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high yield oil OPEC

Full Energy Retard: The Final Chapter

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

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:

retard2

A couple of weeks later, we got the results:

retard

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:

retarded

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:

HYOAS

Oops..

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

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