Full Energy Retard: The Final Chapter

Who remember’s “Full Energy Retard” and its illustrious sequel, “Full Energy Retard, Part Deux“?

If you’re a Heisenberg newcomer, those might not ring a bell and some Heisenberg readers didn’t like those titles very much (sorry about that, watch Tropic Thunder).

Well, if you missed them, the point was simple: lots of folks were so confident in the OPEC deal that they were speculating HY Energy would ultimately trade inside of HY as a whole.

As Citi pointed out, that’s a state of affairs that’s persisted for extended periods in the past and the bank decided to run a survey to see how many clients expected it to happen again. Here’s the screengrab from the January survey:


A couple of weeks later, we got the results:


Here is what we said about that in January:

Note that HY energy trading inside of HY as a whole is inline with historical precedent, but betting on a return to that precedent is effectively a bet on oil prices going higher and, well… you know what we think about that.

Or, if you want a visual representation of what we thought about the 62% of Citi’s clients who said HY energy would start trading inside of HY again, see this:


Fast forward four months and crude is in a bear market having crashed to 10-month lows as of Wednesday afternoon.

Well, guess how that prediction about HY energy trading inside of HY has turned out? Here’s a hint:



“You gotta be super smart to trade credit, buddy, it’s not easy”…


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