Tag Archives: Markets Are Dumb

Saudi Arabia Goes To War | Coronavirus 2 | Oil Endgame | Markets Are Dumb 11

This Coronavirus thing impacts everything. The oil market is no exception. I’ve committed to some pretty strong predictions about the future of the oil market and how it means the end of the current regime in Saudi Arabia. I still stand by all of those predictions, but it’s hard to say whether this current crisis accelerates the timeline, or slows it down. Starting March 6th, Saudi Arabia went to war against every other producer in the world.

I believe that the US oil industry will be the most prominent victim. The sustained period of low oil and gas prices we are about to experience may bring us to an inevitable future more quickly. Saudi Arabia will be the last oil producer. The crucial question remains the price at which they are able to sell that oil for. It’s now possible to envision a future where Saudi Arabia controls price again… but only briefly. Today’s video explains…

If you’d like to earn my undying gratitude, please click where to support this project through Patreon. Please do reach out to us through Twitter, Facebook, Youtube, or our e-mail newsletter.

Video Transcript after the jump…

Continue reading

2008 All Over Again? | Coronavirus 1 | Markets Are Dumb 10

I’m not kidding when I say I’ve been agonizing over Coronavirus for months. It’s really quite infuriating how hard it was to get good solid information. China looked terrifying. But all market and government sources in the US seemed pretty relaxed. A couple weeks back only the US government was relaxed, while media was waking up to the shock. It was only two weeks ago that the markets began to reflect what was happening. Now everybody is losing their shit, just as China seems to be recovering. It’s all a mess.

When it comes to history, I usually know as much or more than any journalist I am reading. That’s not the case with diseases and epidemiology. It seemed like everything I read contradicted the last thing I read, making it impossible for me to say anything definitive. Eventually I gave up on talking about the disease. It’s too late to warn folks, we are now at the crisis, which is what today’s video covers. I feel like I’ve kind of let the viewership down. I knew this was coming for a while now, but I’m only now adding to the panic pile with this video. Guess I should bone up on biology for the next plague.

If you’d like to earn my undying gratitude, please click where to support this project through Patreon. Please do reach out to us through Twitter, Facebook, Youtube, or our e-mail newsletter.

Video Transcript after the jump…

Continue reading

How the Oil Market Dies | Markets Are Dumb 8

I often talk about the oil price on this channel. That’s what I do with today’s video. But I don’t think I talk about what incredibly good news the death of the oil market is. For the environmentalists this is a bit of a mixed bag, but I think on balance very good. The whole “peak oil” thing has turned out to not be a problem. 30 years ago it was mostly the US, Japan and Europe that were intensively using other people’s petroleum resources. We’ve more than tripled the number of people, and probably more than tripled the amount of consumption. And we’ve all survived. That’s pretty damn cool. The downside of course is that we’re producing more and more carbon. Cheaper oil prices are not a good thing for those worried about global warming in the short term. Oil is cheaper, more of it gets consumed, and more carbon gets dumped into the atmosphere. But it can actually be a good thing in the long term.

Lower oil prices provide the same sort of good news to environmentalists that it does to geopolitics nerds. Bad people have less power. If oil is permanently cheaper, that provides less money to all the people who used to use oil wealth to steer the world. As I keep pointing out, lower oil prices are leading to a collapse in terrorism. It will also lead to a collapse in oil industry influence in the United States and other countries across the world. We can already see it happening. The fact that electric cars have been allowed to go this far is an indicator of how much power the oil industry has already lost. The days when oil execs could confidently march into the government’s most powerful positions almost certainly ended with Rex Tillerson. The Oil industry’s global warming skeptics are still churning out their reports, but they look laughable to everybody now, including the oil executives who pay for them. The oil industry’s decline in prestige will cede the climate change conversation to the scientists and their friends in the environmental lobby almost entirely. Good news all around!

