| MARKET ROUNDUP | |
| Dow | +75.65 to 17,076.87 |
| S&P 500 | +9.54 to 1,997.94 |
| Nasdaq | +18.80 to 4,557.35 |
| 10-YR Yield | -0.016 to 2.387% |
| Gold | -$3.30 to $1,276.90 |
| Crude Oil | -$0.25 to $93.40 |
Is Russia’s Vladimir Putin invading Ukraine? That’s basically what Ukrainian officials are charging.
Putin already sent one “humanitarian relief” column into Ukrainian territory without Ukraine’s permission or the Red Cross’ blessing late last week. Now, Russia just said it will send a second column across the border this week.
At the same time, Ukraine just accused Russia of sending more military vehicles — including tanks (!) — into Ukrainian territory. The incursion was reportedly accompanied by cross-border shelling near the city of Novoazovsk.
Meanwhile, ISIS rebels just overran a Syrian air force base in the northeastern portion of that country. The capture of the Al-Tabqa base solidifies ISIS’ control of a broader region of territory in Syria and Iraq. It also ratchets up pressure on the U.S. to respond by expanding airstrikes into Syrian territory.
These tensions only underscore Martin’s message from this morning — namely, that fear of spreading wars and conflicts is causing investors to move money faster than ever before.
One potential huge beneficiary is select oil and gas stocks. In fact, this could be the best time to buy select oil and gas stocks in decades.
Why? Because high-profile energy stocks pulled back somewhat in July and early August, making them rare bargains.
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| Aid for the hungry or a military invasion? |
It’s critical to understand that the pullback was a fluke; based on misinformation. Investors pulled back on energy stock purchases primarily due to concerns over economic growth in Europe.
But let’s face it — one reason everyone is so worried about Europe is that Putin is throwing his weight around in Ukraine and elsewhere in Eastern Europe. And one way he could get even with Europe is to cut off supplies of natural gas and oil!
Let me ask you: Does that sound bearish for energy prices? Of course not!
Russia produces around 10.5 million barrels of oil per day and 21.4 trillion cubic feet of natural gas per day. If it curtails even a tenth of that production, it’ll help send energy prices skyward!
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“Does that sound bearish for energy prices? Of course not!” |
And as I noted at the outset, Eastern Europe isn’t the only major flashpoint in key energy-production regions.
Fact #1: Before Muammar Gaddafi was overthrown in Libya, the country produced roughly 1.7 million barrels per day of oil. Now it’s producing less than 500,000 … and even that output is at risk.
Just today, airstrikes and fires swept through the Libyan capital of Tripoli and the international airport. A whopping 1.5 million gallons of gasoline went up in smoke thanks to one rocket attack, and there’s no end in sight to the tribal violence rocking that nation.
Fact #2: Iraq is the second-largest OPEC producer behind Saudi Arabia, with production of around 3.3 million barrels per day. ISIS is already gaining territory and strength as I mentioned earlier.
In a worst-case scenario where ISIS overruns multiple Iraqi fields and the country plunges further into chaos, it could slash output by 1.5 million barrels. One economic forecasting firm estimates that would raise global oil prices by a whopping $50 per barrel.
Fact #3: OPEC output declined 2.5 percent last year. It’s going to drop another 300,000 barrels per day this year — and that’s according to estimates from OPEC, which has every reason to pump out optimistic forecasts. You and I both know geopolitical tensions, a lack of investment, and declining reserves will likely crimp their output even more.
Fact #4:Â Demand is growing. Here in the U.S., crude oil consumption rose 1.3 percent from a year ago to 19.3 million barrels a day in July — the highest level for that month in four years. Diesel and heating oil demand jumped almost 7 percent — to the highest since 2007.
That’s a clear reason why energy prices should remain high. It certainly bolsters the case for investing in energy. But the plain truth is, domestic energy stocks don’t even need high oil prices to spin off huge profits for you.
Thanks to America’s massive reserves — the largest in the world — U.S. energy companies are producing, transporting and refining more oil and gas than we’ve seen in decades — and that alone is more than enough to drive their stocks through the roof.
