Weekend market recap with Peter Brandt
Click download link to listen on this device: Download Show
T Boone Pickens says back to three digits in next 12-18 months. Have not found a good link to article yet. The reader has to sign in.
http://www.fool.com/investing/general/2014/12/05/oil-prices-opec-us-producers-interview-pickens.aspx
Thanks Dan,
I found a similar article – no sign-in req’d.
quote snip:
“They didn’t say they wouldn’t cut, but OPEC will have to cut, and that is what’s going to happen. The Saudis are the ones that make the cut. They can take $70 oil and take it out 10 years — they have the cash reserves that allow them to do that. But they can’t do that to the rest of OPEC,” Pickens said.
Thanks for the link. I was hoping someone could get a better link; and glad to here from you again Irwin.
Due to the fact that my life depends on oil/gas, the price of oil is particularly sensitive to me. I continue to hear that friends with many years’s experience are laid off. Most of the contractors are terminated at the end of year. Several companies I know are freezing hiring and planning to cut a quarter to one third budget. Some foreign companies like French and Norway companies here have decided to phase out the projects. The reaction to the low oil price is quite swift. I feel that the production will decline very rapidly and shale operations will fail massively and create unemployment. With the essential role of oil, the price has to rebound since most oil producing countries will not be able to fund their social program under lower oil price. The only beneficiary is China but it is not in the best interest of US to allow China to develop more quickly.
I personally think that euro at par with the dollar is a bit of a stretch. But hey what do I know. 118/120 remains my target..for euro.
If even one country seriously threatened to leave the Euro experiment we would be at par in a heartbeat. That is not likely though. But the trend still remains firmly down versus the dollar which itself is now strengthening despite Euro weakness driven by the ECB comments. In other words, the dollar, which is signalling deflation is coming is now determining Euro weakness to some extent rather than Euro weakness feeding into the appearance of a strong dollar. I believe we are getting this effect due in part to capital flows out of economies that are troubled and as money flows into the US it is propping up both the domestic stock markets and reinforcing convictions in the stability of the worlds primary reserve currency. This trend will both continue and accelerate in my opinion if news flows from elsewhere continue as they are. Look at the Yen as a secondary reason and its weakening trajectory. Other than the NZD, all the major currencies are currently losing ground to dollars and this strikes me as being very significant as the dollar is bearing the brunt of most other sovereign devaluations. You can see there is now impetus for a continuation on that front as well. Consider for example that as a European, had you invested in US equities last year you earned both a bump on typical stocks but also a meaningful premium in the exchange rate. Same for Japan and elsewhere and that makes the trade even more compelling going forward. So capital will continue to find a home in North America and primarily in the US where it is getting better treatment than in parts of the globe where currencies are in decline. My view is the dollar still has a lot of legroom to keep running up in the coming year.
Birdman, your comment is interesting, but……
Although not in the Euro, if given the chance, the population of the UK will vote to leave the European Union. They are severely annoyed by mandates of the EU commission.
However, I don’t see how Greece can stay in the Eurozone. They have issued bonds that they have no possibility of paying back. Germany has been pushed and pushed to allow more European QE, but are becoming increasingly unwilling to expand the money supply further. It is my feeling that if Frau Merkel allows a bailout for Greece she will lose her position as will many German politicians at the next election. The European populace is moving definitively to the right. (Except schismatic France that is moving to the extreme right and the communist left simultaneously.)
Further if Greece were bailed out, would Spain, Portugal, and Italy not also show up with their begging bowls?
One country may never choose to leave the Eurozone voluntarily, but the possibility of one being forced out is not zero.
The repercussions of the Euro being threatened or coming to an end as a result of even a partial dissolution in its membership is mind altering to think about, CFS. That is one idea I do my best to suppress because of the dire consequences that might follow. It would almost certainly result in the dollar spiking to unspeakable highs virtually overnight and bringing on sovereign defaults across the globe. In other words, we would enter a period of financial discord of extreme severity and it is difficult to imagine exactly how and where capital would flee in response. Politics and the will of the electorate will dictate what happens in regards to the Euro though which just means the door remains open to the most tragic financial nightmare any of us might imagine. Lets just hope that a Euro failure is not in the cards. Seriously….God help if that were to come about.
I think the Euro failure is already being baked into the cake Birdman.
Its only a matter of time now, it’ll totally implode in the next year or two.
Maybe that will be the impetus for the next bull market for commodities?
