Stocks loved last Friday’s Bank of Japan move. But commodities like oil certainly aren’t celebrating, as I mentioned yesterday. Today, I can’t help but highlight another very important market that’s equally skeptical:
Market Roundup
Bonds.
Just consider: The yield on the 30-year Treasury bond sank another 10 basis points to 2.68%. That’s the lowest since the August 2015 crash day. If this key yield drops just a few basis points more, it’ll be at the lowest level since last spring.
Or how about the iShares 7-10 Year Treasury Bond ETF (IEF), an ETF that tracks the price of mid-duration Treasuries? As you probably know, bond prices move in the opposite direction of interest rates. So I sat up and noticed when IEF rose to its highest level since last February today.
That’s not all. The BOJ’s latest step isn’t doing anything for the mega-banks based in Japan that trade here. Mitsubishi UFJ Financial Group (MTU) and Mizuho Financial Group (MFG) both just plunged to their lowest levels since December 2013 today.
|
|
| Treasury bonds yields are falling: What does it mean? |
That mirrors the dismal action in European banks, which aren’t getting a leg up at all from the European Central Bank’s endless promises of more purported “stimulus.” Deutsche Bank (DB) of Germany, Credit Suisse Group (CS) of Switzerland, and Barclays PLC (BCS) of the U.K. — just to name a few — haven’t bounced at all. In fact, they’re all plumbing multi-year lows … and in some cases, undercutting the worst crisis-era lows they set in 2008 and 2009.
Then there’s the action in the Dow Jones Utility Index. Utility stocks are classic recession/deflation plays because of their above-market dividend yields and downturn-resistant businesses. That makes it hard to ignore the fact this index just broke out to a one-year high.
Lastly, there are the other major averages. The Dow Industrials plunged almost 300 points today, while the S&P 500 gave up almost all of Friday’s BOJ-driven gains.
These are NOT the kinds of reaction to central bank stimulus we used to see during the six-and-a-half-year bull market. Stocks that used to rally on stimulus, and bonds that used to sell off, are behaving exactly the opposite now. That is proof positive the stimulus isn’t working, and classic bear market behavior.
| “These are NOT the kinds of reaction to central bank stimulus we used to see.” |
Could it change at some point? Sure. Is it changing yet? Nope. So I recommend you continue to stay cautious and stay alert. Play defense with the core funds in your portfolio, and consider peeling off a portion of your funds for hedges and/or other investments that rise in value when stocks fall. My favorites can be found in my Interest Rate Speculator service.
So now that you have my take on the latest bond market action — and what it means for stocks — what’s your view? If bonds don’t seem to “believe” the BOJ’s latest move will work, should you? Or do you think stocks can rally further regardless of what interest rates do? Let me know in the comments section.
|
Negative interest rates in Japan. OPEC’s policy toward oil production. The outlook for U.S. stock markets. Those are just a few of the topics you’ve been discussing online.
Reader Sherman B. said we should all be prepared for some wild swings: “Every indicator suggests a slowdown of the world economy for the first half. I expect a modest recovery in the second half, followed by a seasonal boost. Employment and stock prices will continue to be volatile, so investors are understandably nervous.
“Where to put money? Diversity is more important than ever, including energy, which has to rebound ultimately as the weak go under.”
With regards to the Bank of Japan’s latest gambit, Reader Books said: “Negative interest rates. Hmm. It has been years since retirees anywhere have made any interest on safe investments. It pushes retirees into high risk investments in a quest for any kind of income. Not good.”
Speaking of which, Reader Gordon said: “The whole government double standard is just amazing. The government is trying to sell workers on the idea of saving money for their retirement. Well, I am there now and being shafted with low-to-negative interest rates and no return on my dead money unless I want to gamble in the stock market.
“Then the government does a 360 and tells us we must keep consumer spending up to keep the country rolling along and workers working. They feed us the low interest rates carrot. Then they do the old 360 again and point out to us that consumer debt is reaching dangerous levels and we should be worried. The consumer is whipsawed in all of this.”