Get this: In July, U.S. crude oil imports plunged 12 percent to the lowest level for the month in 19 years. Meanwhile, U.S. domestic production surged 14 percent year-over-year to 8.5 million barrels per day.
Domestic energy producers, transporters, refiners, and storage companies are making an absolute killing as a result. Oil and gas spending in this country has soared to $200 billion at an annual rate. That’s 20 percent of U.S. fixed investment — the first time ever that has happened.
Hopefully, that helps you understand why I’m so excited about the domestic energy industry. I believe this is a huge, long-lasting opportunity rather than a short-term, flash-in-the-pan cycle.
How about you? Are Putin’s latest moves — and ISIS’ ongoing offensives in Iraq and Syria — a major threat to global energy supplies? Do you believe they’ll help prop up oil and gas prices? What can we do here in America to offset that pressure? And what are your favorite ways to profit? Let me know at the Money and Markets website here.
| OUR READERS SPEAK |
Mondays always seem to bring out great comments about the previous week’s columns, and today was no different.
Reader Robert weighed in on the zero percent interest/car buying article from last week, saying: “I always buy a car with a 5-yr loan, because the payoff rate is in line with the depreciation, and then I get about another five years of driving without paying the bank or exorbitant insurance charges. This has been my strategy for 30 years, except for a moderately long period when my pay didn’t keep up with inflation.”
Thanks for sharing, Robert. The trick to successful car buying is to make sure you’re getting a good deal on the sales price, regardless of what kind of financing you choose. You also want to make sure you don’t get upside down on the loan, then have to roll that unpaid balance into a new loan on a new car a couple years later!
With regards to my piece on the Federal Reserve and Janet Yellen’s speech on Friday, Reader Frank E. said:
“They will not raise rates quickly as so many of the new jobs are only part-time ones, and the large increases in taxes coming soon because of Obamacare will keep the economy in a slow growth mode or maybe even no real growth over the next few years. The average person out here has less and less disposable income all the time.”
Frank, the economy isn’t booming like it was in the 1990s. But it’s in much better shape in 2014 than it was in the depths of the Great Recession in 2008.
Yet for some reason, the Fed is still using 2008-era monetary policy. It makes no sense whatsoever! And that’s why I believe they’ll have to raise rates sooner rather than later.
Finally, Reader Francis C. expressed his outrage about the banking sector and the massive fines and settlements they’re dishing out. His comments:
“What kind of bad activity (and how much of it) can a bank have been up to that they merit paying $16 billion — and more importantly, why are they still in business? They should be hounded out of the market place, and never be allowed to threaten the economic welfare of ordinary citizens again.
“I think it is an absolute disgrace that virtually (or is that actually?) no one has done any jail time for the disgraceful behavior, and outrageous greed, displayed by the financial industry in both the U.S. and the U.K.”
Amen! It is disgraceful, and until we see more perp walks, bad behavior will persist throughout the banking sector! Any other thoughts are always welcome at the website; just click here to share!
| OTHER DEVELOPMENTS OF THE DAY |
 Break out those “S&P 500 2,000” hats! The broad U.S. index topped that milestone in early trading, albeit with less celebration than when the Dow Industrials first breached 10,000 back in 1999.
This was the strongest quake to strike the San Francisco bay area since the infamous magnitude 6.9 Loma Prieta temblor in 1989. It killed 63 people and caused around $6 billion in damage.
Burger King wants to adopt Tim Hortons’ Canadian home base as well. That makes this just the latest “inversion” deal partially motivated by a desire among U.S. firms to cut taxes by relocating their headquarters to foreign territories.
Reminder: You can let me know what you think by putting your comments here.
Until next time,
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.
{ 33 comments }
Mike, I would like to get some specific recommendations on what Oil and Gas stocks to buy at this time.
Thnx for your hard work.
Please quit trying to sell us MORE news letters, If you cant give us your picks to use in Safe Money , then i might go some where else.
So sad that Mike Larson swallows the MSM swill about Ukraine, Russia and Putin. One after another, the lies from Kiev and DC are revealed and yet he still regurgitates their propaganda.
Hello Curtis,
R:E: Curtis Bok,” so sad Mike Larson swallows the MSM………………regurgitates their propaganda”.
