Financial Markets Meltdown

[Dean2]

Just a bit of an update.I have now sold all IPL shares at 20.25 as that is 75 cents higher than the highest bid right now, and bought more PPL at 38.01. The speculators have IPL trading above the best offer on hopes of more bids, I don't see PPL increasing its .5 PPL share for each IPL share. If PPL shares rise to $39, recent high was $39.60, that exchange ratio matches the current Brookfield Infrastructure bid of 19.50. Whether PPL wins the deal on not its share price is going up from 38 in my opinion, plus they pay almost 3 times the dividend that IPL does. PPL will likely go up faster in the short terms if they don't win as they are still trading $1.60 below their recent high. Longer term I do hope PPL wins the bids because they will make a ton from buying IPL so cheap.


KGB If you bought a couple of days ago at around 37.50 and PPL just goes to its old high you will be up 5.6%. I don't see it going up another 15% in a month but over 4-6 months I think that is pretty likely.

[Bluedog]

The Heartland Project still has another 18 months of construction to complete not including all the rework and MOC’s
Won’t see plastic 2023
Bluedog

[KGB]

Originally Posted by Dean2

KGB If you bought a couple of days ago at around 37.50 and PPL just goes to its old high you will be up 5.6%. I don't see it going up another 15% in a month but over 4-6 months I think that is pretty likely.

I am looking at a longer term hold, on top of the stock price appreciation I’m also attracted to their dividends… I will be very happy with a 15% up in a 6 months plus dividends….

[Dean2]

Originally Posted by Bluedog

The Heartland Project still has another 18 months of construction to complete not including all the rework and MOC’s
Won’t see plastic 2023
Bluedog

Well unless you know more than the company does you are not correct on this. Here is the latest company update from 2 weeks ago. If they are releasing wrong information intentionally there are severe SEC sanctions that would apply.



