“I'm sort of a pessimist about tomorrow & an optimist about the day after tomorrow” - Eric Sevareid

MACRO / REG.

We see messes being made & regulators preparing for clean-up:

1. From Deutsche Bank to Bank of Oklahoma, loan loss reserves may be an issue again

   • Good news for them, the regulators are happy to provide relief

2. If the world backtracks from Basel 3, we won’t be surprised

   • Would you call that a Basel 2-Step?

3. Insurance is another animal - we can’t imagine that actuaries forecasted a scenario where corporate & health insurance markets were stressed this hard, globally

   • And if they did - and punted it to the re-insurers - well, it’s still a matter of stressed actuarial reserves

In any case, we’re expecting bailouts & stimulus packages of comical proportions -

OIL.

The supply & price Oil is still half of our problems, and we don’t see this being resolved in the short term.

New developments in the price war include:

• Saudi announced ANOTHER production increase

• The UAE announced a 30% production increase

• Russian E&Ps held firm, claiming to be fine with much lower prices

We think this is Aramco’s back-of-the-napkin revenue ($MM/day) math:

E&Ps.

Yesterday - at close - Warren Buffett could’ve bought Shell, with Berkshire’s cash on hand…

To say that it’s been a long week is an understatement.

We don’t feel like knocking everyone while their down, so will move on to the other half of our problems - the Virus -

VIRUS.

Over the last 6x weeks, we’ve beat this topic to death.

On Wednesday, it seems that much of the US adopted views similar to ours.

Better late than never -

We’ll leave you with 3x current pieces on the virus that we believe are worth reading:

• From Tomas Pueyo - What to Do

• From Elad Gil - Virus Update

• And, Ohio has 5x confirmed cases, but estimates that 1% of Ohio has the virus

SPORTS.

We bet on sports.

And that ended on Wednesday…

From Bryan Fischer:

Share Reserve Report

OTHER NEWS.

• Undrawn credit lines across the US were drawn over liquidity fears. Both banks & the Fed assured the market that liquidity would not be an issue:

• Daniel Yergin’s take on the Virus+Oil

• OFS is still getting squeezed

• Post-OPEC+ fallout, tanker rates have spiked

• Central Banks buying Equities bothers us

That’s it for this week - we’ll back Tuesday - we’re going to take a look at a few Oxy wells over weekend, to see what everyone is fussing about - be safe -