1. Week-in-Review
Poon Panichpibool

3. The Petro Bomb and 28 Debts Later
•Slump in Oil price = Real pains for Banks too! How?
•What is going on with the Banks? (Too much bad debts?)
•Will we have another financial crisis?
•The End of Debt Cycle?

4. The Petro Bomb
• Low oil price turned energy loans into bad loans.
• ⅓ of Oil producers (~175 companies) are at high risk of
bankruptcy - rising risk that bank loans will not be repaid.
(Source: Deloitte)
• Banks have to boost reserve for impaired energy loans.
• Affect their bottom lines!

5. The Petro Bomb - JPM Case
• If oil were to hold near $25 a barrel for 18 months, it would
need to boost reserves for impaired energy loans by $1.5
billion. (Is it possible for prolong historically low oil price?)

6. The Petro Bomb - $123B Banks’ Energy Loans

7. The Petro Bomb - Lots of Junks!

8. The Petro Bomb - A nightmare from Fed St. Louis

9. The Petro Bomb - A nightmare from Fed St. Louis
•Oil prices will reach $0 per
barrel by mid 2019.
•Good news … It’s largely
unrealistic.

10. The Petro Bomb - What’s next?

11. The Petro Bomb - What’s next? The Rise of EVs

12. 28 Debts Later - Many Banks reported bad Q
•Banks reported significant drops in profits, some even
reported losses.
• Result of loan losses provisions, losses tied to oil and gas loans,
restructuring costs etc.
• Might have to cut dividend? No Bonus? Lay off?

13. 28 Debts Later - Standard Chartered Case
• Standard Chartered makes first annual loss since 1989.
• Impairments rose 87 percent to $4 billion from the year-
earlier period.

14. 28 Debts Later - Standard Chartered Case

15. 28 Debts Later - HSBC dividend cut?

16. 28 Debts Later - Global Debt Contagion!
• Since the financial crisis, adding nearly $60 trillion in the
process of pushing the worldwide debt load to $200 trillion, or
nearly three times the size of the entire global economy.
• Are we near the end of the Debt cycle? Is it time for
deleveraging?
• How contagious new defaults and financial meltdown will be?
• This is why we are so worried about China (well, EM markets)

17. 28 Debts Later - Global Debt Contagion!

18. 28 Debts Later - Global Debt Contagion!

19. 28 Debts Later - Global Debt Contagion!

20. What do you think would be a good market
trade based on this information?
http://goo.gl/forms/vnNCoRmLsw

21. Additional Reading
• Ray Dalio's Economic Template
• Article: JPM rough Q
• Article: Stock and Oil correlation
• Article: China's Credit Conundrum
• Article: Global Debt Contagion?
• Article: Kyle Bass is Wrong about China?
• Kyle Bass' Letter
• Economic Calendar