Europe is the question!
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Crude looks like it may triple bottom here and then bounce. Like most I also believe it has more downside but over the shorter term I feel confident we will now get a technical bounce.
Could be, Birdman…though 2 big competing influences being 1. the dollar/euro equation and 2. oversupply. The rebound in the euro helped oil for a while…this morning’s inventory news knocked crude back down. It will be interesting to see if/how the Fed statement in a little while affects this.
The final, albeit gut-wrenching, bottom may come late winter/early spring, when companies release their recalculated reserves, at 2014 year-end prices for oil. Among other things, that will reveal that America does NOT have endless supplies of oil for the future as has been believed. This will be a 1. financial shock, that may cause some dominoes to fall in the markets, banks, etc. while at the same time 2. showing that lingering oversupply from US shale production especially can’t last long, because all this alleged oil in the ground is worthless until there is a BIG recovery in prices.
Fasten your seat belts…gyrations withing a $10 or so per barrel range for crude in the near term could cause even more angst than the drop from $100 to the present level!
Good to hear from you Chris. I had been hoping you might weigh in on this drama we are seeing in crude because I know you have said you follow energy markets. Maybe more closely than others here.
The world does need oil of course but our assumptions of how much is needed are skewed by our knowledge of current usage. What if usage plummets like it did in the Thirties?
That happened during the more serious contractionary phase of the economy and took a lot of vehicles off the road at a time when there really were not that many cars to begin with. For the most part they were owned by the wealthy.
But if the rich could not drive then it only begs the question of how serious the depression really was for all society. Mostly we assume it was ordinary people who suffered but in fact it was everyone who owned assets that subsequently fell in value. In some cases those assets dropped all the way to nothing.
The wealthy were wiped out to zero in many cases as they could not service their debts. Anyway, I am, getting a little off track but my main point here is that I don’t think we can rely on consumption charts for oil and assume they will keep moving along their current trajectory.
We really need to reassess our understanding of the kind of trouble that is impending to get a better perspective of where we are going. Crude is signalling to me that the next major economic contraction has already arrived even if it is not showing up in all the other data yet.
Who knows, we may yet see Bennett Buggies on the road again.
Images of Bennett Buggies from Canada during the 1930’s. (Called Hoover Wagons in US)
https://www.google.com/search?q=bennett+buggies+images&tbm=isch&tbo=u&source=univ&sa=X&ei=fSfJVLGGNIHXywPhq4K4CA&ved=0CCEQsAQ&biw=1366&bih=582
Looks like we will hit 44.50 today so tomorrow crude should on the rise (at least in my small world).
Hmmm….44 and change now after the FOMC.
Yeah…FOMC seems to have some crazy kind of death wish
My triple bottom theory is not destroyed yet though. Not perfect but close enough. it only tells me if we bounce that the continuation will eventually be to the downside. I still think crude rises tomorrow….tenacious eh?
Of course they do it.They are usurary people aka loansharks.First they lend you and when you can get out of your debt they buy you cheap.They take all your valuable assets at a bargain price.It is another way of conquering a country.No missles,no bullets but just one government who bends backwards and forwards for the demands of the eu psychopaths.In the case of greece it was Papandreou and his son.Their policies were popular but it was those same policies that led greece into banckruptcy.
Forget Greece if I was a citizen of Germany I would want to leave The ECB immediately, why would you want to support a system of deadbeat governments. The Germans should be the ones who want to pull the plug. All the other countries in The ECB including France are living on handouts.
Many Germans do want to leave…but part of the hypocrisy of all this is that German manufacturers have made out like bandits, able to have a relatively weaker export currency (the euro) than they would have had (or would now) with a much stronger D-mark
Indeed, European policy and the design of the Euro system is beggaring some parts of Europe for the benefit of others. They should have had a transfer system in place if they could not actually achieve Fiscal Union. By that method there would not be debts incurred by regions that had developed serious trade imbalances with other stronger parts of the Union. It might sound socialist but the strong would be supporting the weak for the benefit of the entirety. Canada has had just such a mechanism in place for many years and it has held the country together when for example the Eastern Provinces or Quebec were not performing to the levels that Ontario or the Prairie provinces were. Under a transfer system, Quebec does not go into debt to Ontario for its basic economic survival.
It sounds good Bird but The Pigs will never be able to reciprocate so the system of transfer payments is not a good idea for them.
