The Evil Diaries: Join me for a drink at Master Investor 2016

It has taken a long time to gather this far but it does seem that Master Investor’s annual assembly (23rd April in Islington) has caught the public’s imagination big time. I’ll try and persuade the organisers to include a serious drinks assembly area. There is no guarantee of success. So, here’s hoping.

*****

I have touched upon Natixis in these columns before. They sport a permanently resident egghead Patrick Artus. Here is what he has to say about oil. His advice is unequivocal. One really must get long of oil for settlement in, say, nine months’ time (please note that the April contract is $2.50 dearer than March – talk about contango). Here is his argument:

“FLASH ECONOMICS

ECONOMIC RESEARCH 10 February 2016 – No. 111

2016 will be a difficult year for financial markets, but followed by an improvement

Author: Patrick Artus

Our “optimism” is due to the strong correlation between the situation of financial markets (equities, credit) in the United States and the euro zone and the oil price. This correlation is partly rational, partly irrational, but it is there. However, it seems more or less certain that the oil price will rise in 2016 and 2017: 30 or 35 dollars per barrel is not an equilibrium price, since the imbalance between supply and demand is very quickly absorbed at this price. 45 to 50 dollars, i.e. the production cost for shale oil in the United States, is a likely equilibrium price. At 45 to 50 dollars per barrel, probably the average price in 2017:

– The situation of oil-exporting countries will improve markedly, and their imports will pick up;

– US oil companies will once again become profitable: credit spreads will tighten, first in the energy sector in the United States and then for the credit market as a whole in the United States and the euro zone.”

I regard this assembly of facts and prognostications as a bull argument with a clearly defined base. It’s a while off though.