So, I’m beginning to think, what and who’s propaganda does one partake of, anyways? Oil prices rise, oil prices drop. Euro drops, Draghi yelps, Euro drops further. And, my oh my,EH? Look at that crashing USD? EH! Isn’t this amazing? Not long ago, it was everywhere about how the USD was crash and burn ahead. How to buy gold, oil is going zoom, and sell the greenback. Now, isn’t it coincidence,EH?, how the dollar is gaining groung, gold is becoming worthless, oil is dropping? Of course it is! Oil is dropping because Nat.Gas is taking over! There happens to be a glut of oil, especially now, in the USA, Canada, where fracking is chewing up the landscape, while oil gushes from every spicket. I guess that’s a touph one to guess? Let’s see. A surge of oil supply. A shrinking oil usage market. Yup! That equals lower oil prices! So, why is gold not zooming, to $3K ?
I agree, Curtis, but what can you say. The rhetoric from the western media is outlandish hypocrasy about Ukraine. But MandM are in business and guess they cant very well say the truth of the horrible, brutal atrocities taking place over there by the invading western capitalists and oligarks. Or else they risk being run out of business. I notice at the dailyreckoning, they dance around it pretty well. They know whats going on, but they cant come right out with it, because theyre in business.
Mike stick with you info. Putin and his internet pack are the biggest of liars.
Select oil and gas mid-sized with good sound proven management skills are the way to go,
Denis Murphy—–on beautiful Vancouver Island B.C. Canada
It won’t be quick, but the best thing we can do is expand refining capacity, so that we can export finished product to Europe & others. This will leverage our oil reserves to best advantage.
WLL…Whiting Energy. US EP firm. All assets in US. Stock price up 2.3% today :-))
Hi!, Weiss Research Staff:
At 321gold.com about a week or so ago there was an SR SOROCCO report on oil hydraulic fracing which explains that these wells are running dry; while managements are forced to sell equipment to keep going; along with begging governments to forgo taxing their companies allowing them to continue to exist yet in an attempt to try and eventually just break even. If their report is spot on, then why are you attempting to convince your readers otherwise? These explanations opposed to each other sound like a call to take to the sidelines and see who’s providing oil and gas speculators the straight skinny if anyone is? These markets can’t have it both ways at the same time can they? The one fact I can believe is the price of gas at the pump. Other than that how can the little uninformed speculators know they know anything?
RUSS SMITH, CA. (One Of Our Broke, Fiat Money States)
resmith1942@gmail.com
So sad the stupid politicians don’t realize that their damnfool tax and spend policies have essentially bankrupted this country. Big business and the 1% can afford to buy breaks and exemptions that have so far kept them going, but now even they are looking for ways out, such as buying a headquarters company in another country with lower taxes (for now, anyway). So, the pols can try to penalize Burger King, et al, and they might just decide to give up on the US entirely. Then who can the pols tax for spending money? You and me, of course.
Incidentally, there is no essential difference in this country between taxation and the crime of extortion. Don’t pay up and the mob may not break you knees or toss you in the river with concrete shoes, but you may lose your life’s work and spend time in a cell somewhere.
i’d like to suggest that you examine evidence concerning the crisis in Ukraine that does not rely on information from the controlled American MSM.. Is it logical to rely on the controlled media to tell us the truth about this crisis, when they have steadfastly refused to tell the American public the truth about the administration’s failed and flawed economic, national security, immigration, affordable and VA healthcare policies? I don’t see how..
Joel ! Right on the dot!!
I have watched and listened to the reports of what people have done in the financial sector, and have only this to say: If I as a private citizen and not a bank officer with connections in “high” places were to do what some of these bankers have done, there is NO DOUBT in my mind that I would be in a prison for a very long time. Markets that are fixed is despicable behavior, and needs to be made an example of for breaking the law.
I don’t understand how cops are dismissed from the police force after seeing them beat the daylights out of people, and they don’t go to jail, they get thrown off the force. Why is the penalty different for a cop as opposed to me?
If the government is screaming “Unpatriotic!” when a company moves its corporate headquarters away from U.S. taxes, why doesn’t Obama get the hint and LOWER corporate taxes instead of charging the highest corporate taxes in the world? People work hard for their money. Why then should they surrender it to an entity that blatantly throws it away on wars and policies that Americans don’t want or need?
