The biggest reason: The rise in energy is actually because the currency has depreciated. First of all, I think M2 is the real currency depreciation rate, not CPI. The growth rate of M2 in the United States in 2020 is 17%, and the growth rate of M2 in 2021 is 27%. In the two years of the epidemic, the currency has become close to 50%, and the price should rise by 50%. However, the US CPI has only risen by a dozen points. It can be seen that the CPI and Unemployment is meaningless. The real money is actually printed 50% more. There must be a place for more money to go. The inflation this time is not surprising at all. What surprised me the most is the stupidity and hypocrisy of the Federal Reserve. The nerd who writes policies according to the CPI, the Federal Reserve chose the simple and rude method of unplugging the power supply to deal with the 50% more money printed by itself. , very funny. When the economy is bad, I will print money and fight with blood. When the economy improves a little, I will directly unplug the power supply. After the economy collapses, I will start printing money again. Since these nerds are so afraid of inflation, why did they print a lot of money when they first printed money?
On the one hand, the supply of banknotes can increase by 50% in two years, and on the other hand, the output of fossil energy has not changed in the past 10 years.
Whether it is coal or oil, production has remained largely unchanged over the past 10 years. And the development cost is getting higher and higher. Demand is not lacking at all, especially with a sudden surge in coal demand. The mining industry prioritizes the development of the lowest cost part, and then the high cost part. Why not add it? Because all capital expenditures are taken as dividends, the existing production capacity can only be maintained.
Glencore’s sustainability report at last year’s general meeting was even rejected by shareholders, who felt that Glencore’s exit from coal was unacceptably slow. What is even more exaggerated is that many environmental protection organizations specifically buy the stocks of major coal companies (whether WHC or Glencore have shareholders of such environmental protection organizations), and then specifically criticize the management at the shareholders’ meeting, and use shares to make money. Put pressure on management to reduce carbon emissions.
Therefore, it is illogical to expect energy prices to return to their previous state when the currency continues to grow, but the production of fossil energy does not increase. The correction is possible, but it is impossible to directly return to the pre-epidemic period. In the past 10 years, the US dollar and the renminbi have become at least 2.5 times gross (calculated on the basis of a 10% increase in M2), especially during the epidemic, the currency depreciation is particularly serious, and M2 is the real depreciation speed. Not CPI, so it is not surprising that the price of fossil energy has become 2.5 times. For example, coal used to cost 100 a ton, but now it should be $250 a ton. Oil used to be 30, now at least 75
Therefore, the Fed raising interest rates actually only affects the depreciation rate of the dollar in the future, but it does not affect the part of the dollar that has depreciated in the past 10 years, nor does it affect the world’s energy demand and production at all. The impact of the Fed’s rate hike on energy stocks is actually limited to a blow to financing and liquidity, but it does not affect fundamentals at all.
Firmly bullish on energy, but the only thing to worry about is leverage, and ensuring there is no liquidity crisis is the bottom line. If there is no leverage, no matter how the Fed raises interest rates, it does not matter.
$CNOOC(00883)$ $Yancoal Australia(03668)$ $Yankuang Energy(SH600188)$
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