If you’d like to earn my undying gratitude, please click where to support this project through Patreon. Please do reach out to us through Twitter, Facebook, Youtube, or our e-mail newsletter.

Video Transcript after the jump…

Continue reading

Why Amazon HQ2 Is Good For New York City | Markets Are Dumb 7

So what’s more important, the short-term pain of vulnerable populations in New York City or the long-term health of the city? Actually it’s a trick question. It’s not an either/or sort of question. New York City’s vulnerable populations are just as reliant on the success of the city as the rich and famous are. More so actually. NYC has been the prime example of the “Blue Model of Government” for quite some time. Public Sector Unions own the city (and the state). The largest public housing blocks in the country are a dominant feature of the architectural landscape. There’s a lot of mismanagement and waste in the education and social services sectors, but there’s also a lot of impressive work being done, that couldn’t be done elsewhere. New York’s mix of wealth and poverty is unique.

All of this, the good and the bad, is reliant on New York retaining its position as the country’s dominant economic hub. If the golden goose flies south, the place will fall apart. Sure, the rent would get cheaper, but a lot of the social services would just evaporate. I wasn’t actually joking when I compared NYC to Detroit, the US city that has lost over half of its population over the past fifty years. For those who think the comparison is ridiculous, I suggest you take a walk through the Bronx, a part of New York City that still hasn’t recovered from New York’s last economic collapse. Today’s video may seem callous in privileging the interests of business over poor New Yorkers, but I don’t think that’s what I was doing at all. The interests are the same.

If you’d like to earn my undying gratitude, please click where to support this project through Patreon. Please do reach out to us through Twitter, Facebook, Youtube, or our e-mail newsletter.

Video Transcript after the jump…

Continue reading

The Stock Market’s “Trump Bump” Is Over | Markets Are Dumb 2

With today’s video we go all in on discussing the US stock market. There’s this idea that stock markets are somehow rational, or serious. People who talk about it are always wearing suits, and we put a lot of effort into making all the details of interest rates, portfolio management, and valuations seem boring. The stock market is none of these things. In fact it’s nuts. By going through the history of the “Trump Bump”, I attempt to draw the curtain back a bit.

Unfortunately, watching the video, I think I screwed something up. It’s not that the story I put forward is wrong, it’s just that I left too much out. The video falls into the “Presidents impact everything” school of commentary. I hate that school. The differing views market makers took of Trump and Obama are tremendously important to this particular economic story, but that doesn’t mean that presidents are actually all that powerful. I really don’t want to create that impression, and I apologize if I did so with this video.

If you’d like to earn my undying gratitude, please click here to support this project through Patreon. Please do reach out to us through Twitter, Facebook, Youtube, or our e-mail newsletter.

Video Transcript after the jump…

Continue reading

What’s an Economy? | Markets Are Dumb 1


I feel like markets and economics have been an underpinning of what I’ve been talking about for quite some time now. It’s been a troubling thing for me. There’s always a lot of certainty when these issues come up in political discussions, but usually almost nothing backing up that certainty. The conditions we’re looking at are always changing, and the theories that people gravitate to are some of the least proven imaginable. Economics has pretensions to being a science. But the variables are immense, and there’s really only one result.

We have one world economy, and its performance at any given time is the only thing that we have to point to, to see whether our theories are working. There is no control group. Most of the figures we rely on to measure what’s going on are little better than rough estimates, and the political consensus rarely lasts a decade. I have high hopes for the profession of economics. People are doing amazing work in the field, and the move onto the internet that our species is currently undergoing provides the possibility of real measurement (and Orwellian nightmares). I’m confident that the future is bright, but I think we all need a lot more humility in talking about the economy. Which is why I made today’s video, and why I’ll be adding to the series in the coming weeks…

If you’d like to earn my undying gratitude, please click here to support this project through Patreon. Please do reach out to us through Twitter, Facebook, Youtube, or our e-mail newsletter.

Video Transcript after the jump…

Continue reading