CALGARY, AB, April 22, 2021 /CNW/ – Inter Pipeline Ltd. (“Inter Pipeline”) (TSX: IPL) today announced the following update on production capacity contracting, adjusted EBITDA guidance, environmental advantages and other matters relating to its Heartland Petrochemical Complex (“HPC”).
HPC, which is in the final stages of completion in Strathcona County, Alberta, will be an industry-leading petrochemical facility converting locally sourced, low-cost propane, into high-value polypropylene. Polypropylene is an easily transported and fully recyclable plastic used in the manufacturing of an extensive range of essential finished products and consumer goods such as healthcare products, medical supplies, textiles and lightweight automotive components.
The construction of HPC continues to advance, with the propane dehydrogenation plant expected to be substantially mechanically complete in May 2021 and the polypropylene facility by the end of the year. Polypropylene production is expected to commence in early 2022.
HPC Capacity Contracting
As previously disclosed, Inter Pipeline’s objective is to secure a minimum of 70 percent of HPC’s polypropylene production capacity under long-term, take-or-pay agreements; a commercial framework that will make HPC unique in the world for an integrated polypropylene facility. These agreements are structured to include a stable return on capital payment to Inter Pipeline plus fixed and variable operating fees, with no exposure to commodity price fluctuations.
Inter Pipeline’s contracting efforts to date have yielded significant results. Currently, approximately 60 percent of HPC’s production capacity is held under executed take-or-pay agreements with seven counterparties, including Canadian and multinational energy producers and North American polypropylene consumers. One of the executed agreements is subject to conditions expected to be satisfied this quarter. The weighted-average contract term of the seven agreements is approximately nine years.
“Our commercial teams have made great progress in securing high-quality, long-term contracts for HPC’s production capacity,” stated Christian Bayle, Inter Pipeline’s President and Chief Executive Officer. “Our systematic approach to contracting this unique facility over the past several years has been key to creating a diverse customer base and has resulted in a stable cash flow profile consistent with our energy infrastructure business model.
“We are over 85 percent of the way to our minimum contracting objective and advanced negotiations are proceeding with a number of additional counterparties. Should these negotiations be successfully concluded as anticipated, Inter Pipeline will be in a position to exceed its 70 percent minimum target for production capacity under long-term contracts, in advance of the facility becoming operational in early 2022.”
HPC EBITDA Guidance
In 2023, the first full year of operations, Inter Pipeline expects HPC to generate annual adjusted EBITDA in the range of $400 to $450 million. Approximately 70 percent of this adjusted EBITDA range is expected to be generated by a combination of stable take-or-pay cash flow from existing capacity contracts with the seven counterparties as outlined above, and fixed cash grant received through the Alberta Petrochemical Incentive Program* (“APIP”). Furthermore, approximately 85 percent of this take-or-pay cash flow and APIP grant will be from investment grade counterparties or private firms with investment grade owners.
The remaining 30 percent of forecast 2023 annual adjusted EBITDA is anticipated to be generated through merchant sales of polypropylene production currently not under take-or-pay contracts. In estimating the merchant sales, Inter Pipeline assumes, among other things, a US$1,200 per tonne spread between North American posted polypropylene and Edmonton propane prices. This is a conservative assumption when compared to the current spread of US$2,300 per tonne and the seven-year historical average of US$1,400 per tonne. As additional take-or-pay capacity contracts are executed, stable adjusted EBITDA from those agreements will grow, and merchant product sales will decline.
In 2022, HPC adjusted EBITDA is expected to be approximately two thirds of the 2023 guidance range, as the facility’s production begins partway through 2022 and capacity ramps up over the course of this two-year period. Long term, Inter Pipeline continues to expect HPC to generate approximately $450 to $500 million of average annual adjusted EBITDA. This represents a strong return on invested capital and is a substantial increase when compared to Inter Pipeline’s consolidated 2020 adjusted EBITDA of $969 million.
An Environmental Leader
Inter Pipeline is committed to building a sustainable future through its business practices and HPC has been designed to deliver to shareholders the benefit of sustainability as a commercial opportunity. Through the use of advanced technology and on-site hydrogen-augmented power and utilities generation, the polypropylene produced at HPC is anticipated to have a greenhouse gas (“GHG”) emissions footprint 65 percent lower than the global average.
In fact, HPC is expected to have among the lowest GHG emissions profiles of any comparable integrated facility in the world, making its production desirable by sustainability-minded global polypropylene consumers.
HPC Partnership Opportunity
In February 2021, Inter Pipeline initiated a comprehensive review of strategic alternatives to maximize shareholder value. The process to secure a partner to purchase a material interest in the Heartland Petrochemical Complex remains an integral component of this ongoing strategic review. The partnering process remains active and is expected to conclude in the first half of 2021. There can be no assurance that a definitive agreement will be reached or, if a transaction is undertaken, as to the terms or timing of such a transaction. Inter Pipeline will provide updates to this process as appropriate.
Join Us: Virtual Tour of HPC
On May 12, 2021, Inter Pipeline will host a virtual tour to highlight current construction and operational readiness at the Heartland Petrochemical Complex. Presenters for this virtual event will include: Senior Vice President of Petrochemical Development, David Chappell, and Project Director, Neil Montgomery. The virtual tour will be followed by a question period.
Date: May 12, 2021
Time: 2:00 p.m. MT (4:00 p.m. ET)

[Jim Blake]

Not a fan of Brookfield as well. Especially after Mark Carney joined them. I just read the National Post's article on Carney and his book....shocking and very scary stuff!!

Carney is a perfect candidate for a trip to the Train Station!!

I see the article is posted in the Politics Super Thread.

[fishtank]

Originally Posted by Jim Blake

Not a fan of Brookfield as well. Especially after Mark Carney joined them. I just read the National Post's article on Carney and his book....shocking and very scary stuff!!

Carney is a perfect candidate for a trip to the Train Station!!