To me it sounds like you are blaming the victims of the euro experiment DT. I fault the Germans though and mostly it is because they control the purse strings. They wield their economic dominance like a blunt club. It is more like warring parties than a cohesive group but nobody has the guts to speak out against a failed system because of history. Can you imagine if we did the same thing in Canada when it came to Quebec? The country would have been divided decades ago already and Quebecer’s would have told the rest of the country to shove up their collective arses. The ONLY reason Canada is still whole is because the leadership in Ottawa decided long ago to make concessions where wealth inequality existed between the regions. I won’t say the system is altogether harmonious but it works well and we have one country instead of three. What they are doing in Europe amounts to stronger regions robbing the weaker ones. It is such a joke it ain’t funny anymore. Greece should have walked and defaulted outright the day after the election. That would have woken everybody up.
You can fault The Germans but I see the greed on both sides of the fence.
Human nature is what it is Dick. We need to look at the big picture in such cases though and ignore the noise found in the individual cases where Southern Europeans are being portrayed as lazy, dishonest and corrupt. Like I said before ….if Ottawa did to Quebec what Germany is doing to Greece we would not have a country called Canada today. Those morons in Brussels could learn a thing or two from the colonies.
Thats is one reason why the germans have accepted the greeks to be part of the eurozone otherwise german goods would have been expensive for the greeks with drachma and german exporters would have lost market share.Imo greeks were not prepared to be part of the ez.
That’s true for them and others…many nations had to fudge to meet the “membership” criteria to begin with. That’s what happens when 1. starry-eyed Utopian idealists and 2. Greedy bankers put together such a “union” which makes little practical sense and, in many ways, has violated even the simple laws of mathematics.
Beyond that, read the following by George Friedman of Stratfor…his take on things is always at the top of my own reading list:
http://www.stratfor.com/weekly/european-union-nationalism-and-crisis-europe#axzz3PMtY6OsF
BTW, for those interested, here’s the new Greek Fin. Minister from CNBC yesterday:
Thanks Chris !
Best to you,
LPG
Thanks for that Chris
Good stuff, Rev — I especially like the “This is Drachma!” one, with the guy wearing his “F_ck the EU” button.
RO Andrew, Please Mam, might we have a little more!
Guess we are all on the same page after all. European unity is going to come with a price tag and that price includes a loss of independence in exchange for for equitable sharing. Right now it just looks like WWIII to me with the Germans getting what they never achieved using bombs and tanks. Basically we need a crisis to bring it all to a head. That’s when the fiscal union will finally be seriously entertained. In the meantime there is a lot of water that will go under the bridge and wages will have to decline as surplus labour persists. Nobody said that unity was going to be easy to achieve.
Meanwhile, if I was Greek I would tell Germany to F-right-O this morning and take a bath.
Syriza’s Service for Empire – Unless There’s a Syriza Surprise!
http://fortruss.blogspot.com/2015/01/syrizas-service-for-empire-unless.html
Along with other critical industries presently in private and foreign hands, today Greece is the second largest gold mining country in Europe, and is projected to have the capacity to overtake Finland (the largest) in 2016. … Greece ought to have among the largest – or at least fastest growing – supplies of gold in their central bank in their neighborhood, and eventually in all of Europe. They could almost mine themselves out of debt…
[Easy to read text of this article is available.]
Greece and Syriza: Not What it Seems – Joaquin Flores
https://www.youtube.com/watch?v=cAWINFifYY0
FWIW
Just moments ago Mark Carney was on the BBC giving a speech about the exact topic we are discussing here today. He is saying similar things regarding a Fiscal Union for Europe as the solution to what ails them. Maybe Mark can point out the success of the Canadian model for those not aware of how it works. It is worth a try and really its not so hard to achieve if the parties are willing. I would sure endorse that model because such an change in Europe could alter the course of history and bring a swift end to the serious economic disturbances that plague the group. To do nothing seems the worst option of all. At this stage I agree with those who say the Euro experiment is going to end in failure unless accommodations are made that are supportive of all members.
Whoops…..forgot the link for those interested in what Mr Carney said. Here it is….
http://uk.reuters.com/article/2015/01/28/us-eurozone-economy-carney-idUKKBN0L12CL20150128
Canadians have got Carney to thank for the housing bubble BM, just as Londoners have here thanks to him.
http://www.bloombergview.com/articles/2015-01-26/will-oil-plunge-pop-canada-s-housing-bubble-
Andrew, Carney is just a chair pusher, he follows the policy of The Federal Reserve, he is not visionary or a leader.
