American Economics Thread
- Thread starter Bernard
- Start date
PiSigma
"the engineer"
Ya. WCS (Western Canadian select) the oil my company produces is priced under $10 right now. Most Canadian oil companies lost 2/3 of their value in the last week and half.
Someone should tell the Saudis to stop screwing with the world, they tried in 2014, didn't work. Now trying again.
Jura The idiot
General
Jura The idiot
General
now looked up what was that politically correct expression
Thursday at 8:22 PM
but oops Dow had been like 2k points higher then
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What you say is true, BUT! my friend, I think you underestimate the effect. It is bad, very very bad!
1st/ why is the stock going down? Because analysit believe the FUTURE prospect is dim! So they are betting on the stock wont return the returns they are expecting. And if they are right, then the firms is really not making any money leading to less profit, therefore employment, tax revenue. Etc.
2/ firms going to find it hard to repay any loan and interest payments with reduced peofits, leading to cut backs, less employment, tax receipts. Etc.
3/ firms gearings gone up drastically, as liabilities increases, and asset value plunged, which makes it harder and mire costly to borrow money to cover any cash short fall.(Boeing is a great exampl). All this leading to lenders trying to recoup their money forcing firms into bankruptcy (how ironic, ust like most of Trump's businesses).
So I could go on, but you get picture, this is why I keep telling my students, why, in a capitalist system, all CEO have one eye on the stock value of their shares, (which is why also Trump set his stores by), and why they concentrate their efforts in keeping up those value (not really what we employ CEO for).
Which is also why Trump is now pumping money into the economy by big give away. Completely unheard of, even during the great recession and depression.
Jura The idiot
General
PiSigma
"the engineer"
Only buy integrated companies, so for Canada it is Imperial Oil or Suncor or husky. Full disclosure, I work for Suncor and obviously own Suncor shares.
In an oil crash, the downstream side of the business (refineries) will make a ton of profit vs losses in the upstream side (oil production). That's why you won't see gas prices crash to 40 cents a liter.
If buy American companies, get ExxonMobil. I used to work for ExxonMobil's Canadian affiliate (Imperial oil). Chevron sold most of their downstream assets awhile ago. You can also buy pure downstream plays, like Tesoro oil.
PiSigma
"the engineer"
Yes and no. The problem with the American economy is FIRE ( finance, insurance, real estate) which is counted towards the economy. But the real economy is much smaller (primary, secondary industries). FIRE doesn't produce anything other than speculation. After this is over, primary and secondary will come bounce back, because people need to eat, things need to be made (so mining, forestry, etc will be fine). People don't need to buy a fourth house...
Our National Super Fund has divested alot of their holdings in the Oil Companies at the behest of the Green Party and national sentiment. The policy is to now invest in clean industries.
Having divested their holdings in Oil companies at a high, I reckon they could make a killing through buying oil shares again. But they wont.
Actually Nders are adverse to the share market
No amount of cajoling will see too many mum and pops play the share market. They rather invest in real estate as their are no capital gain taxes.
If you make s million in a year it's all yours . If you made the same in shares you could loose up to 33% of it in taxes. So what would you do.