By Andrea Rangel The oil price war between OPEC and the U.S. drove out oil producers who could not keep up with low prices. However, it also led to the development and implementation of more efficient technologies for those who remained, which in turn drove production prices down. Breakeven points were reduced and countries like the U.S. became competitive with production costs that had only ever been seen before in the Middle East. Oil prices were at a high of $142 in June of 2008. Constant spikes in prices led to an increment in U.S. oil deposits exploted, which in turn resulted in an oversupply. This drove prices down in the summer of 201...
The shift from natural gas importer to exporter has occurred in the U.S. over a remarkably short period of time. We’ve periodically written about this (see U.S. Natural Gas Exports Taking Off and The Global Trade in Natural Gas). Only a few years ago Cheniere Energy (LNG) was investing in facilities to import Liquefied Natural Gas (LNG), anticipating that the U.S. would need to rely on foreign suppliers such as Australia and Qatar. The Shale Revolution changed all that, and the conversion of planned regasification plants to liquefaction began. The story of how this shift occurred is only complete when the role of Cheniere’s founder Cha...
Some potentially displeasing “Sunday Start” thoughts to market bulls, from Chetan Ahya, Morgan Stanley’s global co-head of economics, who warns that in light of the recent “hawkish tilt” by central banks, the message is clear: “…central banks are more watchful of financial stability risks: It is in this context that central banks now appear to be keen to lean against easy financial conditions so as to pre-empt the rise of financial stability risks. To assess financial stability risks, Fed Vice-Chair Fischer had recently highlighted the Fed’s framework in a recent speech in which he highlighted the ...
The Dow Jones hasn’t seen a new all-time high since June 19. But as the Dow Jones’ BEV chart below shows, it closed the week in scoring position, only 0.53% away from a new all-time high. If the bulls are willing, the Dow Jones could see a new all-time high at the close of Monday’s trading. Do they want to? We’ll see. But let’s face it, in July 2017 the bulls driving this market are central banks, and I doubt they want to transform the current advance into an all-consuming mania as they did in 2000 or 2007. Next chart has the Dow Jones plotted along with the NYSE 52Wk H-L Net step sum. What’s the NYSE 52Wk H-L Net step sum? I...
The consumer staples sector has been performing well of late buoyed by rising consumer confidence and improving economy. Strong recovery in the housing market and an improving labor market played a crucial role in boosting buyers’ confidence. Encouraging manufacturing index readings issued by the Institute of Supply Management (ISM) also hints at a pickup in GDP, indicating that economy is in good shape currently. Drivers Indicating Improvement in Economy Consumer confidence improved moderately in June, with the Consumer Confidence Index up from May’s reading of 117.6 to 118.9 in June. Steady job additions and persistently low unemploymen...
Fundamental Forecast for the US Dollar: Neutral US Dollar stages tepid recovery after sinking to a ten-week low Soft prices have markets doubting Fed, upcoming data won’t help Hawkish Yellen testimony may finally revive US Dollar uptrend The US Dollar managed to find support after sliding to a 10-month low last week. A relatively steady stream of upbeat economic data surprises brought upbeat ISM manufacturing- and service-sector readings as well as rosy payrolls numbers. Minutes from June’s FOMC meeting were also cautiously upbeat. A clear-cut balance sheet reduction plan is yet to emerge but officials’ appetite for rate hikes seems...
Look, here’s the thing: Goldman has got something they need to get off their chest with regard to upcoming earnings results. Normally, the bank’s “US Weekly Kickstart” notes are about “conversations they’re having with clients,” but this week’s iteration reads a bit more like “our projections for Q2 reporting season.” What’s amusing about the bank’s Q2 earnings preview is that the themes are so self-evident/obvious to anyone who hasn’t been asleep for the entire quarter that there’s something disconcerting about the fact that this is what the bank is sending to institutional clients. That is, read everything excer...
Walgreens Boots Alliance (WBA) decided not to buy out drug store chain Rite-Aid (RAD) for $9.4 Billion. Opting to break the deal, paying Rite-Aid a $325 Million cancellation fee and created a new deal to buy 2,100 Rite-Aid store for a grand total of $5.1 Billion. This new deal was created to created to satisfy FTC fears that this deal would be bad for consumers. This deal helps Walgreen expand its territory, giving it over 10,000 stores nationwide. ...
This week we’ll begin with our monthly and weekly forecasts of the currency pairs worth watching. The first part of our forecast is based upon our research of the past 11 years of Forex prices, which show that the following methodologies have all produced profitable results: · Trading the two currencies that are trending the most strongly over the past 3 months. · Assuming that trends are usually ready to reverse after 12 months. · Trading against very strong counter-trend movements by currency pairs made during the previous week. · Buying currencies with high interest rates and selling currencies with low interest rates. Let’s take...
SPX still points a little higher. This is based on the P&F projection which calls for a move to about 2500 although, admittedly, it could fall short of its target; the structure, which appears to be forming an ending diagonal needing one more wave; and Friday’s apparently successful retest of an important support level just below the 2411 pivot point. That is the second time in a week that the .382 retracement of the move from 2322 to the 2353 top has held. Even more convincing, on Friday, the DOW transportation index closed at an all-time high. Granted, we do not have a confirmed short-term reversal that puts us back into an uptren...