Comments on: It is good to be the king (of oil) http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/ Sat, 07 Nov 2009 04:45:11 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Movie Guy http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109333 Movie Guy Wed, 02 Jul 2008 05:19:31 +0000 http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109333 Good post, Brad. --- Good post, Brad.

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]]> By: Rachel http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109292 Rachel Tue, 01 Jul 2008 00:00:28 +0000 http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109292 Brad - great post and graph. I think though that KIA's website doesn't respond to any new PR move. Its always been one of the more complete of the SWF websites (something that's been rather helpfu in the past as has the tendency of Kuwaiti parliamentarians to leak KIA's assets to the press). They even include information on benchmarks (which is rather rare) for their counterparts. The real question in my mind with Abu Dhabi is now how its assets on a stock and flow basis are distributed between different investment vehicles (ADIA, ADIC, Mubadala and others) But it seems pretty clear that with oil at $140 there's plenty of money to spend a lot at home and a lot abroad. Brad – great post and graph.

I think though that KIA’s website doesn’t respond to any new PR move. Its always been one of the more complete of the SWF websites (something that’s been rather helpfu in the past as has the tendency of Kuwaiti parliamentarians to leak KIA’s assets to the press). They even include information on benchmarks (which is rather rare) for their counterparts.
The real question in my mind with Abu Dhabi is now how its assets on a stock and flow basis are distributed between different investment vehicles (ADIA, ADIC, Mubadala and others)
But it seems pretty clear that with oil at $140 there’s plenty of money to spend a lot at home and a lot abroad.

]]> By: Scott http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109289 Scott Mon, 30 Jun 2008 23:41:45 +0000 http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109289 <a href="http://yellowroad.wallstreetexaminer.com/blogs/2008/06/30/china-and-commodities-the-last-bubble/" rel="nofollow">Wall Street Examiner</a> hypothesizes that China is "building a multi-year stockpile of various commodities to diversify its trade surplus. Anything that can be practically stored (as metals, grains) is removed from the world markets and stored. Obviously it creates gigantic price distortions. This is why I’m watching China, at some point I expect the consumption of industrial metals by China to slowdown dramatically as they shift from imports to enormous domestic stockpiles. In fact I think China can easily continue to grow for some time without importing any industrial metal at all. Zero." I'd be interested in your thoughts regarding this theory. To me, the price distortions would seem to make this approach a mistake for the Chinese as they are costing themselves money as their demand drives prices up. On the other hand, they will suffer on their holdings of Treasuries eventually. Wall Street Examiner hypothesizes that China is “building a multi-year stockpile of various commodities to diversify its trade surplus. Anything that can be practically stored (as metals, grains) is removed from the world markets and stored. Obviously it creates gigantic price distortions. This is why I’m watching China, at some point I expect the consumption of industrial metals by China to slowdown dramatically as they shift from imports to enormous domestic stockpiles. In fact I think China can easily continue to grow for some time without importing any industrial metal at all. Zero.”

I’d be interested in your thoughts regarding this theory. To me, the price distortions would seem to make this approach a mistake for the Chinese as they are costing themselves money as their demand drives prices up. On the other hand, they will suffer on their holdings of Treasuries eventually.

]]> By: Stefan, Tallinn http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109287 Stefan, Tallinn Mon, 30 Jun 2008 21:54:21 +0000 http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109287 Nowing how many dollars is held by SWFs and central banks is soon as uninteresting as knowing how many dollars the Fed can print during one day. The answer is - an infinite number, any usage of this potential will just destroy the dollar, that is it. The money exists only as long as it is not used. Nowing how many dollars is held by SWFs and central banks is soon as uninteresting as knowing how many dollars the Fed can print during one day.

The answer is – an infinite number, any usage of this potential will just destroy the dollar, that is it. The money exists only as long as it is not used.

]]> By: Mmaduell http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109286 Mmaduell Mon, 30 Jun 2008 21:34:28 +0000 http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109286 Brad, Great work on the growth analysis of these gulf funds, it is fascinating to see that Saudi Arabia has much to gain from the rise in oil prices. Another interesting trend that I am starting to notice is joint wealth funds, where one fund will pair with another sovereign fund to invest. Brad,

Great work on the growth analysis of these gulf funds, it is fascinating to see that Saudi Arabia has much to gain from the rise in oil prices. Another interesting trend that I am starting to notice is joint wealth funds, where one fund will pair with another sovereign fund to invest.

