This morning’s appearance on CNBC’s Squawk Box was a couple of speedy responses at the end of the segment relating to runaway gasoline prices. Hark, click on the below mug shot to launch to the clip:
Posts Tagged ‘emerging markets’
Well, it has certainly been an eventful first few days to kick off 2011, with natural gas all over the shop, as cooler weather outlooks rally prices, while bearish fundamentals hang out in the background, heckling the bulls. Crude is baffled by a stronger dollar despite rising equities and moderately decent data; hence it has been bashed back below $90, as European default worries pummel the euro, making the US look relatively spry in comparison. Meanwhile, the monkeys are the smart ones and have sought out the radiators in this most frigid of months. Let’s forget about frostbite for these bites instead: » read more
Life is not a race, but a journey. (But if it were a race, wouldn’t you want it to be at Churchill Downs?!?). At this point in our journey through the year we can see Thanksgiving off the starboard bow, while Christmas is on the horizon. In the foreground and clearly in focus is crude oil, with its eyes on the prize of $90 (although getting cold feet today), while el natster is grappling and grasping to grab onto the $4 handle as we reach a record storage level (with at least one further injection to come). Next week sees a return to form in the flow of economic data, but for now, let’s get past the finishing post of this week with the help of some fast food: » read more
Here’s the deal; weakening economic data has been unrelentingly pitched at us this week. Few have hit the mark, while many have dealt body blows. And some have just been a slap to the face. So let’s leave these misses, and hit some snacks:
–How much oil from the spill is still in the Gulf?
–Natural gas futures premium is at its lowest in seven years.
–Nasty people have a higher risk of heart attacks and strokes.
–Renewables increased 8.3% last year in Europe, coal consumption down 16.3%.
–Flow diagram of US energy use.
–Top ten most tattooed cities in the US.
–Factbox about biofuels in Brazil.
–30 new coal-fired plants have been built in the US since 2008.
–Grannies knit smart car cosy.
–New microbe discovered eating oil spill in Gulf (h/t LB/NG).
–11 Green inventions that go too far.
–Fat-fingered Sumo Wrestlers unable to use cell phones.
–Europe’s brisk energy transition.
–Great piece from the Economist on the outlooks for China and India.
The Burrito Deluxe Award of the week goes to the heating oil crack spread. This has rallied to a two-month high at $11.50, as higher future prices and Latin American demand has encouraged US refiners to increase output. (The crack spread = the profitability of turning a barrel of oil into heating oil. Calculation = the price of 42 gallons of heating oil minus the price of one barrel of oil).
The Burnt Burrito Award of the week goes to US natural gas, which has made a prompt month low for the year.
Burrito Headline of the Week: Police catch man in bush with socks on his hands.
I hate to go all naysayer-doomsayer-debbie downer on you, but this cannot be good. The Burrito Worry of the Week goes to the housing market. There is now 12.5 months of supply on the market. Even if you think the economy is not double-dipping, you have to be delusional to think that the housing market isn’t. There were 11 million properties in negative equity in Q2 this year, not one house sold for above $750k across the entire US last month, and existing home sales hit their lowest level since 1996. All rather foreboding for the economic picture.
And finally! Last week’s caption competition was won by Kevin. A giftcard will be winging its way to you – have a burrito on the burrito! Thanks to all for playing – Ginny, you are nuts.
I can’t recall a time when consensus has been so divided as to whether prices are set to rally or crash, be it in commodities, equities, bonds, or currencies. So to add to the confusion, here’s some startling charts I’ve been looking at in the last week that highlight some of the changing dynamics and/or current dichotomy in markets:
The first chart up is actually two charts, and they are taken from last week’s IMF World Economic Outlook. The key takeaway from the retail sales chart (left) is the incredible strength exhibited by emerging economies over the past few years, despite the global slowdown and the temporary move into negative territory by advanced economies. As for industrial production (right), the dip has been pronounced for both emerging and advanced economies. However, although strength in emerging economies has dragged the overall world data back into positive territory, advanced economies are still showing contraction from where we were at the beginning of 2007 (as previously discussed here):
The following index is getting a lot of attention, and is being watched ever more closely as it experiences its 34th consecutive down day. Yep, that’s right. This chart is the Baltic Dry Index, which measures the cost of shipping dry bulk commodities. It acts as an acid test for emerging market demand for raw materials such as coal, iron ore and steel; it basically gives guidance for the economic health of emerging markets, and to a certain extent, future pricing for coal and other commodities. It is still to be seen whether this fall is due to a collapse in demand (and, hence, shipping prices), or whether the supply of ships has increased, raising competition and reducing costs. Whatever the case, the move lower is certainly raising worries about the strength of a global recovery:
Next up is the 800-pound gorilla in the corner of the US natural gas room: shale. According to EIA data, we know that approximately 8 Bcf/day of US production currently comes from shale, which is approximately 14% of total US production. As for how much production is expected in the future, estimates are wide-ranging, and add to the cloak of mystery and intrigue of shale. The EIA predicts this number to be 16.4 Bcf/day by 2035, making up 24% of the natural gas consumed in the US. An interim report released recently by MIT called ‘The Future of Natural Gas’ shows a large disparity from the US government data, looking at 12 Bcf/day in the next year, to about 29 Bcf/day by 2030 (given current drilling rates and mean resource estimates); whatever the number, shale is set to be a significant influence on the future of US natural gas:
Finally, we take a look at US oil inventories. WTI crude oil is currently sitting around the mid-$70s, despite inventories in the US still above both last year’s level and the 5-year average. The overall inventories picture is, however, somewhat emasculated when compared to the inventory levels of Cushing, OK, where WTI is priced. Near-capacity inventories were making headlines a few months ago, but have dropped off the radar despite remaining at elevated levels. The point is this; crude oil prices at Cushing remain relatively unaffected, despite supply bottlenecking to push inventories to near-capacity. The flipside of this means that once this bottleneck eases, and once both US inventories and Cushing-specific inventories fall, crude will have one less downward influence to weigh on prices:
So that’s what was on the burrito block this week – hope you enjoyed it. Please feel free to highlight any startling charts you may have seen recently. Laters ‘taters.