I see the article is posted in the Politics Super Thread.

brookfield should swoop in and buy up all the privatetized prison , they are the most hated stocks right now( with the blm and police reform ) but given the direction current govenment are headed, if the can survived the short term debt issue, they will gain on the long term . those big government contract will be back .

[big zeke]

There is a huge difference between being mechanically complete and being operational. On very large facilities the intervening steps (fully complete, commissioned, started up and turned over to Operations) can span many months, even years. The IPL release is correct, well worded and leaves an opening for a protracted startup phase.

Even once operational, the facility is considered running when it makes it's first pound of product. It can take a long time until the facility reached nameplate thruput and the associated cashflow.

Once operational there is often sustaining capital investments in the range of 2-5% of original build costs but that is usually caught in the modelling. In cases of a project that runs late, the sustaining capital is often used to finish the build.

I'm guessing it'll be late.

[bdub]

Originally Posted by KGB

I am looking at a longer term hold, on top of the stock price appreciation I’m also attracted to their dividends… I will be very happy with a 15% up in a 6 months plus dividends….

I will be ecstatic if we get a return like that off of them in the next six months.

If PPL is successful the stock price is going to have to get through the overhang of BIP divesting their interest in IPL. Could take some time.

[Dean2]

Originally Posted by bdub

I will be ecstatic if we get a return like that off of them in the next six months.

If PPL is successful the stock price is going to have to get through the overhang of BIP divesting their interest in IPL. Could take some time.

In my opinion BIPs threat to dump PPL is just game playing. Post a PPL deal BIP would hold a very small percentage of PPL. they only directly control 10% of IPL and PPL is much larger. On top of that BIP will want to maximize the return so they will sell off over an extended period. No matter what happens they will make a great return, they bought most of their IPL in the 12 to 13 dollar range and will cash out north of 20.

[Bluedog]

The construction of HPC continues to advance, with the propane dehydrogenation plant expected to be substantially mechanically complete in May 2021 and the polypropylene facility by the end of the year. Polypropylene production is expected to commence in early 2022.
Plus 12 Months

[MooseRiverTrapper]

Wti $70

[jstubbs]

Nice of Alta Govt to subsidize TC Energy shareholders

[Dean2]

Well, Pembina Pipelines closed at 39.90 today and traded slightly higher, so it has now surpassed its previous high of 39.60 from pre IPL bid period. It would appear the street is betting PPL will win over BIP, and BIP filing to have the 350 million break fee set aside is just more delay tactics and theatrics. The large Banks are contacting holders of IPL to see what they want to do about the BIP offer but interestingly they are not asking the same question about the Pembina offer. I can't imagine anyone taking BIP up on a 19.50 offer when the Pembina offer is at 19.80 and the market on IPL is at 20 and the market price today is 20.25.

Just as an aside, any of you that bought Ensign between 40 cents and a buck should be very happy, it is trading over 1.90 today.

[pikeman06]

Hey Dean don't catch a falling knife. Remember? Oil n gas are done. I guess even the "smartest" of us fall victim to media hype every so often eh? Energy is what drives the world, pick some form of energy and invest and you will get a gain sooner or later people. It all has its place, and will till the end of mankind.

[Dean2]

Originally Posted by pikeman06

Hey Dean don't catch a falling knife. Remember? Oil n gas are done. I guess even the "smartest" of us fall victim to media hype every so often eh? Energy is what drives the world, pick some form of energy and invest and you will get a gain sooner or later people. It all has its place, and will till the end of mankind.