]]> By: Rien Huizer http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109271 Rien Huizer Mon, 30 Jun 2008 14:21:16 +0000 http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109271 Brad, BkNegara once had a guy called Krieger (Asssie, ex BT Australia) He used to take interesting positions until he started to lose serious money, the Malaysians audited him properly and revised option valuations allegedly did the rest. Long time ago, late 1980s. In those days ADIA had the reputation of generating market-influencing orders (you are right, if a large portfolio needs to adjust FX cover, amounts can be large) No idea if anything was considered untoward. But. ADIA had a mix of young, talented locals plus very experienced westerners. Aparently they treated staff well enough to keep agency problems at bay. The current deluge of money should be a challenge to their investment model though. Brad,

BkNegara once had a guy called Krieger (Asssie, ex BT Australia) He used to take interesting positions until he started to lose serious money, the Malaysians audited him properly and revised option valuations allegedly did the rest. Long time ago, late 1980s. In those days ADIA had the reputation of generating market-influencing orders (you are right, if a large portfolio needs to adjust FX cover, amounts can be large) No idea if anything was considered untoward. But. ADIA had a mix of young, talented locals plus very experienced westerners. Aparently they treated staff well enough to keep agency problems at bay. The current deluge of money should be a challenge to their investment model though.

]]> By: bsetser http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109268 bsetser Mon, 30 Jun 2008 12:39:10 +0000 http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109268 Rien -- more please. Bank Negara stopped playing the fx market after taking big losses. What prompted ADIA to change (if it did). And how can even a $500b fund with $50b plus inflows avoid playing the fx market in some way or another? As for ADIA's size, don't declare victory too quickly. Morgan Stanley's $825b estimate is cited far more often than Gerald Lyon's smaller estimate (or the Setser/ Ziemba estimate, which could easily be too high) Rien — more please. Bank Negara stopped playing the fx market after taking big losses. What prompted ADIA to change (if it did). And how can even a $500b fund with $50b plus inflows avoid playing the fx market in some way or another?

As for ADIA’s size, don’t declare victory too quickly. Morgan Stanley’s $825b estimate is cited far more often than Gerald Lyon’s smaller estimate (or the Setser/ Ziemba estimate, which could easily be too high)

]]> By: bsetser http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109266 bsetser Mon, 30 Jun 2008 12:32:51 +0000 http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109266 I cannot give Stephen Green's work away, alas -- and they are not freely available on the Web. Logan from comments is indeed Logan Wright, but now that he is a super-star, he may not drop by as much. His work is also often behind the Stone and McCarthy firewall, tho China stakes seems to be publishing more of it. I cannot give Stephen Green’s work away, alas — and they are not freely available on the Web. Logan from comments is indeed Logan Wright, but now that he is a super-star, he may not drop by as much. His work is also often behind the Stone and McCarthy firewall, tho China stakes seems to be publishing more of it.

]]> By: Judy Yeo http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109265 Judy Yeo Mon, 30 Jun 2008 12:10:01 +0000 http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109265 Sorry, brad, bit garbled there would love to read stephen green's works in full but the only websites that offer them seem to offer only excerpts and often edited too... as for logan, is that the logan who comments, meaning the comments provide a link to his work? Sorry, brad, bit garbled there

would love to read stephen green’s works in full but the only websites that offer them seem to offer only excerpts and often edited too… as for logan, is that the logan who comments, meaning the comments provide a link to his work?

]]> By: Judy Yeo http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109264 Judy Yeo Mon, 30 Jun 2008 12:07:30 +0000 http://blogs.cfr.org/setser/2008/06/29/it-is-good-to-be-the-king-of-oil/#comment-109264 Interesting, but your point about sovereign wealth funds not being too strictly divided from personal wealth investments/funds, could it be because the system of rule itself is so structured? BTW, Brad, saw your reply in other other posts, would lo9ve to read stephen green 's works in full but the only websites that offer them as excerpts, often edited... Rien- not to be standoffish but general asian politeness means I rarely address people by their first names, unless they are around my age or are going by some form of username or have given specific instructions to call them by their first name. Interesting, but your point about sovereign wealth funds not being too strictly divided from personal wealth investments/funds, could it be because the system of rule itself is so structured?

BTW, Brad, saw your reply in other other posts, would lo9ve to read stephen green ’s works in full but the only websites that offer them as excerpts, often edited…

Rien- not to be standoffish but general asian politeness means I rarely address people by their first names, unless they are around my age or are going by some form of username or have given specific instructions to call them by their first name.

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