Mikey

Options Trader

[Mikey @Vybequant]

@AndrewInAlberta @cap_zay I was thinking more like a cliff...

[Douglas Padgett @MMTmacrotrader]

Inflation getting hot! Setting up some late cycle dynamics. Full analysis in the update.

https://t.co/wgkikq2FR3

[Mikey @Vybequant]

@DannyDayan5 it’s a real shame this is behind a paywall.

[Mikey @Vybequant]

@KC_Invests Same. Huge manipulation. The worst part is that it’s not signalling demand destruction with higher prices. So we’re heading towards the cliff and still have our pedal to the metal.

[Mikey @Vybequant]

It's astounding to me that $crudeoil markets are so complacent. This is 4+ orders of magnitude larger than Covid, 10x+ more than Ukraine

[HFI Research @HFI_Research]

I think a lot of people are using AI slop nowadays to calculate production shut-in math + rerouting. So let me clear it up once and for all.

Pre-War:

Saudi - 10.4 million b/d
UAE - 3.55 million b/d
Kuwait - 2.55 million b/d
Iraq - 4.3 million b/d
Bahrain - 0.18 million b/d

Total: 20.98 million b/d (crude)

Post-War:

Rerouting

Saudi’s East to West - 7 million b/d, but export capacity in Yanbu is only 4 million b/d. Domestic needs 2 million b/d.

Saudi shut-in - 3.5-4 million b/d

UAE’s Abu Dhabi pipeline - 1.8 million b/d.

UAE - 1.75 million b/d

Iraq - 3.5 million b/d

Kuwait - 2.35 million b/d

Bahrain - 0.18 million b/d

Total shut-in: 11.33 to 11.83 million b/d

This INCLUDES rerouting!

[Mikey @Vybequant]

Crude will pump this week, Nat Gas' time to shine will be next week. Assuming Trump doesn't sign a deal (v. unlikely IMHO)...

[Mikey @Vybequant]

@daniel_koss You forgot B2C. Enterprise is a moat in itself.

[Commodities R King 🪙🔥🛢️✋🏼🤚🏼 @lindlawesome]

Soon

[Mikey @Vybequant]

@tejparikh90 @iealondon @DanielJHannan @GreatBritishTT

[Ayesha Tariq, CFA @AyeshaTariq]

US home prices are now almost 5x the household income.

p.s. I couldn’t find a source for this chart, so please tag if you have it.

[Mikey @Vybequant]

@LEAPTRADER_ Options

[Mikey @Vybequant]

@JasonL_Capital Leaps

[Damian Pudner @DamianPudner]

As promised.

Get the figures on what the government takes on each litre of fuel. And much much more data besides.

https://t.co/c5Z2WWpq0C

[Mikey @Vybequant]

@ClarksonsFarm1 Do it! Onya Jeremy.

[ClarksonsFarm @ClarksonsFarm1]

Yes, drill our resources in the North Sea.

[Mikey @Vybequant]

@iAmJoshHunt This should make people VERY angry. What options do they have to get out of it?

[Josh Hunt @iAmJoshHunt]

This one will require a stiff drink.

In the early 1990s, the government came up with a clever idea. Instead of borrowing money cheaply to build hospitals, schools, and roads, it would get the private sector to build them and then pay the private sector back over 25 to 30 years. The Private Finance Initiative. PFI.

The attraction was obvious. You got a shiny new hospital today. The bill didn't show up on the government's books. The cost was deferred into the future. Politicians got ribbon-cutting ceremonies without the awkward conversation about borrowing.

It was, in effect, the nation's credit card. Buy now, pay later. Except the interest rate was extraordinary.

The total capital value of everything built under PFI was around £50 billion. As of March 2024, there were 665 PFI contracts still running across the UK, with roughly £136 billion in remaining payments stretching out to the early 2050s. These are payments public bodies are contractually locked into. Hospitals, schools, councils, government departments. Paying for buildings that in many cases were constructed twenty or thirty years ago.

And the terms are extraordinary.

PFI contracts were structured so the private sector would not just build the facility but manage its services. Cleaning. Maintenance. Catering. Portering. These services are bundled into long-term contracts with built-in inflation increases that the public sector cannot renegotiate, cannot exit without paying massive penalties, and often cannot even fully scrutinise because of commercial confidentiality clauses.

In one case raised in Parliament, a hospital was charged £333 to change a lightbulb. That isn't an urban myth. It was cited in Hansard.

The NHS has been hit hardest.

According to parliamentary analysis, the capital cost of NHS PFI projects was around £13 billion. The total repayments are estimated at around £80 billion. And the peak of NHS PFI annual repayments isn't even here yet. It arrives in 2029. The bills are still going up.

In 2020-21, NHS trusts paid £457 million purely in interest charges on PFI contracts. Not services. Not maintenance. Interest. In the last five years, NHS trusts have handed over more than £1.8 billion in PFI interest alone. We Own It calculates that money would have covered the starting salaries of over 50,000 new doctors.

One NHS trust, Essex Partnership, has reportedly paid back 27 times what was originally borrowed. Some hospitals are spending more on PFI repayments than on medicines for patients. And remember, these repayments come out of the same NHS budget that's supposed to fund patient care, staff, and equipment.

Scotland got it just as badly. Audit Scotland reported that Scottish taxpayers will pay a cumulative £40 billion for PFI assets worth just £9 billion. North Ayrshire Council will have paid £440 million by 2038 for four schools that cost £83 million to build.

Now here's what makes this worse.

Many of these contracts are starting to expire. The buildings are being handed back to the public sector. And the NAO has warned of significant risks around the handback process, including cases where public bodies were dissatisfied with the condition of assets being returned to them. Decades of payments. And some of these buildings may come back needing significant further investment.

So what actually happened?

The government could have borrowed money at significantly lower rates to build these hospitals and schools itself. Sovereign borrowing has always been cheaper than private finance. Instead, it paid the private sector to borrow at a premium and passed the inflated cost on to the taxpayer. The private sector took the profit. The taxpayer took the risk. The buildings are now ageing. The debts are still being paid. And the services that were supposed to benefit are being squeezed partly because so much of their budget is locked into contractual obligations they cannot escape.

PFI wasn't investment. It was an accounting trick. A way for governments to build things without the borrowing showing up in the national debt figures. It made politicians look fiscally responsible while loading future generations with obligations they had no say in and no ability to renegotiate.

Both parties did this. The Conservatives created PFI in 1992. Labour massively expanded it after 1997. More than 700 projects were signed. The coalition eventually wound it down. The current government scrapped the latest version. But the contracts remain. The payments continue. And the damage is already done.

This is what it looks like when a country chooses to buy its infrastructure on hire purchase instead of investing properly. You lock in above-market rates for decades. You lose control of the assets. You tie the hands of future governments. And when the bill keeps coming due, you're told there's no money for doctors, teachers, or social care.

There was always money. It just went somewhere else.

[Mikey @Vybequant]

@DamianPudner @GreatBritishTT Good luck!

[Damian Pudner @DamianPudner]

I’ve joined @GreatBritishTT because the gap between economic reality and policy narrative has become too wide.

Better data, clearer thinking, and a willingness to challenge orthodoxy are long overdue.

Editors and journalists - always happy to discuss.

[Mikey @Vybequant]

@iAmJoshHunt @GreatBritishTT