The return of Late Night Finance! – Episode 30

Date: Thursday, April 9, 2026
Time: 7:30pm, Pacific Time
Duration: Projected 60 minutes (might go a little late this time – I won’t be offended if you clock out after an hour).
Where: Zoom (Registration)

Frequently Asked Questions:

Q: What are you doing?
A: Portfolio review over the past 15 months since I have done this. The Big Picture. AI revelations. Prognostications. And finally time permitting, Q+A. Please feel free to ask them on the zoom registration if any questions.

Q: How do I register?
A: Zoom link is here. I’ll need your city/province or state and country, and if you have any questions in advance just add it to the “Questions and Comments” part of the form. You’ll instantly receive the login to the Zoom channel.

Q: Are you trying to spam me, try to sell me garbage, etc. if I register?
A: If you register for this, I will not harvest your email or send you any solicitations. Also I am not using this to pump and dump any securities to you, although I will certainly offer opinions on what I see.

Q: Why do I have to register? I just want to be anonymous.
A: I’m curious who you are as well.

Q: If I register and don’t show up, will you be mad at me?
A: No.

Q: Will you (Sacha) be on video (i.e. this isn’t just an audio-only stream)?
A: Yes. You’ll get to see me, but the majority will be on “screen share” mode with MS-Word / Browser / PDFs as I explain what’s going on in my mind as I present.

Q: Will I need to be on video?
A: I’d prefer it, dress code is pajamas and upwards.

Q: Can I be a silent participant?
A: Yes.

Q: Is there an archive of the video I can watch later if I can’t make it?
A: No.

Q: Will there be a summary of the video?
A: A short summary will get added to the comments of this posting after the video – assisted by Zoom AI because I can’t think for myself anymore and need to let the computer do it!

Q: Will there be some other video presentation in the future?
A: Most likely, yes. Hopefully sooner than in 16 months.

Spot oil windfall

When will we start hearing, once again, “Windfall profit taxes” in relation to oil prices?

Eyeballing the chart, we have spot WTI US$60 for January, US$65 for February and so far in March, let’s call it US$85.

Just as an example, we look at Cenovus’ sensitivities:

CAD$220M/year in “adjusted funds flow” sensitivity per dollar of WTI, so a first-cut analysis of a US$20 one-month change in WTI would be about CAD$370M in cash flow, or about 20 cents a share. For a single month of elevated pricing.

Suncor is about C$215M/year per US$1 change in WTI. CNQ forces you to do your own homework, but very roughly, my paper napkin has a model going from US$65 to US$85 WTI resulting in a change from $4 to $7/share in free cash flow (assuming things go for a whole year).

Given the extreme slope on the oil futures curve (spot oil being US$88, give or take, while December 2026 crude is US$75, a 15% discount for patiently waiting 9 months for your delivery), this windfall is not expected to last. Or will it?

The perception of inflation expectations

US monetary policy functionally changed after the 2008 economic crisis. Traditional fractional reserve banking was replaced with the Fed collecting huge amounts of deposits from financial institutions due to multiple rounds of QE programs.

Fighting deflation became the overarching objective of the central banks in the name of financial system stability – for a more “pedestrian” example, take a look at Canada’s financial institutions if asset collateral were to drop (deflate – I understand this is not the usage of the word in the ‘traditional’ sense of the term, and I am more concerned with asset prices rather than consumer prices in this post by using the phrase “deflation”) by a 20% magnitude. The cascade of defaults that would occur would trigger waves of selling and it would be the proverbial landslide that conquers everything underneath.

You can take a look at a chart of Goeasy (TSX: GSY) for the scenario that central banks have been trying to avoid with the whole financial system. If you want a more extreme example, what happened with Bear Stearns and Lehman Brothers gave enough of a heart attack for central bankers that they never wanted it to ever get to that point again.

Now we live in the altered reality world where central bankers need to promote that asset price stability but their traditional tool, the short-term interest rate, loses its effectiveness the closer it gets to zero.

Keep in mind that the real rate of interest is the nominal rate minus inflation.

Your goal is to lower interest rates. Keeping bullets in your monetary policy firearm is keeping the market on notice – if you fire your bullets and drive rates to 100bps, the market knows that you’re waving around an unloaded gun. You need to keep the reserve, especially if a “true” crisis happens.

So your other policy tool is to give everybody the impression that there is inflation. By increasing the perception of inflation, you are decreasing the effective rate of interest in everybody’s heads.

Was this one reason that the middle east is erupting in conflict all of a sudden?

Safety, or lack of it

I know this was a little cryptic in “The big picture“, but one of my takeaways was:

* What we have known as “safety” is no longer going to be as such

It was partly intentional.

As I am writing this, gold, silver and platinum futures are down about 10% in really volatile trading.

This is despite spot WTI being up a few bucks – normally when energy goes up, the cost to refine metals goes up with it (not to mention all the industrial chemicals going through the Strait of Hormuz).

What’s going on?

Liquidity. The safe haven is being cashed out. The Persian Gulf needs money. What can be liquidated? Since you can’t get crude oil out of the Persian Gulf anymore, you get the next best thing out of there – precious metals.

The next safe asset on the liquidity list? Government debt.

AI self-reinforcement

Forgive me for the next little while as I am seemingly writing more about epistemology than finance, but trust me, it is all related!

The algorithms for some reason decided to put on my feed this video of Senator Bernie Sanders talking to Claude.

I found it fascinating, for reasons not intended by the producers of the video.

The intended payload of this video is Sanders trying to convince his audience that curbs are required on AI data centre development with the added irony of Claude AI agreeing with him at the end.

I don’t know if this is a good or bad idea. Indeed, for the purposes of this post, it doesn’t matter.

However, what I was focused on was the susceptibility of confirmation bias on the user of AI.

At 5:34 in the video clip, Sanders asks:

“… would you support, or think it’s a good idea, to have a moratorium on the development of new AI data centers?”

Claude answers (paraphrasing), there are trade-offs. Perhaps a half-way solution will work.

Sanders, at 7:05, adds a couple pieces of evidence in support of his position.

Claude: “You’re absolutely right, Senator!”

Where am I going with this?

More and more people are using AI tools to analyze external circumstances and make portfolio selections. AI will happily take the information and validate the input of speculations of the user. An unperceptive user will take the rendition as gospel and apply it accordingly.

It is very easy to feed quarterly financials, MD&A statements and conference call transcripts and ask AI to perform reconciliations or summarize highlights and the like. The subtle touches missing from this process is very similar to language translation – while it can deliver the general message, there will be nuances and context missing that are not included in the petabytes the AI machine combs through when delicately lacing the words it chooses to interface your brain with.

This is where competitive advantage can be exploited. Absent of the correct nuance and context lies opportunity. In particular, if too many people (and their AI agents self-reinforcing such thought) believe something in one direction, markets will stretch in one direction until circumstances change perception – sometimes taking a lot longer than most will ever anticipate.