On the oil front, Reader Ted F. posed a handful of questions to the group: “Is OPEC going to bankrupt itself before oil production is cut? And what are they going to do when the well runs dry? Also, what will this country do when we have all the oil?”
In response, Reader Richard Mc F. said: “A good program which would save our domestic petroleum producers would be to proceed to fill the strategic petroleum reserve with domestically produced oil purchased at $50 per barrel. This would provide producers with a sustainable price for their oil, build out a strong reserve, and provide a sustainable profit opportunity, as oil from the reserve could be sold in the marketplace in the future when the price of crude rises.
“That would save domestic producers from financial ruin and recreate jobs in the industry, which would employ needed talent. It would also allow OPEC to self destruct without killing our economy.”
But Reader Jim said: “I have been an independent oil producer for forty years. I don’t want a bailout. All I want is for the free market to be left alone to work. Central planners screwing with the economy always make things worse.
“Oil should never have been $147-a-barrel years ago, and it shouldn’t be $25 now. How can we be expected to conduct rational business plans when we have no idea what regulation or manipulation they will throw at us or withdraw from us next?”
Thanks for weighing in. We are truly seeing some amazing developments in the interest rate and energy markets — and it’s obvious they are greatly influencing stock market action day in and day out. So I’ll definitely keep you abreast of all the swings and what they mean in the big picture here in Money and Markets. Meanwhile, feel free to add any additional comments below.
|
It was a tight race in Iowa, but ultimately Democratic front-runner Hillary Clinton narrowly beat out Bernie Sanders for the win. On the Republican side, Ted Cruz topped Donald Trump while Marco Rubio came in a strong third.
China National Chemical Corp. is spreading its wings, buying the Swiss agricultural chemical giant Syngenta AG (SYT) for around 470 Swiss francs per share. That represents a 24% premium to where SYT was trading in Europe before the news. The $42.8 billion deal would represent the single-biggest Chinese acquisition ever if it is ultimately consummated.
The struggle for “Big Oil” is real, with the latest report from the British energy giant BP Plc (BP) showing massive losses of $2.2 billion in the fourth quarter alone. BP is planning to cut 7,000 jobs over the next couple of years, and writing down the value of oil and gas properties in the North Sea and Angola.
On the flip side, Internet search behemoth Alphabet (GOOGL) had investors cheering after it reported a 19% surge in fourth-quarter sales. Earnings per share came in at $8.67, well above the average forecast of $8.08. Strength in its core search and advertising operations offset large losses in its “Other Bets” businesses – things like health technology, robotics, the “Nest” home thermostat, and so on.
Looking for a break from winter? Well, according to Punxsutawney Phil, you’re in luck. The famous groundhog didn’t see his shadow this morning, suggesting we’re going to have an early spring rather than six more weeks of winter. That’s assuming you believe in the prognosticating power of a woodchuck.
So what’s behind China’s latest mega-foray into the global M&A business? How do you think the next phase of the election cycle will play out, now that we have the Iowa results? Is it safe for us all to put away our winter coats now that Phil has shared his “wisdom” with the world? Use the comment section below to weigh in.
Until next time,
Mike Larson
P.S. Today is the final day to view Larry Edelson’s intensive interview with CNBC regulars Boris Schlossberg and Kathy Lien. In this video, Boris and Kathy will reveal:
The often-overlooked currency that could deliver gains of up to 1,587% in 2016 …
And that could turn every $10,000 you invest into as much as $168,700 …
Click this link now to view this important video, before it goes offline TONIGHT.
Recommended Articles by Mike Larson:
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
{ 92 comments }
I could kick myself. I was thinking of buying IEF a couple of weeks ago. Oh well, at least I have not lost 6 out of 6 coin flips lately…..like Bernie Sanders did yesterday!
I have read the Boris and Cathy #13 reasons for the collapse of America. It is a devastating
report.
