Posts Tagged ‘unemployment’

0 Aug 26 2010 @ 10:24am by Matt Smith in Capital Markets, Crude Oil, Economy, Natural Gas

Canada, go, Canada

No need to blame Canada this time, Mr Cartman.

I have a certain affinity with ‘our friends to the North’. Whether it is because I spent eight years working at a Canadian bank, or because one of my favorite people in the world is Canadian (economist Dave Rosenberg, aka Batman – my favorite superhero), or because they produce such great bands as Arcade Fire. I just think they are kinda cool. But to bring this back to our commodity chopping board, here are three random illustrations of their greatness.      

First up, a litmus test to show how they have fared during the ‘great recession’. As we giddily totter ever closer to the edge of double-dipdom, the Canadian employment situation underlines how stoic they have been in the face of adversity. Since the beginning of 2008, Canada has added 173,000 jobs. This is relevant because the US has lost in excess of 7.5 million over the same period. Obviously, the economies of scale are different, but to show positive job growth through the worst recession in nearly a century is rather impressive to say the least:  

       

Next, we board the good ship natty, to take a look at how much Canada exports to its friends to the South. As the chart below illustrates, although levels have currently dipped below the five-year range, Canada is still the most significant supplier of natural gas to the US (at approximately 11% of total supply). Canada sends half of its total natural gas production in the direction of the US, and this volume blows total global LNG imports out of the water; they are six times as small, and only expected to add 0.5 Tcf to US supply this year:         

Canadian Imports of Natural Gas (source: Bentek)

And finally, we tip our hats to the consistently largest exporter of crude oil to the US: Saudi Arabia Canada. They also have the second largest oil reserves in the world (178 billion barrels, second only to Saudi Arabia), and ultimately supply one in every six barrels consumed in the US:     

Exporters of Crude Oil to the US - May 2010 (000's barrels) - (source:EIA)

So these three quick examples serve to show the impressiveness, the importance, and the relevance of our Canadian counterparts. And we didn’t even need to mention Keanu Reeves, Jim Carrey, or Pamela Anderson. And it is for the above reasons we should be grateful that our friends to the North are both our friends, and to the North. And for that, I raise my glass of Moose Milk to you….cheers.

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1 May 27 2010 @ 9:07am by Matt Smith in Capital Markets, Crude Oil, Economy, Global Energy, risk management

Doorbells and Sleigh Bells and Schnitzel with Noodles

Here are a few of my favorite things. I’m going to go a little left field of nerdy on you here, so I apologize in advance. Here are three pictures that paint three thousand words, which help me keep a grasp on what is going on. Actually, they are just three cool things. So here we go, first up, everything:

I know I always bang the drum about this, but it is essential to keep a handle on what is going on across asset classes, as they can help you to understand short-term movements in your own asset, whatever that may be. Above (courtesy of Econompic) is the performance of a smorgasbord of assets for the month to date (through the medium of ETFs). This illustrates how the best performing asset has been Treasuries (= US government debt = flight to safety), while the worst performer has been our poor old buddy, Texas tea. 

Next up is one of my favorite indicators. And I don’t love this indicator for its accuracy (it has an awful track record of revisions), I just love the pure havoc that it wreaks on the first Friday of every month.  So without further introduction, I present to you Nonfarm Payrolls: 

Don’t get me wrong, US unemployment data is an essential barometer of the economy (…but just viewed over a longer time-frame); it’s the hubris and brouhaha it causes that I love. As for the actual data, the chart above shows how in 2008 and 2009 we saw 8.4 million jobs lost (that’s all the down bars on the right-hand side). Although we are seeing improvement across much of the economic landscape, we need to see sustained and improving job creation (extending from the circled area) to spur on consumer spending to spur on a housing recovery to spur on a sustainable recovery.

Finally, if I was stranded on a desert island and could only access one datapoint which to gauge the US economy by, it would be this (I make that comment knowing full well if I were stranded on a desert island I would be much more interested in hunting for coconuts); the Conference Board Coincident / Lagging Ratio, which measures the strength of the business cycle:

A rising Coincident/Lagging ratio (= indicates improvement as current conditions beat yesterday’s) is an historically proven positive indicator. However, should this indicator wobble and turn lower (…it’s awobbling), that would be bearish indeed.

That’s all folks; thanks for viewing my favorite things – feel free to take them with you as you leave…and remember, they will help if a dog bites or if a bee stings. (err, maybe..).

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1 Mar 31 2010 @ 10:50am by Matt Smith in Capital Markets, Crude Oil, Economy, Natural Gas

Revisiting Old Friends.

As we reach the end of an eventful first quarter, it seems an appropriate time to reflect and review some of the charts we have looked at on our journey through energy burritoville since its inception last fall. So let’s jump straight to exhibit one. We looked at the oil/gas ratio back in mid-December, when crude was at $73, natty at $5.50. This put the ratio at around 13, while the near-term mean (= 200-day moving average) was above 15. We highlighted at the time that the ratio should rise, as natural gas was at an eleven-month high, while crude was at a two-month low:

Oil/Gas ratio - 12/16/09

Fast forward three-and-a-half months, and the ratio continues to elude its near-term mean, but this time to the other extreme. As the natural gas prompt month is at a six-month low (<$4), crude is testing near-three-month highs ($83). The ratio has blown out to the upside, and is now above 21 (versus the 200-day moving average of 16). The ratio may narrow over the coming quarter, as crude lets some pressure out of its tires, while natural gas could find some near-term support after a post-winter drubbing (or at least see limited downside):  

