patrick Ceresna from Macrovoices. Patrick Ceresna does some seriously large trades and has a large amount of knowledge about commodities including gold. The video is a 4 part educational series.
https://www.youtube.com/watch?v=5zBuErUgr6E

A documentary about the largest commodity traders in the world if this does interest you.
https://www.youtube.com/watch?v=WaZUpVX3FAQ

Serious, knowledgable comments only please - your a funny chap Yvil demanding such things

This is from Keith McCullough at Hedgeye.com

Want to talk about oil? Talk about crashes!

It was down almost 20% last week. WTI is obviously crashing again this morning. You had the biggest moves in terms of contango, or at least one of the biggest moves ever.

Isn’t it an amazing thing how gravity wins when the Federal Reserve isn't buying? The Fed is bailing out their cronies in Junk bond debt or super late cycle bad investments, which would include crappy credits and levered equities.

A lot of people say “Don’t fight the Fed.” We’re of course long Treasuries alongside the Fed, so we’re not fighting them there. But we’re fighting them in a lot of different places. These are all big problems.

Don’t forget immediate term downside in the low end of the risk range for WTI today. No, I’m not buying it. It is deep #Quad4 at its core. Don’t forget Quad 4 is defined as growth and inflation slowing at the same time.

In Deep Quad 4 you don't touch Oil.

Yvil - rather than 'investing in', try thinking of 'having'. As in physically.

Too many folk have though like you for too long - artificially tapping into reality in a non-productive manner, then expecting to exchange those bets for something real. That epoch is looking like coming to an end - physical possession of the item will, I suspect, be the new 'invest'.

IG Markets

I take it with a pinch of salt. Not that they do not want to do that or that they do not mean it, but Indian government have zero capability in doing anything.

Why is this surprising?

Who regularly updates their electoral role record, for example, when they move? They only do it when the elections come around.

Likewise, I don't believe we currently have information sharing across all agencies for a master record of individuals in NZ, and an approach to managing that master record? That would likely have to jump through a bunch of privacy hoops to get close to being achieved.

Perhaps NHI data would be more accurate, but there would still be a bunch of folk who have incorrect addresses or have changed phone numbers after moving or changing their doctor.

Got to admit the criteria bugs me. Except for the minor fact that is caused by the dry weather rather than covid we easily fit the criteria over a number of months. As would many thousands of farms this year.

I've been asking people about the normal flu for a while. My wife goes to get a vaccination and I comment that the trip is the only think likely to infect her right now. What else might we be setting back? Aids in some places (cannot see that one going away). Certainly the flu, could we remove a few strands or indeed encourage some. Head lice? Other STD's? Seems like an opportunity to kill off various things. What might we be encouraging like weeds, insects. I note a load of cats seem to have got less road savvy recently. Will fishing be amazing for a short while just due to fish coming closer to shore more often etc.

I asked people, do you expect we will kill off the flu in lock down? They pretty much all said no, so I said what makes you think it will work on this virus then?

More likely to go up in the short term due to less particulates in the air.

And the carbon cycle will take a long time to reduce the amount of CO2 in the air even if emissions drop to zero anyhow.

Think of all those people who won't be going back to work, the demand shock is going into the record books.
I don't know why the RB feels it needs to support unaffordable house values.

One trick pony indeed! Is this all New Zealand has! What will the pony do though when the fireworks go off?

"9. Stop following negative media, speculation on how bad things might get, and measurements of the depth of downturn. Pessimism leads to inaction."

How can people receive Tony's advice if they're avoiding the media?
Positive thinking and avoiding reality is not going to help people avoid financial stress.
Positive thinking and avoiding reality was how people took on too much debt and put themselves into vulnerable financial circumstances which led them to financial stress