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Macro Confessions Part XXVII, projecting forward from the macro year 2006. Chris finds a dishevelled Acid Capitalist holed up in his cement bunker in St Barts. The initial salvos find the boys reminiscing about the Fight Club, The UNIBomber, Nirvana and bereaving the passing of Agent 007 as one of their own.

Hugh picks up the pace, sharing how he bought the chip company AMD and shorted its larger, more successful competitor, Intel simply because he thought the pattern reminiscent of the gold price's resurgence.  Oh Gosh, Oh Gosh I'm Juliette Binoche whispers a wistful Hugh as he confesses to inherent flaws in his trade, but the Dice Man vows never to stop throwing.

The child like wonders of curiosity, Hugh was always asking why the sky was blue? However, he's still furious about environmentalists seeking to prevent all new permitting and exploration for hydrocarbons. Such anarchy is driving energy prices higher. Europe's profound lack of resources is seeing governments subsidizing household energy bills. Could this be the fabled "helicopter money"? Will persistently higher and higher oil prices create permanent and rising  cash subsidies. Is this how inflation finally emerges?

A liberty Gas Pipeline from the US to Europe? The boys ask, would this not be a more elegant solution to confronting Russia's bear hug on the European energy market; better than NATO raising defence spending by $100 bn ? The Acid Shamen levitates with excitement at the notion of what a Europe with a cheap source of energy could achieve for the world.

Gas? Chris couldn't let the opportunity pass without asking about the 2006 hedge fund disaster, Amaranth's $6bn implosion, one of the largest ever. Hugh confesses that he too was long nat gas, just not that long!! Why? Because the price of oil had exceeded $40 per barrel for the first time in 25 years. Hugh explains the perils or opportunities from trading commodity futures curves, beware contangos at the short end. Gas prices rise from $1 to $6 per btu and yet you lose 80% trading futures. The boys explain why.

And finally, the Acid Capitalist reveals his new macro trade.

Tune in or lose out.







 

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