Here is the link to that report:
http://www.moneyandmarkets.com/reports/GCI/lp/?ccode=020220166881136GCI&em=caf330@aol.com&sc=MAM&ec=6881136
Trump must be seething. After leading so much for so long, he barely got second place in Iowa. I’ll give him this: he didn’t show what he must feel, in his concession. Of course, what we saw, was one of the professional politicians pull out the win. Do we really want another professional politician occupying the ‘White House? That seems to be all that’s left, except Hillary, and she is next thing to a professional – having been married to one, and in the spotlight for so long.
“No Body Remembers Who Place Second”…… Thank GOD we will finally get him to tone down his Narcissistic Ravings!… :( A successful business man, he is NOT!… As the Washington Post pointed out, if he had taken the millions his Father left him and put them into an S&P 500 Index fund rather than his failed businesses, he would have about 8 Billion rather than the 2.8 Billion that Bloomberg Financial estimated…
They also pointed out in the same article that Buffet had basically the same 44 million back in the 70’s (that Trump had) and today he is estimated to be worth 68 Billion… Too bad we can’t get Buffet to run, aye?… :(
The Trump and S&P 500 index fund statement is rather misleading, since such index funds did not yet exist at the time Trump began his career. Personally I think the S&P 500 was and still is a riskier investment than real estate. I wouldn’t be surprised if $8 billion in the S&P 500 right now turns into $2.8 billion or less rather quickly.
and how much of that money that buffet got came from shipping oil by rail since warren buffet owned the rail line and barack Obama wouldn’t ok the keystone pipeline forcing the oil to be shipped by rail …… shipping a barrel of oil by rail costs 19 dollars I guess all those special visits to the white house by warren buffet payed off
Listen
Who’s on second and what’s on third.
hey eagle you like to talk about people who have narcissistic ravings ever look in the mirror AYE ?
Interesting observation of track records Buffet vs Trump. Buffet has had some down side with IBM and the railroad (re oil). He is now buying Phillips 66 to the tune of ?$8? billon looking for long term gain based upon product development, world economy turn around, crude price reversal. There are some crude replacements being developed. Everyone fasten your seatbelts. Respectfully James
You are obviously not a Trump supporter and that’s OK, to me hid biggest asset is making us all think more about what is going on in this country and do we want it to continue. Also, if Trump had put his money into an S & P fund how many jobs would NOT have been created
Trump will win in NH. Iowa is a caucus made up of party regulars, not voters broadly. Sanders will probably place a strong second in NH, not as strong, because activists will be less important. But that will be it; Sanders has no traction in the South, where we’re headed next, and he’ll run out of money soon.
Trump is a real threat — to Hillary. His polls numbers are beefed up with Democrats and independents. I wonder if her top-heavy, tone-deaf campaign gets this yet.
Hillary is Hillary’s biggest liability. Her performance in the caucus and on the stage last night was just plain bad. She was obviously angry. She made Dr. Dean look placid. The people on the stage with her would make a great Depends commercial, a real herd of dinosaurs. The guy mugging behind her was the real show. Sanders has forced her to the Far Left which won’t work in the general election. Geez, she basically won by winning six coin flips. Right! She also relies on a few wealthy donors while Sanders got over three million small donations. If the current crop of politicians represents the Establishment the Establishment is in trouble. Jim
If the current crop of politicians represents America, America is in trouble.
America and the Establishment is in trouble. The Koch Bros. doubled down on their political pork contributions from $400 million to $889 million. Then Cruz and dad Cruz say that they had an epiphany telling them that God said that Teddie should run for president. Teddies wife got religion as well adding to the religious lovefest. I think that earlier presidents stated that the state and the church should remain separate and I think this was mentioned in the constitution but they are merging now into one great sword of Damocles. This sword likened to chemotherapy will kill the good along with the bad. If this religious nut bar ever reaches the world most important job well I just shudder thinking of the consequences. No one really stands out in the terrible offering of presidential hopefuls. Read Chuck B.’s comment below. Chuck is one of the more balanced posters. He seems to sense the problems that exist.