The Canadian housing bubble had absolutely nothing to do with Mark Carney, Andrew. He was between a rock and a hard place given what had transpired in the US during the housing bust and what followed with the Fed policy on rates. In fact he did raise rates at one point to what was probably the maximum possible in an attempt to cool the ardour of buyers and he worked in conjunction with the previous Finance Minister to slow the speculation. All to no avail. He faced an insurmountable wall of buying and borrowing that is typical of the public sentiments that always dictate at such times. You need to appreciate Andrew the close economic relationship between Canada and the US. The BOC cannot simply post rates at 3 or 4 or 5 percent willy-nilly to cool a mania without first taking note of what the Fed is doing. Otherwise you get foreign capital inflows that can end up being even more damaging and causing even greater distortions if the spread between the two banks rates is too large. And you end up with a carry trade that might blow and even bigger bubble.
Enterprise Architecture agrees to close out the NAO Field Data Capture project.
Bird, I don’t agree that housing bubble has nothing to do with Carney. But I do agree he has done a reasonably a good job considering the circumstances. I also think Flaherty managed the country finance well in the worst possible case. I am a supporter of Paul Martin and feel he is the best finance minister. Not sure you agree or not. He is much better than Flaherty
Sorry, top part has nothing to do with the topic. Wrong copy.
Al, please delete my post if you see this.
Fair points BM. But as DT says Carney’s just a chair pusher!
Bird:
But is it not easier for the Canucks to spread the wealth around as Ottawa owns all the natural resources and the wealth derived therefrom? I’m not sure that your model would work for the EEC.
Generally the provinces have jurisdiction over resources. I say generally because it’s actually a little complicated and different areas come under Federal powers such as oceans. But you can read the linked primer for a better idea. Anyway, who does any of the country belong too when stumpage licenses and mining rights can be given, assigned, leased or granted to pretty much anyone including non-Canadians and outside corporate interests?
How Canadians Govern themselves.
http://www.parl.gc.ca/About/Parliament/SenatorEugeneForsey/book/chapter_3-e.html
Chris I have much respect for you but I think they will raise rates.. small increments..Stewart Thomson says gold will rise as they do…sorry for repeating..
No need to be sorry, Sally. Bill Gross made some sense today when he suggested they might also raise rates pretty much just to save face, and to prove they can do it. Plus, as I even said, if they think they can get away with it they will, if for no other reason than to have something to cut again later if we have worse times.
That threat (?) to raise rates, though, is not being viewed favorably, as this afternoon showed. Keep in mind that it’s one thing the effect on the economy might be…it’s another, though, the damage that is already resulting merely from the notion of coming (albeit slow) rate hikes…stronger dollar…etc.
Rates are gonna stay the same until summer of this year.Stock buybacks from central banks and corporate america has to continue.Besides that the drop in oil price will dampen the inflationary pressure thus giving more time to the fed to raise rates.Besides that the usd is getting stronger by the minute and an interest rate hike will make it much stronger which in turn eats up on eps of u.s. companies due to lack of exports.
Will do my best DT!! Slightly off message but compulsive viewing imo is Greg Hunter’s interview with Lord Monckton. In short Monckton tells us that global warming is a total fraud, with Al Gore (Nobel Prize winner) now facing his own ‘inconvenient truth’ where NOTHING of what he said has come true. We need to fight tooth and nail Obama’s Communist conspiracy if we’re not to enter a global dark age.
Climate change of course but global warming never!
http://usawatchdog.com/climate-change-is-global-communist-tyranny-lord-christopher-monckton/
nice info Andrew de berry !
DAVID KING ! A GREEN LAKY ! https://www.youtube.com/watch?v=m4xN8uRYLVI
AND NOW NR ! https://www.youtube.com/watch?v=ClqUcScwnn8
THE NEW WORLD ORDER WILL MANIPULATE MORE AND MORE AND MORE ALL REAL THINK’S !
Thanks for the link, Andrew. Of course it’s a total fraud. There’s no limit to scared sheeple gullibility.
Andy……..Lord Monckton….tells it like it is………………………….j….
But Andy
How would your East Anglia University possibly survive?
That’s due to natural erosion Dai Uy?
Always enjoy Mr. Temple’s thoughts. I wouldn’t worry somuch about being called left or right so much as long as not being called for dinner.
Fed loses respect if it doesnt raise rates…
Thank you Chris
That’s a big part of the problem, Sally — they’ve talked everyone, and even themselves, into the idea that they even CAN raise interest rates. So yes, they’ll look like even bigger buffoons than they already are if they chicken out.
Well that’s a relief. If Europe was the answer there would be no hope. 😮