Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Lots of talk about oil price and share price correlations - income side of the equations. But has anyone looked at the cost of debt funding? LIBOR/OIS spreads are opening to record wides and show a real squeeze on credit pricing in General. Also Commercial Paper issuance has gone wild. Will all impact the cost of that heap load of debt. Some good stuff on money market spreads. https://macro-man.blogspot.co.uk/2018/03/the-anatomy-of-libor-panic-new-wides.html
There appears to be little pojnt in arranging the deck chairs on HMS Tullow's micro world of 'maybe maybe not drilling results and staff costs' whilst equities crash, risk blows up, oil dumps, VaR leveraged funds get squeezed, credit markets get coshed and all you do is look at oil priced in USD spot against a hedger that fixes againstca forward curve and is priced in GBP. Seriously how can anyone possibly try to pick previse buy or sell levels in this noise? Loom at the macro chaps. The micro is like arguing about how many angels there are on the head of a pin. Good luck.
OIl now getting properly flushed on spec long liquidation post NFP data. Bonds still falling so yields rising, US Stocks getting crushed, volatility indexes rising, general risk flush out. Sry, but really not looking good for Tullow despite GBP/USD weakness.
Hi, I've been a reader of this board for a while as I regularly play Tullow. But rarely as a specific stock, but more as a highly leveraged play on other aspects of financial markets. It ties together oil, stock markets, bond markets (cost of funding), Emerging Markets, foreign exchange, and finally its own tweaks of news. So here are my thoughts Stock markets - Tullow is a component of overall fund allocations. If equities go out of fashion the number of buyers for Tullow falls. no matter what the internals. I think markets are rich and sentiment is ahead of itself. 'on the tips of its skiis' Oil - probably the most leveraged long out here. Yes the fundamentals are good but if everyone owns it, marginal buyers are limited. FX - most important - Oil is priced in USD. Tullow shares are in GBP and its labour costs are in local currency. Oil can go up in USDs but once translated into GBP share price, a stronger move in cable (GBP/USD) can make it negative. USD/EM local currencies. a falling USD here doesn't help here either wih local costs and taxes. Bonds - most borrowing is tied to a spread over treasuries. As US Treasuries are tanking ( yields rising) and I assume Tullow has funded in USDs because that is what their receivables are in, then any highly leveraged operation is gong to feel a squeeze on funding costs. Even if they don't the market will be more averse to buying. highly leveraged companies. Emerging markets - the darling of the markets for the past year and a lot has poured in on the leverge side. Yes, fukky agree this is where the world growth is going to be big picture, but right now with reisk leverage and USD yield rising there could be a pull back. So whilst I have been a great fan of Tullow I am now out until the rst of teh macro world sorts itself out. I don't put price targets on things like this, I watch teh mood of all the components. Putting a price target on a share is liek trying to work ou a 15yr forward economic projection ( eg brexit) - too much noise to get a reliable signal. What a share price should be or what you think it should be is immaterial as if ebveryone agreed it would already be there. I look at things and say is there more reaon or less reaon to buy this than there was yesterday. Other than the price is lower. but running on price anchoring can be ruinous as many crypto punters are now finding out. And today I dont think there is. But when I feel that oil is going up and Usd is going up, Gbp is not going up, binds stop dumping, stocks stop dumping and leverage and postioning in global markets becosmes less consensus .. I'll be back in. What price that is at I have no idea. Thank you all for your inputs.