Gordon, I forget who said it but it’s really scary if you consider a country’s political establishment is a reflection of its people. If that’s the case it explains a lot about the current set of candidates and portends poorly for our future. Maybe it’s exactly what we deserve. Jim
HEY GORDO its funny you never mentioned dictator barack Obama who has done everything in his power to stifle the economy through more govt. regulations who if he had his way would throw out the bill of rights and suspend congress and the senate …… I remember him saying if he didn’t get his way he had a pen and phone and he could veto everything he didnt like
HEY GORDO its funny you never mentioned dictator barack Obama who has done everything in his power to stifle the economy through more govt. regulations who if he had his way would throw out the bill of rights and suspend congress and the senate …… I remember him saying if he didn’t get his way he had a pen and phone and he could veto everything he didnt like
AND DONT FORGET about her big INDITEMENT those 22 very top secret e-mails she tried covering up on her own personal unsecured server that was hidden away in a bathroom that was professional scrubbed that she said she had no knowledge of or at least she said , . the Clintons were professional lawyers and professional liars but it sure is fun watching hillery try to lie her way out of everything shes is nowhere near as good as her cheating husband
Hillery Clinton is a lying cheating professional politician just like her husband but hillery is worse
The only way Hillery loses to Sanders is if she is abducted by aliens. It is the most proposterous race I have ever seen. Jim
…taken away by aliens or the FBI.
in about 5 weeks those aliens are going to the attorney general if she doesn’t indite hillery Clinton that’s it SHE GETS INDICTED BY THOSE ALIENS IN THE FEDERAL GOVT please whisk her away where we never have to see her lying and cheating ever again on this planet
Chuck,
This site will not take “links”… Too bad really as we could get some real honest study results posted here rather than the constant Conservative Rove style “Sky is falling because we have Democrat in the W. H.” blather that is so constant… :(
HEY …………….EAGLE495 what ever happened to that robust 6%or more of growth in the economy that BARACK OBAMA promised every year that he was held the office as president of the United States well ……………………… 4TH QUARTER GDP came in at 0.5 % the truth hurts doesn’t it eagle495…………… your winner all you liberals projected was a complete LOSER with a ………..L
Remember. Everything that goes wrong for Liberals is someone else’s fault. Always! Jim
Progressives never consider the regressive consequences of their policies. There’s always someone else to pay for it and when you run out of other peoples money WELL, you just print some more.
EXACTLY ALWAYS ……………………..like barack Obama whined about for 6 1/2 yrs whenever the economy went wrong he blamed it on George bush ….. barack obamas quote was ITS BUSHS FAULT all you liberals out there please explain to me OBAMAS quote when he said let someone run a country who knows how to run a country November 3rd 2008 ….. was he talking about someone else ?
Bernie lost because it is a rigged game. Cruz won because he is owned by Goldman Sucks
I think Bernie is the ONLY one who isn’t bought and paid for….
Bernie Sanders would be the best thing to ever happen to the Republican Party. You guys are losing it! Jim
you forgot trump
It seems to me that it is time to become bigger than we are and ask what is the best for the country as a whole. What can we all do to pull together. There’s not much at the top to hope for.
When half the folks pay taxes and the other half doesn’t you have political permalock. Jim
I see that Cruz’s wife works for Goldman Sucks. On “unpaid” leave hmmm.
Trump lost Iowa because he flat out said he’d eliminate the bogus ethanol program that Bush instituted to pay back his Iowa constituents. And he barely lost at that to Cruz with both getting the same # of delegates so no big deal. Watch now as going forward Trump runs way ahead of the pack.
The ethanol program was a result of a confluence of two things: a desire for energy independence and the bad science surrounding “climate change,” claiming that ethanol would lower greenhouse gas emissions. Once it got entrenched, it became very difficult to consider getting rid of it.
If I not wrong, I believe Ethanol is not profitable then oil is below $80
that why ethanol gets all those wonderful government liberal subsidies to keep it alive
Cruz also said he would phase out the subsidies and still did well. He said he would end all such programs over five years. Only about one per cent of the delegates were committed here. This race has a LONG way to go. Jim
The Establishment is deathly afraid of Trump. That should tell you something. He is constantly attacked by both sides of the Corpo Media “liberal” and “conservative” if you fall for that paradigm.