I said it and it was correct at the time. Never buy stuff on the way down. That is still good advice. Wait till you are darn sure it has bottomed. Guys that bought Whitecap at 7 after it had been at 20 thought it was a deal but the trend was still down. It bottomed around 2. If they bought at 7 and held, they are at least back even, if they bought at 15 they still have a long ways to go. Vermilion had been over 40, everyone on bnn thought it was a great deal at 20, it bottomed below 3. That is a falling knife. Once it recovered to around 4 with improving oil prices and demand it is time to buy. If u look at where it is today it was a money making buy. Same for ensign, was over 9 dropped to 4, heck of a deal, bottomed below 50 cents. Once it recovers to 80 cents with an upward trend time to move. All that said, these are all short term trades. None of these fit into longterm buy and hold portfolios. Oil and gas will be around for decades yet but it is so reviled that big money is less and less interested. You can make money playing the swings but the long term trend for these stocks is down.
The pipelines will follow the same trajectory. They have been a great investment for 70 years but like Kodak, the future is swinging against them. Time to find another asset class with long term growth and good dividends to start moving that money into over the next 10 years.
If you read just what I have written over the course of this thread you will find my views remain consistent, which isn't surprising since it is the same perspective I have had for over 30 years.

[bdub]

I view the pipelines like the rails. Building any new lines is getting increasingly difficult. Existing lines in the ground are only going to become more valuable over time.

Same thing with oil sands producers with operations in production. They are sitting on huge reserves with no declines, producing oil at 20$ bbl op costs in a world where OPEC has put a floor at 60$, in an environment where the west is increasingly hobbling domestic production. They are like a utility throwing off massive amounts of FCF. And they are working on the hard ESG front. And the best part is everybody hates them so they're still cheap as hell. Not as cheap as last summer, but still cheap.

[Dean2]

Originally Posted by bdub

I view the pipelines like the rails. Building any new lines is getting increasingly difficult. Existing lines in the ground are only going to become more valuable over time.

Same thing with oil sands producers with operations in production. They are sitting on huge reserves with no declines, producing oil at 20$ bbl op costs in a world where OPEC has put a floor at 60$, in an environment where the west is increasingly hobbling domestic production. They are like a utility throwing off massive amounts of FCF. And they are working on the hard ESG front. And the best part is everybody hates them so they're still cheap as hell. Not as cheap as last summer, but still cheap.

Differing views is exactly what makes a market. For every seller who sees better opportunity elsewhere, there needs to be a buyer that thinks he is wrong. I actually hope Suncor and the pipelines have a better and longer run than I expect but I am not willing to bet capital on it. Lucky for them there are many others that think I am wrong.

[bdub]

Originally Posted by Dean2

Differing views is exactly what makes a market. For every seller who sees better opportunity elsewhere, there needs to be a buyer that thinks he is wrong. I actually hope Suncor and the pipelines have a better and longer run than I expect but I am not willing to bet capital on it. Lucky for them there are many others that think I am wrong.

For sure, it’s always supply and demand.

I know we’re both watching this IPL deal with interest but did you notice another small deal today in patch as my second favourite energy company snapped up a Black Swan for 1.1 billion. The market seemed to like that one.

Not as big a fan of Suncor. Last time I looked I believe their op costs were in the thirties. But yeah, I hope our patch keeps going strong for many years too.

[Twisted Canuck]

Tourmaline has really had a good run up this year, I like the deal they did.

[bdub]

Originally Posted by Twisted Canuck

Tourmaline has really had a good run up this year, I like the deal they did.

Ubet, they've been doing lots of small deals in the last year or so, snapping up land, infrastructure and production in tight gas. Their head honcho is constantly buying shares. I don't think there has been a quarter where he hasn't bought several thousand shares for quite a while.

[MooseRiverTrapper]

Originally Posted by Twisted Canuck

Tourmaline has really had a good run up this year, I like the deal they did.

TOU WCP BTE NVA PEY MEG SU ATH ERF CPG KEL and more have been running wild.

[Jim Blake]

Originally Posted by MooseRiverTrapper

Wti $70

WTI this morning at 72.45!

I am going to start peeling off my Athabasca, MEG this morning and put it into the solid dividend payers I'm into now. If they keep skyrocketing that's fine with me. No such thing as bad profit LOL!

Keeping the Service Sector stocks for now.

[fishtank]

us fed will keep the cheap money printing , with tame inflation numbers. there going to be ugly wake up once the inflation lid gets pop.

