Inflation percolating

[I Love Freedom]

Originally Posted by DTickler

My advisor says that the stock market is the direct beneficiary of hyperinflation and to stay in it especially now.

It depends on the stock and how well run the company is.

Shitty companies tend to get run over no matter what.

[Texas Contrarian]

.

Originally Posted by WTF

Seems like Dick Cheney was right when he said deficits do not matter....

LOL ... yes, I remember that well.

Specifically, he said something like, "Reagan proved that deficits don't matter."

This was in response to Paul O'Neill, then GWB's Treasury Secretary, who had begun warning about deficit spending.

But if Reagan "proved" that deficits don't matter, why was there so much angst about them in 1989-1990, shortly before H. W. Bush signed the 1990 budget bill with a tax increase? (To be followed by a larger one under Clinton in 1993.)

The problem we face now, in my view, is that our gargantuan debt load acts as an albatross around the neck of the economy, virtually insuring historically low growth rates for a very long time.

Originally Posted by I Love Freedom

Hopefully you have all positioned yourselves to benefit from inflation.

Many equities would benefit from a modest pickup in inflation, especially issues of politically well-connected, big-cap, dividend-paying companies.

.

[WTF]

Originally Posted by CaptainMidnight

.



LOL ... yes, I remember that well.

Specifically, he said something like, "Reagan proved that deficits don't matter."

This was in response to Paul O'Neill, then GWB's Treasury Secretary, who had begun warning about deficit spending.

But if Reagan "proved" that deficits don't matter, why was there so much angst about them in 1989-1990, shortly before H. W. Bush signed the 1990 budget bill with a tax increase? (To be followed by a larger one under Clinton in 1993.)

The problem we face now, in my view, is that our gargantuan debt load acts as an albatross around the neck of the economy, virtually insuring historically low growth rates for a very long time.



Many equities would benefit from a modest pickup in inflation, especially issues of politically well-connected, big-cap, dividend-paying companies.

.

Here is a good article on it. It seems that they think both China and our aging populations will depress inflation. There are many more points but overall a balanced article.

https://www.cnbc.com/2021/01/31/fed-...inflation.html



.

[I Love Freedom]

Originally Posted by CaptainMidnight

.



LOL ... yes, I remember that well.

Specifically, he said something like, "Reagan proved that deficits don't matter."

This was in response to Paul O'Neill, then GWB's Treasury Secretary, who had begun warning about deficit spending.

But if Reagan "proved" that deficits don't matter, why was there so much angst about them in 1989-1990, shortly before H. W. Bush signed the 1990 budget bill with a tax increase? (To be followed by a larger one under Clinton in 1993.)

The problem we face now, in my view, is that our gargantuan debt load acts as an albatross around the neck of the economy, virtually insuring historically low growth rates for a very long time.



Many equities would benefit from a modest pickup in inflation, especially issues of politically well-connected, big-cap, dividend-paying companies.

.

Indeed Cap'n.

[Ripmany]

Originally Posted by rexdutchman

don't forget the 1 million jobs lost by 2022 ( in gas and oil alone ) and prices skyrocketing

The lost jobs will cause prices to go down the lack of production will cause a price in crease.

[Texas Contrarian]

.

Danielle DiMartino Booth of Dallas (Quill Intelligence) tracks data flows about as thoroughly as anyone I know. Her office put out a couple of notes recently indicating some inflationary trends in the supply chain over the last couple of weeks. But then she goes on to say that the trends will likely reverse as soon as helicopter drops of cash to non-affluent households slow down or cease.

Lacy Hunt takes the under, though, and still maintains that slow growth and historically low inflation will be the order of the day for quite some time.

In the meantime ...

Back in March/April, I took a couple of bites of this:

Diamondback Energy, symbol FANG. (Well, why not? There are a lot of Western diamondback rattlesnakes in West Texas!)

A long-time friend who knows much more than I about the energy industry put me on to this, as I had barely even heard of the company. Small cap, about $9 billion. Mostly a Permian Basin play and went on the acquisition trail recently, buying up a couple of promising small companies with stock. Now controls a lot of very attractive assets, I understand.

