Unless you’ve been living under a rock you saw oil today. People smarter than me like my husband’s boyfriend tried to explain that the crash for oil was limited to WTI was for contracts for this month. That contracts for other months like May and June are trading above zero dollars. Ultimately, this won’t really matter. Demand still low. It costs money to store oil. Yada yada yada. US crude production etc. firms and other industries that can’t deal with oil so low are going underwater. Quick.
Not sure what other autists have been seeing, but other commodoties going the way of oil too (someone else said this elsewhere, but it’s weird that oil etc. better reflect the fundamentals to the economy than S&P, but that’s an analysis for a different way. Indices might be rational at the moment in light of JPOW).
Oil is deflationary. Soft commodities look like they are going to follow suit and the US farmer is sadly going to be driven into bankruptcy, just like the shale patch…
— Raoul Pal (@RaoulGMI) April 21, 2020
This thread has a good overview. Corn, soy beans, sugar all on the process to cratering. Milk in a similar spot.
“It’s looking very grim right now. We’ve been told there is 10 percent too much milk in the country, and even if every plant opened up that was closed due to all the manufacturing being shut down, it would take a while for the milk to clear,” Yeaton said.
RIP to farmers. Think Donnie has enough in his bank account to keep Carnival, Boeing, Exxon and the Mid West solvent?
At this point, deflation is an obvious concern. There’s an alternative theory that farmers will basically pour milk on the ground and drive crops into the dirt to meet margins or diminish loss. At that point, we than have a supply shortage. Some nerds at NASA think the sun won’t shine as bright this year. This is important for the sake of agriculture.
Not the article I saw earlier, but from what I can gather, it’s going to be hard to grow as many crops next cycle. Start with low prices like we have now, farmers react and create a lower supply, prices go up, can’t grow as much next year, low supply, prices go up, inflation go up bigly. You get the idea.
TLDR: Economy is bad. Bear szn will be upon us eventually. Bankruptcies gonna go up bigly. The crystal ball says some deflation could be coming. But maybe something even darker is under the surface.
Edit: Here’s the actual article on solar activity electroverse.net/nasa-predicts-next-solar-cycle-will-be-lowest-in-200-years-dalton-minimum-levels-the-implications/
“NASA’s forecast for the next solar cycle (25) reveals it will be the weakest of the last 200 years.
The maximum of this next cycle — measured in terms of sunspot number, a standard measure of solar activity level — could be 30 to 50% lower than the most recent one. In 2008 the researchers used this method to make their prediction, which was then put to the test as the current solar cycle unfolded over the last decade. It has performed well, with the forecast strength and timing of the solar maximum aligning closely with reality.
NASA is effectively forecasting a return to the Dalton Minimum (1790-1830) but gives no mention of the brutal cold, crop loss, famine, war and powerful Volcanic eruptions associated with it: (i.e. global temp decline by 2 degrees celsius) AND wait for it….. Crops that had managed to sprout were frozen out in early June, replanted, and frozen again in July. Very few crops were actually harvested, and of those that were, the yields were very poor. In turn, food and grain prices skyrocketed — for example, in 1815, oats sold for $0.12 a bushel but by the next year, a bushel would set you back $0.92.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.