If the Euro fails Skeeta we can rest assured gold will be absolutely explosive as just one of the outcomes. All hard currencies would benefit as would most commodities. Of all the hair brained reasons we have heard these past few years of why gold might rise (and never did) this is one reason that is virtually guaranteed to put rocket engines under the price. Just a whiff of the euro breaking up would send me fleeing for dollars and gold along with tens of thousands of others. No question about that in my mind…….jeez…maybe I should start accumulating again just in case. Hmmmm.
Glen, I’m with you on the euro but I think oil is at or near an intermediate term low versus the dollar. $54-$52 seems like the worst we’re going to see but it might be closer to $60. Either way, it is heading much lower versus gold over the next few years.
http://stockcharts.com/h-sc/ui?s=$WTIC&p=W&yr=6&mn=3&dy=0&id=p27456807221&a=378377746&listNum=1
Thx matt :)..
Good to hear from Russel Brandt.
Maybe oil goes lower but in my opinion it’s all artificial. It wouldn’t be happening if the US gummit and the Saudis weren’t trying to destroy the Rooskies and Iranians. So Big Al Korelin, as usual, is right.
http://scotthorton.org/interviews/2014/12/02/120214-patrick-l-smith/
Every major oil consuming country has increased consumption since 2009
http://www.kereport.com/2014/12/06/weekend-market-recap-peter-brandt/
There you go again Cory.
You are not a technision and your technical opinion is totally worthless so why pretend. You are in dreamland and you sound foolish when you try and talk like a technision.
Peter
In terms of Supply-Demand one has to distinguish between what is happening in the US and the rest of the world.
Over the past five years in the US, Demand has decreased 4 million barrels/day, while supply has increased 4 million barrels per day.
On the other hand, for the rest of the world, supply has decreased slightly (about 1 million barrels a day) (Primarily due to loss of Libyan oil), while demand has increased (about 2 million barrels a day).
I have mentioned Big Al liking Enbridge earlier, but bought that stock a few years ago and sold it recently on dropping P/E ratio reasons.
I still think good pipeline companies will be profitable at lower oil prices; indeed may even be more profitable as companies may pump more oil to try to maintain cash flow with a dropping oil price.
Does anyone here have a favorite pipeline company they would like to share the name?
Saudi Arabia has stated that the oil price will drop to $60, so that is my belief.
Of the pipeline companies I have been looking at:
PAA, BWP, TCP, PBA, GBNXF, MMP, KMI and TRP, I rate PAA the probable best of that bunch, but have a feeling I must have missed a better one.
I’m a Tree Hugger but I still value your opinion Peter, even if I don’t agree with you all the time. I’m here everyday day listening to the show and considering the future of our global economy. Don’t write us off because we listen to scientific opinion rather than corporate media regarding the future of this mud ball we live.
Very interesting action. Commodities priced in gold shows the inflation/deflation battle really heated-up in June.
http://stockcharts.com/h-sc/ui?s=$CCI:$GOLD&p=W&yr=7&mn=3&dy=0&id=p50804881487&a=379468415
Silver would have to rise 33% just to get back to the 600 week ema.
http://stockcharts.com/h-sc/ui?s=$SILVER&p=W&yr=6&mn=6&dy=0&id=p42064117032&a=379470358
These low prices in energy and metals have got to prompt a rethink on the part of producers on whether production is justified. Certainly taking a loss isn’t justified.
I think shortages and more unemployment will be seen in the near future.
A BIG Thank You to all for a great weekend of comments. I really enjoyed ( listening ) reading to the above conversations between people with logical & common sense views , I troll a large number of sites to gather information which I then cross reference to come up with the facts & I have to say………………………
THE KEREPORT is my #1 site for honest , logical , & common sense information….
GOOD HEALTH TO ALL WHO VISIT HERE.
IT, you are coming across as being a very large A$$ kisser these days, I think we know what motivates your thinking!
DT…Pray kind sir !!!…Please tell me why ?…& who are “WE” ?
Just ignore him Irish. He has that Canadian wedgie thing going on.
Thanks for the show. Good points well taken..
Glen still calling for wti oil 35/40 long term target.. Started calling it when we were at 110/115..Not backing out now. It’s in a clear bear market to me and major trendline has broken.Energy companies will now have to go through what miners went through. Start cost cutting, slashing dividends etc etc. Stay far away from energy companies is my advice until March/april.