MBCC Trading Highlights 12th December'22 - Long Only's ONLY care about y/y EPS! #ouch Energy...

As our readers know that we have been banging the drum about SHORT Oil all the way from $135 down to today, it is now down $60/bbl. despite all the stale analysts telling you to “buy the dip” every 10% move lower. Clearly they DO NOT run pnl or manage an actual portfolio, if they did, they would be fired the next month! Making a call that something is cheap and for it to work in 3+ years is not the same thing as making a living in a Hedge Fund. We never disputed the secular case for bad energy policies and mismatch of the clean energy transition. Our main thesis rested on the fact that product markets which were the main source of tightness in the market, was only a TIMING thing. Our forward looking demand models kept picking up more demand weakness which we are NOW seeing show up in the Oil market. As you can see product inventories are building now aggressively, so where is the tightness now?

Thea above chart shows year over year earnings growth in 2023, and how Energy (the place where everyone seems to be hiding still and desperately holding onto their 20-30% gains, eroding day by day) is now showing DECLINE of 12% next year. This is not a place to be invested and money has been coming out, slowly, but it has started.

Commodities are all a matter of timing, there is a secular tightness and a cyclical tightness. It is important to differentiate between the two. The Commodity super cycle bulls never differentiated between the two, but like 2001 and 2008, these things never last in isolation!

How much more can Oil fall? Where/how much can these Equities fall?

Sign up as we outline our views with our live trading portfolio, looking at our proprietary forward looking cross asset signals to tell you what demand will look like and what inventories will do! We all know Equity analysts are lazy and always react AFTER 50% moves, which really does not help you in making any money!