Goods and service are not worth more, its just the money worth less ..... the items at the dollars store is no longer a dollar

[sendmethem]

Originally Posted by MooseRiverTrapper

TOU WCP BTE NVA PEY MEG SU ATH ERF CPG KEL and more have been running wild.

I would add HOCL to this list. My first multi-bagger on a bit of whim but hey, I'll take the money and run!

[Dean2]

If you have money in commodity stocks or the commodities themselves have a look at what is happening. Many have given back all of their 2021 gains, others are still high but coming down. Supply of the raw materials isn't currently the constraint or what is driving inflation. The accelerating growth in inflation is due to supply chain issues, rampant demand for product caused by far more printed dollars chasing the same or lesser amount of stuff, in conjunction with constrained production and shortages of key components like Chips, Batteries etc.

With the economies of most countries just starting to open up, there is a lot of pent up demand and cash sitting in Bank accounts. Not to mention the wealth effect in many places of the large updraft in house values that provides more borrowing capability. Take a look at your portfolio and make sure you have some ability to benefit from the inflation cycle and higher interest rates. Most of these stocks are up some already but we are only at the beginning of this inflationary cycle, it will get much worse before it flattens out. ( Anyone that calls this re-inflation speaks with forked tongue. For there to be re-inflation there had the be deflation to start with and we sure haven't seen any of that in the past 18 months.)

Oil is over 72 bucks and still rising, the G7 have quietly backed away from their earlier commitment of 2030 for no more ICE vehicles as it really isn't feasible. On top of that Airplanes, boats etc aren't going electric any time soon. Still does not convince me that oil is a growth area but it does prove it has a longer runway than the talking heads are admitting to.
Hope you have all benefited greatly from the rise in the stock markets. TSX is in all time record territory and more than 2500 points or 14.3% higher, than it was before the big drop just over a year ago

[fishtank]

Originally Posted by Dean2

If you have money in commodity stocks or the commodities themselves have a look at what is happening. Many have given back all of their 2021 gains, others are still high but coming down. Supply of the raw materials isn't currently the constraint or what is driving inflation. The accelerating growth in inflation is due to supply chain issues, rampant demand for product caused by far more printed dollars chasing the same or lesser amount of stuff, in conjunction with constrained production and shortages of key components like Chips, Batteries etc.

With the economies of most countries just starting to open up, there is a lot of pent up demand and cash sitting in Bank accounts. Not to mention the wealth effect in many places of the large updraft in house values that provides more borrowing capability. Take a look at your portfolio and make sure you have some ability to benefit from the inflation cycle and higher interest rates. Most of these stocks are up some already but we are only at the beginning of this inflationary cycle, it will get much worse before it flattens out. ( Anyone that calls this re-inflation speaks with forked tongue. For there to be re-inflation there had the be deflation to start with and we sure haven't seen any of that in the past 18 months.)

Oil is over 72 bucks and still rising, the G7 have quietly backed away from their earlier commitment of 2030 for no more ICE vehicles as it really isn't feasible. On top of that Airplanes, boats etc aren't going electric any time soon. Still does not convince me that oil is a growth area but it does prove it has a longer runway than the talking heads are admitting to.
Hope you have all benefited greatly from the rise in the stock markets. TSX is in all time record territory and more than 2500 points or 14.3% higher, than it was before the big drop just over a year ago

yep, put some money in food and consumer good like kraft and P&G and unilever, nestle cause their price will be adjusting to the inflation .

[bdub]

Despite the softness in some commodities recently (lumber was parabolic in its rise), we have a long way to fall to get to pre-pandemic levels. We're about to find out if and which price increases are transitory or persistent over the next few months. Gonna be interesting.

Price changes from July 2019 to June 2021.