This was an $80 stock before the cliff-dive earlier this year (after which I picked up some shares in the 25-32 dollar range, as I recall). I thought there was very little downside risk and that this would be a pretty decent recovery or reflation trade.

A bit of moderate inflation would be pretty good for oil, which in my view is likely to gradually return to the $70 range fairly soon, broad-based inflation or not.

Or maybe higher, if progressives get their way on exploration and production restriction. Demand for oil is almost certain to increase substantially in a post-pandemic world, in any event.

Besides, rattlesnake meat is pretty tasty. (Actually not kidding!)

And very keto-friendly, for those interested in getting greyhound lean.

.

[Tiny]

Originally Posted by CaptainMidnight

.

Danielle DiMartino Booth of Dallas (Quill Intelligence) tracks data flows about as thoroughly as anyone I know. Her office put out a couple of notes recently indicating some inflationary trends in the supply chain over the last couple of weeks. But then she goes on to say that the trends will likely reverse as soon as helicopter drops of cash to non-affluent households slow down or cease.

Lacy Hunt takes the under, though, and still maintains that slow growth and historically low inflation will be the order of the day for quite some time.

In the meantime ...

Back in March/April, I took a couple of bites of this:

Diamondback Energy, symbol FANG. (Well, why not? There are a lot of Western diamondback rattlesnakes in West Texas!)

A long-time friend who knows much more than I about the energy industry put me on to this, as I had barely even heard of the company. Small cap, about $9 billion. Mostly a Permian Basin play and went on the acquisition trail recently, buying up a couple of promising small companies with stock. Now controls a lot of very attractive assets, I understand.

This was an $80 stock before the cliff-dive earlier this year (after which I picked up some shares in the 25-32 dollar range, as I recall). I thought there was very little downside risk and that this would be a pretty decent recovery or reflation trade.

A bit of moderate inflation would be pretty good for oil, which in my view is likely to gradually return to the $70 range fairly soon, broad-based inflation or not.

Or maybe higher, if progressives get their way on exploration and production restriction. Demand for oil is almost certain to increase substantially in a post-pandemic world, in any event.

Besides, rattlesnake meat is pretty tasty. (Actually not kidding!)

And very keto-friendly, for those interested in getting greyhound lean.

.

Diamondback has the lowest SG&A as % sales in the business. They're lean and mean and own acreage in good areas. The company is considered one of the best operators in the Permian Basin.

I haven't looked at their valuation in a couple of years, but the last time I looked they weren't cheap. I guess you pay for quality. Your thesis that they may benefit from recent political developments if they cause the price of oil to increase could be correct. That assumes Biden remains as president. If he dies all bets are off as Kamala Harris favored a ban on fracking when she was a presidential candidate. Anyway most of Diamondback's acreage is in Texas. Only a little is on federal acreage in southeastern New Mexico, which will probably be off limits to drilling before long.

I've stayed away from the shale producers because they never produce free cash flow. They borrow money or issue equity to grow production and reserves, then at some point the price of oil drops through the floor and all the supposed "value" they created disappears. Supposedly this time will be different, these companies will start emphasizing profits instead of growth. I don't believe it.

Anyway, congratulations, you've done well. And where you bought it, I bet it was a no brainer.

[WTF]

Originally Posted by CaptainMidnight

.



This was an $80 stock before the cliff-dive earlier this year (after which I picked up some shares in the 25-32 dollar range, as I recall). I thought there was very little downside risk and that this would be a pretty decent recovery or reflation trade.

A bit of moderate inflation would be pretty good for oil, .

.

I took took a bite from the oil patch in the pandemic downturn. More a midstream player that is in pipeline delivery. EPD. I got it when it was paying above 10% and it received increased the dividend. I think at it's current price it is paying 8-9% and is not taking on debt to cover it...like an ExxonMobil.

So I'm not only optimistic in oil, I'm invested! Will EV be emphasized in the Biden admin. You betcha but it will be a slow transition with market forces playing the bigger part imho.