These politicians can’t decide to do ANYTHING except complain about what the “other party” is doing. This kind of taxation is the principle reason that the colonists revolted against England in 1776.
Martin,
Just because he is a démocrat, (or a socialist) just like Holland in France, see where they are?
During the last Presidential election, Obama met Putin and their was a taped recording of Obama saying under his breath, he couldn’t say something in public, but after the election, he could give Putin what he wished after he was elected. I don’t know if anybody remembers that, but it showed Putin who he was dealing with. A weak individual who had no backbone or conviction. Someone who would talk out of both sides of his mouth and was afraid to say something publically. Putin has seen this as a weakness and will take over Ukraine. Because Obama knew nothing about the cold war, and is afraid to push back, Putin will keep going.
Disposable income will be gone for 90% of Americans in the next 5 years due to the cost of Obamacare, higher taxes, inflation, lower wages and more part time workers. It’s hard to argue with facts.
Obama and the zionists who put him in power are the criminals. From what I’ve seen, Putin is a gentleman and threatens no one while Obama, Canada’s Harper and that idiot in england lie, make threats and need to be put in their place. Russia and China will take down the petrodollar then the world bully can deal with the fallout. Unfortunately, more than him will feel the pain.
Mike,I am more disapoited with you every time you write.i really thought you and Martin were smart enough to be objective.Lately you sound like the US media blaming everything wrong in the world on Putin.I have read your commentary for some time so I know you’re not stupid.Please don’t be like so many Americans with their head in the sand
I agree. Mike and Martin are very smart people but they seem to follow the mainstream with regards to Russia/Putin when US is the actual megalomaniac bully.
It was my understanding that Putin cut off fuel supplies to the Ukraine some time ago, but that it had sufficient reserves to get it to or through December. Does Putin have an alternative buyer (China?) or will Russia hurt itself? The US probably doesn’t buy any fuel (directly) from Syria or Iraq so the increase in prices will only be felt indirectly. ISIS could have itself a major income source. Great strategic move by Putin to send “humanitarian” aid without permission–the Ukraine cannot allow that to continue or all is lost.
You and Francis C. are full of B.S.! Banks are being taken to the woodshed because the gov’t can. And banks are giving in because they know a sacrificial lamb is needed before they can get on with the business of making money for their shareholders. With all the new regulations, they can’t make loans and make money, so they just keep huge cash reserves for M & A–until interest rates get back to normal.
Well done on Putin and Russians to send humanitarian aid to distressed people of eastern Ukraine. I don’t see the NATO or EU doing anything. I see a lot of rallying behind the America flag on M&M. If I was Putin I would’ve done everything he has done. NATO (and the weapons producers) needs a reason to exist, give the people an enemy: Russia/Putin. Where’s the evidence that Russia/Rebels shot down the Malaysian Airliner ? You demonize Russia/Putin but your own country is megalomaniac.
Russians are only acting in self defense. If I was Russian I would’ve felt threatened by the warmongering American Empire creeping to my borders. Hello NSA, I’m here in South Africa but you knew that already. The USA is a lawless Empire and out of control. I think you Americans need to have another Vietnam, at least 50k-100 000 Americans must die before you wake up from X-Factor. But I am just a lone nobody.
I think the Ukrainian army (whoever they might be) who is actually a private army controlled and financed by various oligarchs will have a scorching earth policy. Just because someone speaks a different language they will be killed. Probably very difficult for an American to understand that there are people that speak different than you, have different customs. The Ukranian private military will burn down anything/anyone + ethnic cleansing, and when thousands dead you’ll never hear a word of condemnation from the boyz in Washington. After all, this is American modus operandi. Put their noses where it doesn’t belong.. How can Poroshenko call his own citizens terrorists ?
If I was Putin and Russian I will take every world word from the oh so peacefull and trustworthy ‘West’ with a pinch of salt. Nice example, this democracy. If you don’t agree, bomb your ass to smithereens. Putin is no threat to anyone, has not invaded any country.