Oil/Gas ratio - 3/30/10

The second old buddy is the VIX. Again back in mid-December, we took a look at the VIX index – which was at a depressed level (the VIX measures volatility on options on the S&P500 equity index), indicating a low level of worry for a downside move in equities. What has happened in the last quarter or so? The S&P500 has moved from a fourteen-month high to an eighteen-month high. Risk-taking has continued, while fear has faded like a pair of old Levis. In summary, much of the same. But just like a stopped clock tells the right time twice a day, I still call for a significant correction in equity markets, which will in turn cause volatility to spike once more. These two shall cross swords:

Last, but by no means least, our final familiar friend is the underemployment rate. This measures those people who are unemployed, those who are working in a part-time job (but wish they had a full-time job), and those who are so discouraged that they have stopped looking. When we took a look at this rate last fall, it was at 17.8%, while unemployment was at 9.8%. Currently the underemployment rate has retreated to 16.8%, while unemployment is now back to 9.7%. Friday sees the March nonfarm payrolls released, which should show the first significant increase in jobs in well over two years. That said, this number (and the coming months) will be distorted by temporary Census workers, while February’s inclement weather (which dampened labor growth) will probably skew March’s number higher. The main takeaway here is that although the next few months may paint an improving employment picture, do not be lulled into into a false sense of security; we are not out of the woods yet:   

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3 Mar 12 2010 @ 8:27am by Matt Smith in Capital Markets, Crude Oil, Economy, Global Energy, Random, Technology

Burrito Bites

Happy Friday once again! Sometimes it is better to go heavy on the filling, and light on the bread, so let’s dive straight into this week’s main course:

–One of the stranger headlines this week  – Sumo wrestler steals cash machine from Moscow shop.

–CERAWeek conference discusses how the energy sphere of influence is shifting to emerging markets, while even oil execs like the Conocophilips CEO shift focus to natural gas.

–TreeHugger blog is so good, yet leaves you feeling so, so bad. Waste, waste, waste.

–For all my OCD friends out there…..hand sanitizer doesn’t work.

–Next month’s data releases for employment are indeed going to be March madness.

–Exxon showing the love for natural gas too.

Colchagua Valley, Chile

–Admittedly, this comes a long second to all the loss of life in Chile, but one of the best valleys in the world for red wine has been hit materially – Chile and the effect of earthquakes on their vineyards.

–a new energy source developed from the common pea.

–And while we’re talking healthy, why a Big Mac costs less than a salad.

–Narrowing oil contango signals worries in the crude complex.

–Olympic Hockey final Affects Water Supply, Canadian Economy.

–Rightfully last, but not least - 8 unconventional ways to be buried.

The Burrito Deluxe Award of the week goes to CERAWeek, for addressing and discussing the most prevalent issues faced in the global energy complex.

The Burnt Burrito Award of the week goes to Carlos Slim – the new richest man in the world, according to Forbes magazine. As Bill Gates and Warren Buffett have seen their fortunes fall on philanthropic endeavours, Carlos Slim’s unabated desire to become the world’s richest man has finally been achieved – well done.

And finally! This week’s competition! With all the focus on natural gas at the usual oil-heavy conference for CERA, it leads my to wonder: if natural gas is to be the savior of the energy world in the future, what will it’s superhero name be? The best suggestions provided in the comments wins a prize (which may or may not be burrito-related).

Have a top weekend!

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0 Jan 8 2010 @ 10:50am by Matt Smith in Crude Oil, Economy, Random

Burrito Bites

Happy Friday, one and all. Going forward,  I’m going to be posting a collection of the most interesting articles I have read over the previous week. Themes may emerge, such as my respect for David Rosenberg (similar to my admiration for Batman when I was seven), Barry Ritholtz (bringing punk rock attitude to financial markets), and my unending love affair with The Economist (I realized how sad that was as I wrote it), amongst many others.  Anyhow, I hope this cuts through the chaff and is of use:

—> This is pretty cool – it’s  five centuries of bubbles and bursts – a succinct summary of financial frenzies. The article has both pictures and is easy to understand -  key ingredients for this Burrito boy to digest. 

—> Jeff Rubin, former CIBC chief economist, has got my back -  he called $100 oil in 2007, and is calling for it in 2010.  

—> Here is my favorite article this week, by a country mile –  trainee hypnotist puts himself into a trance. Fantastic. 

—> The conundrum continues that while jobless claims are falling,  people claiming unemployment checks are at 20 million-plus people in 2009 and rising. 

—> Here’s Dave Rosenberg (aka Batman), outlining why this isn’t a new cyclical bull market, and here’s the full commentary. 

—> There’s more projections on this link than you can shake a stick at – basically a review of all the key analyst outlooks for 2010, with trade recommendations and potential outliers to boot.

Finally, the Burrito awards:

shiny happy person

Out of Time? Nah! REM Singer Michael Stipe.

The Burnt Burrito Award of the week goes to The Met Office – the official UK weather service, who projected a 50% chance of a milder-than-average winter last month.  Two hours and forty-three minutes after the statement was released, temperatures tumbled and the UK experienced the coldest December for 14 years. To add insult to injury, things have got progressively worse since, with an emergency balancing alert made on the UK natural gas market this week – which is basically a panic button requesting suppliers to increase supplies, and consumers to clamp down on usage.   

The Burrito Deluxe Award of the week goes to REM singer Michael Stipe, who reached 50 years old this week. Rock on!

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