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iWar3: Iraq + Oil Status 26 June 2014

War Room. iWar3: Iraq + Oil Status 26 June 2014. HiddenLevers War Room. CE Credit. Macro Coaching. Idea Generation. Archived webinars. Open Q + A. P resentation deck. Product Updates. Scenario Updates. iWar3: Iraq + Oil Status. Market Update Middle East TurmOIL Scenarios

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iWar3: Iraq + Oil Status 26 June 2014

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  1. War Room iWar3: Iraq + Oil Status 26 June 2014

  2. HiddenLevers War Room CE Credit Macro Coaching Idea Generation Archived webinars Open Q + A Presentation deck Product Updates Scenario Updates

  3. iWar3: Iraq + Oil Status • Market Update • Middle East TurmOIL Scenarios • History of Middle East Oil Shocks • Energy Exposure – Good + Bad

  4. HiddenLevers Market update

  5. Market Update Winter devoured Q1 GDP Bill Gross losing it Q1 2015 Rate Hike? Dubai Market Crash Rates divergence – EU/UK sources: HiddenLevers, Forbes, Bloomberg, WSJ, BBC News, Business Insider

  6. Macro Snapshot -2.9% GDP is still positive + home prices rising = bond market signals no fear at all!

  7. HiddenLevers Middle East TUrmoil – Scenarios

  8. iWar3 – Mapping the Players African Warlords Authoritarian China Government ISIS Al Qaeda Taliban Iraq Government Latin America Drug Cartels Extremist Legit Govt US Tea Party GOP/Dems Occupy Wall Street Democratic source: HiddenLevers, Foreign Policy

  9. Conflict Contained Oil = 95usd recent uptick in Oil burns off Iraq govt more inclusive or replaced $95usd oil fields NOT in hands of ISIS extremists US involvement only diplomatic Iran + US + Syria stable Iraq good for all three iWar3 Civil war, not anti-US insurgency sources: HiddenLevers, New Yorker,

  10. US Strikes Raise Tensions Oil = 115usd $115usd Israel will not get involved Arab Spring 113usd high Overt US actions ruin Iran detente Iraq matters more than Russia Ukrazy firepower will not fix Iraq situation sources: HiddenLevers, New Yorker

  11. War Engulfs Gulf Oil = 150usd + Easy tell Baghdad in ISIS control Iraq govt gone failed state look for burning oil fields Oil all-time high $135usd Lebanon civil war 15 years $135usd distinct from Iran nuclear threat sources: HiddenLevers, Fox News NY Times

  12. Scenario: Middle East TurmOIL • Good • conflict • contained • Bad • US strikes raise tensions • Ugly • war engulfs gulf If the conflict remains in Syria and outside of major Iraqi oil fields, the market eventually forgets. Absent further risk to oil fields, US strike only raises oil risk premium mildly. If oil fields in southern Iraqor Kurdish-Iraq are set aflame or taken offline, oil prices will spike substantially.

  13. HiddenLevers History of Middle East Oil Shocks

  14. Middle East Oil Shocks – Never Forget +135% +30% sources: HiddenLevers

  15. Middle East Oil Shocks – iWar1 + iWar2 iWar1 1990-91 - spike: US invaded Iraq - retreat: Iraq pushed out of Kuwait +95% • iWar2 2003-08 • spike: ME tension + rising speculation + USD down • - retreat: Iraq drilling ban ends + oil bubble pops + financial crisis +335% sources: HiddenLevers, CNN

  16. US Withdrawal from Oil Addiction Shale oil explosion is driving US oil production back toward all time high Oil imports have fallen below 9M bbl/day from peak of 15M Production has risen so much that White House is ending ban on US oil exports sources: US Dept of Energy EIA, USA Today

  17. US Withdrawal from Oil Addiction US fuel economy rising after being flat for decades New govt standards require 54 mpg for 2025 model year Total US miles driven down 3% from 2007 peak while GDP up 7% Less driving + better mpg oil demand down 15% from peak source: Our Finite World , Oil & Gas Journal

  18. Iraq + Oil Status – Recap burning oil fields move the needle US oil addiction over --> better policy decisions oil shock history = history US + Iraq both Oil Exporters

  19. HiddenLevers In Azerbaijan, bathing in pure crude is encouraged Energy Exposure – Good + Bad

  20. Bad Oil Exposure – Don’t trust ETF marketing Oil Futures ETFs Don’t Track Oil. Physical Oil Funds Don’t Exist. Physical Gold Easy to hold. Physical Oil difficult to hold. Gold ETFs Track Gold Perfectly. source: HiddenLevers

  21. Good Oil Exposure – High Oil Correlation Get investment ideas across industries, ranked by Oil Beta

  22. Macro Picture – Global Deflation Risk decreasing birth rate technology automation commodities sinking sluggish GDP growth first world baby bust So far, deflation trumps geo-political worries sources: HiddenLevers, Economist

  23. HiddenLevers Use Cases iWar3 – Iraq + Oil Status scenario Middle East TurmOIL scenario Global Deflation data center Commodities scenarioOil Prices macro themeHigh Oil Beta Funds

  24. Product Update • Universal Search • Core Model Improvements – Monte Carlo • Annuities Support • Black Diamond Integration • Coming Soon: • - Lighting Fast Portfolio Entry • - Landscape Layout

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