Inflection point

12 June 2021

Dear Fellow Investor,

Inflection point

Last week I had my 2^nd dose of Phizer and Dolly her 1^st dose of Astrazeneca . Mine was done in the METIC while Dolly’s was at the PWTC. No side effects except slight dizziness . The vaccination process  was  well handled and efficient.    Waiting time was minimal. The venues were well chosen as they are able to handle a large volume of vaccinations and access is user friendly.  Staff are very helpful.

I see this is an inflection point for Malaysia as is the only way out of the pandemic and a move to economic recovery are mass vaccinations. The government has finally woken up to this reality and they have gotten their act together. 

Those countries who have rolled out mass vaccinations are seeing good results with lower infection and death rates and their economies are going back to normal. Australia, Singapore, UK, China, Hong Kong, US and Europe are some examples.  Japan has finally woken up to this reality.

With the pandemic receding oil demand is recovering. Below is a headline from the Fleet St Letter.

Reports of the death of oil are grossly exaggerated.  

The main stream media, International Energy Agency , the Biden administration and most European governments  are pushing for the shut down of fossil fuel. Biden has already stopped oil drilling on government land, shut a major oil pipeline and cancelled off shore oil leases. He also has plans to increase regulations and taxes on oil producers to cut into their profit margins.   Couple this with the pandemic recovery, the result has been sharply higher crude oil prices.
From the Fleet St Letter here is a quote  from Alexander Novak, the Russian deputy prime minister .

 

“If the world were to follow the International Energy Agency’s controversial road map, which said that investment in new fields would have to stop immediately to achieve net-zero carbon emissions by 2050, the price for oil will go to, what, $200 [per barrel]? Gas prices will skyrocket… oil and gas will still be around for decades to come.”

Novak is telling us what we should already know but don’t seem to admit. That is by halting investment in oil production, there will soon be less available oil and prices will rise, potentially dramatically.”

At $71/barrel, Brent Crude has more than doubled in price relative to mid-2020

Everything is effected by energy prices. In the US inflation is rising because of the jump in energy prices. Biden could easily lose his majority in congress in the next mid term elections in less than 1 ½ years because of  misplaced green energy policies, massive tax increases, deficit  and social spending.  To keep power he and other officials in major countries will maintain low interest rates and that will keep stock markets supported.  Malaysia’s export industries and economy will continue to recover as supply chains open up, people go back to work and spending recovers.    The latest lock down is inconvenient but will pass. As oil prices inflate this  benefits  Malaysia’s fiscal position.

Keep safe

Bill

Buyer’s remorse