A Little Golf And A Lot Of Rambling -- June 11, 2022

PGA: Rory McIlroy -- an incredible second round. With some help from his friends, Rory is in second place, only one stroke behind the lead. Wow. I'm impressed. 

LIV: link here.

Phil Mickelson, in London, with the new league, struggled immensely on Friday. He shot 1 under par in the opening round but carded a 5 over on Friday and ranks tied for 26th among the 48-player field. Suffice to say that he is out of contention for the win this week.

Except for three names +/- I did not recognize any of the 48 players. This league looks like a hybrid: US seniors + European no-names that cannot qualify for the PGA.

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Back to Energy

Spare capacity:

• $120 oil
• Saudi says it will cut crude oil supply to China in July, link here.
• could be lots of reasons, but ...

Mars Sour:  discount at widest in two years; wiki link here;

A key U.S. sour crude grade is being discounted at levels not seen in more than two years as it competes with a flood of reserves released by the White House to counter sanctions on Russian oil, market participants said.

The SPR crude deliveries have increased the discount on Mars Sour to a $6.50-per-barrel discount to U.S. West Texas Intermediate benchmark on Friday, traders said, the lowest since March 2020.The flood of sour barrels is hurting prices for other North American markets, such as Western Canada Select (WCS), which is trading in Alberta at more than $20 a barrel below WTI, the widest since early 2020.

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BNPL

A reader sent me a link to a story regarding buy now, pay later (BNPL) plans. 

My not-ready-for-prime-time response:

Home Shopping Network or whatever those 24/7 marketing shows are called, have been doing this for decades: "four easy payments." Sometimes, "three easy payments." 

Late night television ads, same thing: "four easy payments." 

I only get my cars serviced at Firestone. Their policy is no interest whatsoever on any charge using their Firestone credit card (which I have) if the charge for service is more than a couple hundred bucks (I forgot the threshold) and is paid off within six months. So, same thing as BNPL. So, my car servicing costs are not put on any credit card the Big Banks would love to have. 

USAA -- car insurance -- same things -- I get a new bill every year or every six months --  I forget -- but I never have to pay it in one big payment. I'm given four months to pay off the six month premium. I generally pay it off in three months and have no car insurance payments for three months. This is another big bill that I don't put on any credit card that the Big Banks would love to have. 

Colleges and universities generally allow folks to pay tuition payments over several months; car insurance policies, noted above, are definitely BNPL. 

When BNPL is used occasionally, it's wonderful, but the risk is that millennials will use this for everything and gradually their debt will increase significantly and they won't notice it until too late. But I'm not sure how that's any different than maxing out all your credit cards with 24% APR. Having said that, I am not aware of any Big Bank credit card that sends you a reminder that explicitly says that if you don't pay the full amount by today, "we are going to charge you 24% interest tomorrow." 

My hunch is that BNPL plans have very explicit notifications in a timely manner.

But all this talk about BNPL, it seems, we've had it forever. 

What I would like to see is for Apple Computers to go to a subscription service on their computers. I believe some telephone plans already do that: you pay a monthly subscription price for your smartphone and it's automatically upgraded every two years. Obviously over time the monthly subscription price goes up but it's slight and generally not notices. 

When all of sudden I see all these stories about the dangers of BNPL, my antennae go up, asking who will most be hurt by BNPL? Unless they do the same thing, M/C, Visa, Discover, etc., could be the big losers. There is a reason the major credit card companies don't offer BNPL when they get 24% APR on delayed payments. 

One gets the feeling these "news stories" are in fact press releases faxed / e-mailed to media outlets who are too lazy to do their own reporting / investigative reporting and simply re-print the press release as a news story.

Whether this all blows up in a year or not, it's obviously something that consumers want.

I think it's brilliant: the big companies, like AAPL and AMZN (who doesn't offer this yet) are willing to fund this themselves since they have deep pockets. I know that when I buy my next AAPL computer (probably next spring, the new MacBook Air) I will gladly pay for it over four months, interest-free. 

It's very possible, when Amazon raises their annual fee again next year, they will offer BNPL as a new benefit.

Anyway, I'm done for awhile with all this rambling. Going out for some exercise while it's still only 90°F. 

Later: now that I've had a chance to read the article that the reader linked to me, it turns out I was correct. It was an "ad" made to look like a news story directing readers to credit card sites.

The link to the article: https://www.foxbusiness.com/personal-finance/younger-generations-bnpl-inflation.