It’s not so much that it’s just Trump. It’s the little people who are fed up with the BS who want change and support something other than control of process. They want their freedom and their country back.
Howard: that’s just right wing code for freedom to bash minorities, use police to keep them down, violate the environment, and not care at all about anyone but themselves. Who, exactly, do you want to take your country back from? It ain’t yours to take from anyone.
Phil
For me personally I want my taxes spent wisely, the country to become motivated again, a leader that inspires across all boundaries and an unbought government that unites us. Maybe that is too much to hope for??
Very cynical Phil. The average person is frightened by change which we have had quite a lot of the last seven years, especially when you mess with people’s religious beliefs. Of course, it isn’t all bad. I do see a violent drug war raging in the big metro areas, but I’m not sure that’s racially motivated. Most of the worst violence is in areas controlled by Liberals for years. These same areas usually feature rotten economic opportunities. I think “taking the country back” is more about being left alone by an intrusive government. I also understand that most Liberals are very decent people with nothing but the best intentions. They are just wrong. I wish you would offer us the same courtesy. Jim
Yes Tactical 111. Whenever Faux news reports on the Donald they do it very begrudgingly and they always have Karl Rove types of Sball hurlers to throw some nonsensical drivel at him. After the vote it was Cruz all over Faux TV spouting his crap. I think as the primaries roll on his religious fervor will cool but will still be simmering on the back burner.
Very gracious of you Gordon!
I wonder if Fox could still be considered fair and balanced??
30yr Treasury Bonds @ 2.68%
What has happened to your and Martin’s proclamations from the past 10 yrs about interest rates exploding higher, and not wanting to invest in them….
Wrong again !
Why won’t the euro sell off. The continent is clearly in crisis.
Lots of EM countries selling dollar-denominated assets to prop up their currencies. Once that ends, the euro will decline more sharply, and the dollar will be up.
Because the euro already has sold off enormously! It was worth $1.40 in mid-2014, it plunged to $1.05 in 2015, and it’s only $1.09 now. A 25% drop is an enormous move for a currency, especially a major one like the euro. (In fact, didn’t Mike Larson make his subscribers a lot of profits by recommending shorting the euro during its big drop?)
The problem is, sooner or later US inflation will kick in and the value of the dollar will begin falling too. That will mask the further decline of the euro as measured in US dollars.
Anthony, We have had a sell off. Two years ago my wife and I visited our families in Europe and we paid $1.38 for a Euro, now it is around $1.09, to me for a currency that is a sell off.
David
Will this election be decided by the House of Representatives? Sanders is now a contender. Could do even better in New Hampshire. If it is Sanders versus Cruz then Bloomberg is in there. And maybe even Trump also. No one gets the needed 270 votes and thus it is the House that decides. How they would vote is anybody’s guess. Even Republicans don’t like Cruz much. No politician likes Trump. Could Bloomberg end up the winner?
This election may be determined by the FBI. Jim
Obama’s FBI? Ha-Ha!
James Comey is a straight up guy. It will be a battle. Jim
Iowa is 100% rigged. Look what was done to Ron Paul last time. Cruz is not only controlled by Goldman his wife is a CFR member and is currently working the architecture for the TPP. That will be the final nail in the coffin of manufacturing in America. It will also totally open the borders to millions more indigent refugees. Cruz is not a “nautral born citizen” He is a Canadian first. His father was not an American. Are we going to have Constitutional Law or mob rule. No one can serve 2 masters. Cruz is serving the Globalist who wish to replace our Constitution with the UN Charter. Cruz is a LIE!
That’s interesting about Cruz’ wife being a member of the Council on Foreign Relations. Didn’t know she was involved with the TPP, either.
Seems like most readers here agree that we need to be wary of the politicians who are doing the bidding of the big corporations.
Anon
Be afraid very afraid. Your loosing your rights in dribs and drabs. If Cruz gets in look out you may have to go to church ever Sunday and have religious police. A 3 ring circus does not even come close to the mess your witnessing now. Your watching something stranger than fiction. Yes the TPP will strip the last few remaining good paying jobs left in America. After that the robot revolution will mop up the rest.
