Tuesday, December 16, 2014

The Chart I Never Saw Coming

Need more time to figure this one out, but it does look very, very interesting.

Saturday, December 13, 2014

Out of Oil, Into Treasuries

Where is the safe place for yield?  Prior to the big drop in oil prices, it was just there - oil.  After a 40% drop in prices over the past few months, investors need to look elsewhere.  And what timing for them to go into US treasuries, if they so choose, as the Federal Reserves exits its third installment of Quantitative Easing and the stock markets begin to dip on weaker than expected consumer numbers.

Ladies and gentlemen, the Fed has left the building.

Thursday, December 11, 2014

Where Does That Capex Go?

Reuters report, link via CNBC, with a headline saying that E&P spending could drop by as much as $150 billion in 2015.  That is a lot of money.  So who makes all this stuff for the oil and gas industry?  All the pipes, rigs, pump, computers, compressors, ROVs, etc, where do they all come from?

Certainly oil exporting nations pay for capex to produce oil.  But do Nigeria, Iran, Iraq, Libya, Saudi Arabia, etc produce the equipment they have installed in their fields?  I wonder if countries like Sweden and South Korea won't take a hit from all of this.

Tuesday, December 9, 2014

Why The Drop In Oil Prices? Three Examinations

First: Libya?  Libyan production skyrocketed by over 500,000 barrels per day from June to September of this year.  Reached a peak of about 900,000 barrels per day.  But now?  There seems to be conflicting reports as to what is happening in Libya.  It seems the rebels have taken over oilfields, but production will continue to come on line.  Libyan production was at 900,000 bpd in September but now may be at 500,000.

Second:  Supposedly Saudi Arabia has been offering lower prices for oil in US markets than in Asian markets.  Nigeria, an OPEC member, has seen exports to the US dry up while Libya restarts exports to Europe.  So there are some real reasons Saudi Arabia has to backtrack on its "US shale doesn't concern us" attitude it has promoted the past two years.

Third (put on your tin foil hat): The Federal Reserve (see explanation below)

The monetary base stops expanding, so institutions with bets on rising oil prices begin selling.  Eventually, the Fed announces the end to QE3 and weeks later the Saudis give the death knell with a "we're not finished, yet" response at OPEC.

Wednesday, December 3, 2014

Bring 'Em Out: Rise of the Consumer

So, I do not read Business Insider. Which is why I chose to use one of their headlines as a contrast for my thesis of rising consumer spending.

Black Friday sales plummeted this year, leaving retailers completely stumped.  
After weeks of declining gas prices, many analysts predicted the biggest holiday season ever. Industry groups like the National Retail Federation reasoned that Americans would use their fuel savings on gifts.  
Despite encouraging forecasts, Black Friday weekend sales were down 11%. Cyber Monday sales rose 8%, falling short of many predictions. 
So where are the customers?

Where are the customers at? Where they at?

The Lord Purveyor of Future Obligations, His Royal Roll-Over of Timely Payment,  Fortress of Accountability, Luke The Debtor saith: Buying higher ticket items.

That's just me. Maybe no one else feels that same way. But after 6 years of paying down debt, I wonder if this drop in oil prices is giving people the premature illusion of prosperity. But, the data are not in to show this. Where are the customers? It is time say Luke The Debtor...bring 'em out!

Tuesday, November 18, 2014

Saturday, November 15, 2014

Looking at The Data: Top Three & Next Three Oil Producers

It's cold this weekend. Very cold. The arctic blast, polar vortex, Rossby wave or whatever you want to call it, is acting up. So, I am staying inside.

For all the commotion in the media not geared toward the weather or Ferguson, there has been some attention spent on Saudi Arabia's offer of higher prices for Asian consumers and lower prices for others.  This is all before the G-20 and the OPEC meetings this month.  Maybe the Saudis want to remind everyone who is the alpha dog.

However, the US, the largest consumer is, according to the EIA (biased?), the largest producer of oil.  And its accent to number one has come within the past four years.  This is must be a testament to American ingenuity, low-interest rate induced prices, and the inability to exit (escape) the exurban lifestyle.