Lumber 161%
Corn 64%
soybeans 59%
cattle 13%
hogs 37%
oil 22%
nat gas 44%
copper 52%
sugar 35%
cotton 32%
wheat 36%

[Buckhead]

Commodities have been in a deflationary cycle for the past 7 - 10 years, since their highs of 2011 - 2014. Except for lumber I have not seen anything to indicate a super inflationary cycle approaching. Lumber prices appear to be into a large corrective phase.
Most commomodities are still well off of their previous cycle highs (some by 100% or more). I would expect to see some of the futures prices at the very least breaking new highs before I would become alarmed.
My feeling is most commodity prices are going to have a certain amount of volatilty for a while until the trading range is established. Right now I don't believe traders are sure where the foor/ceiling price actually is.

[Dean2]

Anyone that thinks inflation will be transitory is dead wrong.





Soaring costs challenge Canadian retailers counting on post-COVID surge

21 Jun 2021 - Reuters
Soaring costs challenge Canadian retailers counting on post-COVID surgeBy Julie Gordon
OTTAWA (Reuters) - Canadian retailers are readying for a post-pandemic rebound as consumers emerge from lock downs and open their wallets, but higher costs are eroding their profit margins and fanning inflationary pressures.
Skyrocketing transport and input costs - fuelled by a global shipping container shortage and surging demand for raw materials - mean prices set a few months ago no longer make sense, especially when demand for goods is so high that certain products are selling out before they even arrive.
Many retailers and importers are sacrificing margins to try to weather what they hope is a temporary imbalance as the world snaps back from the pandemic. But some are also increasing their prices and that is helping feed Canada's hottest inflation in a decade in May.
While the Bank of Canada says the current period of high inflation is transitory, it warned this month that if supply imbalances persist, inflation might lead it to reduce stimulus more quickly than expected.
For furniture importer Rachel Bourdages, the cost of getting shipments from India and China to Canada has quadrupled amid the shipping container shortage. Last year, she was paying around $4,000 per container.
"Last month, for the same container, it was $15,000. And this month ... it will be around $16,900," said Bourdages.
Bourdages and others also are facing frequent price increases from their suppliers, who are grappling with surging costs for raw materials like wood and metals, along with labor shortages.
Bourdages is increasing prices where she can, but it is not enough to make up for her added costs. And the shipping delays mean she is under pressure to order products months in advance, with no guarantee the price she gives her customers now will be sufficient by the time the goods arrive.
It's not just small businesses feeling the pinch. Retailers like Canadian Tire and parka maker Canada Goose noted the cost impact of the global crunch in recent investor calls. And consumer prices for everything from clothing and shoes to furniture and cars have jumped on the year.

Graphic: Canada inflation by select components - https://graphics.reuters.com/CANADA-...lwpr/chart.png

Still, retail sales are expected to boom this summer and were already tracking about 5% higher in early June, according the RBC COVID Consumer Spending Tracker.
The only bright spot for retailers has been the strong Canadian dollar, which has surged 9.6% in the last year, giving importers more purchasing power.
"When the Canadian dollar is stronger, that gives them at least a small buffer," said Diane Brisebois, chief executive of the Retail Council of Canada.
But that buffer is not enough, particularly for furniture retailers and importers who as of May are facing a new anti-dumping tariff on upholstered sofas and chairs from China and Vietnam, two of the largest supplier markets.
Love Dodd, who owns three furniture stores in British Columbia, canceled 35 containers he had on order rather than pay the tariff of up to 296%. The shipments he was unable to cancel or divert have cost him hundreds of thousands.
"That's not something I can pass on to my customers, I can't say 'Mr. and Mrs. Jones, that sofa you've got coming in, we have to charge you 296% extra,'" he said. "We'll be eating the costs on that."

(Reporting by Julie Gordon in Ottawa; Editing by Steve Orlofsky)

[roper1]

Short & long bond yields going down. Housing sales down quite a bit m/m. Money back into stocks, although some of that surely gov't. I'm not sure when to say Uncle & cash some, but there is certainly growing sentiment that post pandemic might look something similar to pre-pandemic?