I thought Obama was pushing TPP and as for illegal aliens Obama opened the floodgates after making the dream act and talk about someone who doesn’t care about constitutional law funny you never mentioned a word about BARACK HUSSEIN OBAMA because it sure sounds like him to a ……………………….TEE
Both parties like unresticted immigration. Republicans like cheap labor, Democrats look upon them as undocumented Democrats. They turn blue states into red states. Jim
Hope is holding up the euro. It is not a good investment strategy. Look out euro..
I wonder do American investors understand the Euro economy.. All the punters are predicting collapse of the Euro. and the european project.
Would not bet on this scenario.Europe has had many problems and all have been solved over time making Europe even stronger!
My scenario a bit of volatility, a bit of negotiation and comprise and Europe is on the road to recovery. However a global recession could change that scenario and then all bets are off.
I seem to recall once upon a time the government for “the good of the country” controlled prices on all sorts of things, including milk, gold and crude oil. The controlled price meant that new technology and oil sources simply weren’t found and we became dependant on foreign oil as the price of technology and exploration went up. The transportation industry especially the airlines and railroads were regulated to death. The railroads were given high rates on some items to keep the tariff down on those commodities deemed good for the “public good” like cement and power plant coal. Airlines had to fly unprofitable routes but were given higher fares on profitable routes. Then the government did an about face and scraped the regulations. Maybe the billions poured into Amtrak and Consolidated Rail had something to do with it, The Penn Central which tried to rescue the northeast rail industry, but ran into the regulatory brickwall, had cars falling off the track sitting in the rail yards. Suddenly the railroads started upgrading their track and equipment, only four states are spending more on their roads than the railroads on track, and the choo-choos got no stimulus money. The age of the planes suddenly got younger and more efficient and they aren’t falling out of the skies as often.
Mike Larson is clearly right that the stock market is headed downward from here. The real question is, when will the bottom drop out of it in a serious way and the S&P collapse below 1,700, below 1,600, or lower. Of course anyone who can answer that question can buy put options at the right strike price and expiration date and get rich. My gut feeling is that this is the month for the first big move down, but there’s no way to know that for sure.
Fed vice-chairman Stanley Fischer told CNBC today that Fed members are worried recent market turmoil might interrupt the plans for more interest rate hikes. Then, in a talk at the CFR (!!) he said not only that the Fed may need to reverse the recent hike, but that members are talking about the possible need to go to negative interest rates, as Japan just did. NEGATIVE INTEREST RATES ARE COMING – NOT RIGHT AWAY, BUT THEY ARE COMING. No matter that they don’t work, and hurt those who need interest income, THEY ARE ON THE WAY.
Pardon me, I rechecked. He made those remarks yesterday. No one seems to have paid attention!!
Isn’t it time to throw the bums out. These people are wrecking citizen’s retirement and destroying the life savings of others. What do they think will come of kicking the can further down the road, unrestricted free trade and open border immigration. My kids have to live with this incompetence.
and howard shortly the national debt will be 19 trillion but before barack Obama leaves office it will be well into the 20+ trillion debt that your children and grandchildren will have to deal with because of his liberal incompetence as president
hawk, I read today that the national debt has officially crossed the $19 Trillion level, and is expected to reach $20 Trillion by next January.
but the problem is barack Hussein Obama makes out the budget for 2017 too so look for the national debt to be well over 20+ trillion after he is done I remember barack Obama lauding after the 2008 election the next day saying he wanted to be president right after the election saying …. LET SOMEONE WHO KNOWS HOW TO RUN A COUNTRY RUN IT too bad he didn’t give everyone the rest of that sentence which was INTO THE GROUND
Howard, what will come with kicking the can down the road is that people will be assured that things are on the road to recovery and the ‘Bums’ in government will either get re-elected or move on to speaking engagements of positions with Corporations that ‘helped’ while in office. As for the rest of us >>>>>>>>>>>>> ?
