- Why aren’t the big oil exporters all over this trade?Could it be these guys don’t actually have all the spare capacity they’re letting on?
- Why are the drillers and oil service names so depressed? Stock markets are supposed to discount the future, not the past. Equity valuations are supposed to be forward looking. And yet, at current multiples, most of the high-quality drillers and oil service names are trading as if oil were headed to $20, not back to $60. Yet the December crude contract says otherwise... and the huge spread between near-month and far-month contracts persists. What gives?
- Could Wall Street still be “broken” in the aftermath of 2008? After the year we just went through, anyone who still believes in perfectly efficient markets should have their head examined.
- Could December crude contracts be expressing an opinion on the inflationary effects of U.S. debt monetization... or rebound possibilities for emerging markets... or both? It’s widely recognized that the U.S. Fed and Treasury are embarking on a “great experiment” now that has never before been tried – one that could be summed up as, “Print like crazy and see what happens.” Some observers, like Joachim Fels of Morgan Stanley’s Global Economics Team, further believe that emerging markets could outperform in 2009 due to better internals than they get credit for. Could the persistent crude spread be reflecting both views?
Dont rightly know, but its worth watching closely what happens.