Been holding a futures pair trade (short $Micro 2-Year Yield - main 2209(2YYmain)$,long $Micro 10-Year Yield - main 2209(10Ymain)$). The rationale was 10 year yield should always be higher under Normal circumstances. In statistics world, revert to mean is expected in the long run. The yield Inversion have been up and down same like all other asset classes. The trade has yet to work out to my favour. But it is definitely good personal experience learning about futures product. Next I will look into $Micro WTI Crude Oil - main 2211(MCLmain)$
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Yield Inversion (10y - 2y)
Yield Inversion (10y - 2y)
Key events impacting SHELL
$SHELL PLC SPON ADS EACH REPR 2 ORD SHS(SHEL)$ had a rough week since 2 major events took place. OPEC+ decided to cut 2 million barrels production. To put it into context, 2 mil is not necessarily the actual production as most of its members are below production target. Hence, it is fair to say the real impact is ~1mil cut, which is equivalent to 1+% of world supply. $Light Crude Oil - main 2210(CLmain)$ responded favourably last 2 weeks. SHELL ADR closed post market at 54 after the production cut. However, the Oil and Gas giant disclosed Q3 '22 advance notice the next day, highlighting impact of price volatility and margin shrink. 5% drop were observed throughout the trading
Key events impacting SHELL
Big Oil Buyback
These days, big oil is no longer expanding at all cost. Financial discipline is key and the popular names like $SHELL PLC(SHEL.UK)$ and $Occidental(OXY)$ are giving back shareholders via buybacks and dividends. Consistent with Mr Buffet, buyback benefits long term shareholders given improved RoE. In turn, dividend per share will go up assuming the return to share holders is constant. Shell launched a buyback of USD 4b until release of Q4 '22 results. Check out the screenshot whereby the average buyback price is USD 55 upwards. I am near term bullish on $Light Crude Oil - main 2212(CLmain)$ given the end of US SPR
Big Oil Buyback
$Shel$ profited from high oil and gas price, net profit of USD 11.5b. Make no mistake, Shell is one of the biggest LNG producers, which is the transitional fuel to future. When EU is rationing gas, LNG is in high demand. The announced USD 6B buy back in the next 90 calendar days reduce outstanding shares significantly (back of envelope shows ~5%). It also shows how undervalued the share price is in management pov. The mgmt has demonstrated financial discipline, reducing gearing to below 20%. Companies like this are printing monies when oil price is more than usd 85.
It is still undervalue after surging 14%. BABA has tonnes of cash, so it will not be impacted by the credit squeeze world wide. I am not sure if the 25b buyback will continue given the latest strategic direction. My personal target price is 150, which is merely 50% of its heyday price. May the force be with all of us in the same boat!
$LION-OCBC HSTECH ETF S$(HST.SI)$ pretty confident the worst is over and in 2023 the China Tech will benefit from the reopening, which is currently in full force. Make no mistake to underestimate the unemployment rates and downturn ahead in China. However it is fair to say it is time to start accumulating these tech stocks when the valuation is not demanding.
Howard Marks is one of my favourite investment gurus. I enjoy listening to him much because he can put things in easily understood contexts. When I feel panic because of draw down, I will check out his videos and memos. He is a great guy of intellectual humility. Worth every second to hear his speech.
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By doing the Tiger daily tasks, I would have gotten a minimum market update, simply by reading the news and useful comments from other friends. A pretty good checklist I would say. I like to create a post to share when I have formed a personal pov after some research. This helps me to get more Tiger points. Good act gets rewarded, why not? 🐰
Stellar Q3 2022 Results from Shell
Big oil is earmarked to deliver another good quarter given the tight supply causing spike in commodity price $Micro WTI Crude Oil - main 2211(MCLmain)$$Natural Gas - main 2210(NGmain)$ Shell $SHELL PLC SPON ADS EACH REPR 2 ORD SHS(SHEL)$released early announcements few weeks back to manage market expectations that Q3 is not as good as Q2. However, it still beats expectations. My key take aways are listed. Near term head wind is windfall tax from government. UK government may act soon. Interestingly, the current CEO Ben actually called out the government to tax the Oil companies more to help the poor. On the other hand, I lo
Stellar Q3 2022 Results from Shell
White House Moves to Lower Down Gas Price
Mid term election is around the corner. White House is doing all it takes to lower down the gas price. Apart from consdering further Strategic Petroleum Reserve release, unprecedented move is taken to set future SPR repurchase price of USD 67 - 72. This shall set as a reference floor price (at least for me personally) when comes to trading oil futures$Micro WTI Crude Oil - main 2211(MCLmain)$. An analyst even says that Mr Joe Biden is a great oil trader (sell at 3 digits, buyback at 2 digits). You can check out the links below for further details. Obviously this is a counter move against the OPEC+ previously announced 2mil /day production cut. All eyes will be on OPEC+ if the cartel were to react on this. Given the higher implied volati
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