YOUR RIGHT they are on the way with manufacturing in a recession already the 4th quarter economy growing at a whopping 0.5 % nobody wants to mention recession while Obama is in office I think its already started so I think the FED will have no choice but to go negative with the interest rates to stimulate the economy
Yes Chuck as usual you are right on the money the Fed is spooked. Negative rates are coming. The patient is barely breathing so they apply more band aids. If they back down now from raising rates their credibility is dead zero nada. I as a pensioner am suffering and will continue to do so while the wise ones use outdated policies that do not work. If you do not put a Democrat in the WH and hand it to the Republicans well your in for a world or at least 4 years of hurt. I have seen this right left back to right and left again scenario play out for 50 years now and all it has gotten us is a mountain of debt.
Gordon, Very good point. I am also retired and I remember my Father, when I lived in England, long ago saying to me, when I was just old enough to vote and asked his opinion who to vote for, saying, ‘we’ll do what we usually do, vote this lot out and see if the other lot can do better’.
Just because the Saudis want to go broke, why should we all follow?
Howard you really do not have much choice. You would have to form an American oil cartel. From what I hear if this low price environment persists for another 6 months 50% of all American shale producers will be bankrupt. This bankruptcy will fall back on Americans who bought bonds buying into the great American oil boom. The domino effect will be disastrous. Yes its great that American consumers can drive around burning $2 a gallon gas but for every positive in life there is a minus as I state above.
I have said all along that low oil was not a positive for the world’s number one producer. Have you noticed that the stock market follows the oil price on a given day? Jim
In the history book one factor re the Japanese attack on the US was they were being strangled by lack of access to oil. It appears access will be present qualified by price. World War is not totally out of the picture.
one of the commentators on CNBC said Saudi Arabia can pump oil at 1-5 dollars a barrel and still be profitable Venezuela at 17 dollars a barrel is profitable
Yes, but they need $80 a barrel to pay off their indigent populations and political pals with free stuff. If the current situation continues both countries will have new governments. Jim
Jim
I am glad that there is someone on this site who understands the bottom line. There are no winners in this game of chicken except those with cash who know and have the guts to move in an buy the bargains at the right time.
Kudos to you.
G
Venezuela needs about $150 or over per barrel to keep up with their govt. givaways over there just like Saudi Arabia everything is subsidized
Believe in the prognosticating power of a woodchuck. He has a better chance at successfully calling for an early spring than Bernie Sanders has for calling a coin flip. Come to think of it, the woodchuck may be better at calling the Presidential party nominations, the Presidential election, the future of the bull/bear market, and the super bowl winner versus the “experts” / “talking heads”. The woodchuck may also be an expert (like Al Gore) on global warming!
Best comment of the day Al. GO WOODCHUCK!! (<:
Mule
Well said. I thought that was hilarious, as well. You do present a few good points. Phil does more work and has a better winning % than any candidate this time around. We all still listen to him. Wonder if he says Panthers and take the over? Real money, not the stock and bond market rigged games… :P
Yes Al. I’d love to hear what a woodchuck thinks about the markets. He couldn’t be more out than some others.
DeBlasio killed the woodchuck! Jim
even with a 50/50 chance Bernie should have won 3
Howard – It’s Who’s on first What’s on second and I don’t know is third base.
Mike, good bond comments. Some stock charts are weak and a few are strong.
Problems present opportunities.
Watching the economic cycles over the passed 43 years as a small business owner has been an education in itself. It matters not whether a Republican or a Democrat gets in office as President other than the fact that the party of the donkey gives away more stuff in order to win votes the dear old USA’s financial system is toast due to over spending, borrowing too much money that is never truly paid back, and the country is run at the expense of the tax payer. The biggest factor is the middle class that has been the back bone of production is now bankrupt due to the use of inflation and debt. Since the backbone no longer exists the next leg of this is the bankrupting of the top 10% income earners as the markets and financial system collapse under the weight of unpayable debts. Neiter political party knows how to handle the writing they see on the wall because it is now to complex to decipher.