Why is a vote for independence in Eastern Ukraine & Crimea invalid ? Because they are Russians or maybe because Washington said so Meanwhile, Kosovo and Scotland can have a vote but there is no problem.
What amazes me (can be expected) is the militant approach towards Russia. But then, friendliness doesn’t sell (guns). Russia is the only country at the moment that can stand up to American and EU bullying. If Russia was any smaller we would’ve seen cinders and bombs flying + invasion already underway.
Regards,
Willem Erasmus
Ellisras, Limpopo Province
South Africa.
Bravo !
as things heat up around the world, especially the radical things Putin is doing and ISIS, demand for US products will surge and that will cause greater production. The play, in the “now: and in the immediate future is on American companies. Their profits will soar and so will their PE so get in early. Is it already too late, no .Putin, by the way, if he gets away with an invasion will not stop at that conquest. Other nations which were part of the old KGB empire will be his targets. Those which require too much aid will be ignored.
Dear Mike:
I wish you Americans would wake up. The Ukraine mess was started by the
CIA when it helped boot out an elected President.
When East Germany united, there was an understanding between Russia and
NATO, that for acceptance, NATO would not move closer to Russian borders. NATO, a mouth piece of the USA has reneged and moved right up to Russias’ border via the
Ukraine. We almost had a world war 3 when Russia wanted to arm cuba which borders
the USA. The hypocricy of the USA knows no bounds.The USA, a country that creates,finances and arms terrorists all over the world .
I am the very last one on the planet who wants to see war and destruction. There is so much suffering and pain – in our world at this time. I have to comment on Mike’s lumping together Putin and ISIS as somewhat equal threats to mankind. If ISIS controlled a country that spans 11 time zones and was friends with China and India – having 10’s of thousands of the most sophisticated nuclear ICBM’s etc, etc – I would be truly worried. We most likely would all die. I think such a statement is deceptive in the extreme and the obvious is so lucidly clear that almost anyone can discern without the slightest difficulty or complication! What a way to contradict and supersede all rational. I truly hope we can all get along some day and statements like yours are just insane.
Jail time is a more effective disincentive to white collar crime than levying massive fines that are just disbursed among CURRENT shareholders. Come on, Justice Dept.
It is simply the best government money can buy.
I have been with the Weiss Elite group for some time. I am concerned that most of the recommendations on buying stock comes to me after there has been a substancial increase in the cost of the share over a longer period of time. Why so late? There are way to many recommendions offered by the Weiss groups that my head is spinning in trying to read all the publications and emails. It is an overkill!
I would like to know how I can have an access to the Weiss Rating List. I Googled. .Then all I get is “Weiss’ Insurance Ratings”
As the World sits now, Russia will take that which Putin believes necessary in the Ukraine.
Non Linear Reality, due to the sanctions, that the US & EU have placed on Russia and that which they will place on Russia, will cause Putin to take all of the Ukraine.
At this point in time (30 Aug 14), even Putin does not realize this.
Once Russia has taken all of the Ukraine and the US/EU does not backed off, Nuclear War with the EU/US will take place. TILT!!!!!!!!!!!!
If Japan joins this War, China will be forced to join this War. Possibility China will see the writing on the Wall and join the War regardless,
It appears to me the US wants War with Russia, but not China, I doubt, if he will be successful in limiting this War. TILT!!!!!!!!!!!!
Invasion? Kiev charges? Kiev accuses? Putin demonization? WW3 = non factual propaganda. FACTS dont matter anymore? What the hell is wrong with you people? You used to be respected financial analysts. Now you are selling, using fear of global war.
I have to agree with your other commentors… you are sounding like a mouthpiece of this fascist government of the USA trying to rev up the war scenario. You have not given one economic concept towards the possibilities of peace prevailing from saner minds on the planet. Has your ethnic memory clouded your perceptions of earth as a place of peace. Humans can by virtue of all of us using peace rhetoric instead of war mongering. Please stop drumming the war to up the ante of old financial pathways. Finances should serve the poor, education, peace, and those in need not “protect our family wealth” by investing in more war. common Weiss! get with the new generation who does not live in war memories and who truly practice and want peace in every nation…My head is not in the sand .. like yours is in the past being repeated.