|Dow||+139.55 to 17,868.76|
|S&P 500||+22 to 2,069|
|Nasdaq||+61.63 to 4,787.64|
|10-YR Yield||+.043 to 1.991%|
|Gold||-$7.60 to $1,233.90|
|Crude Oil||-$2.34 to $50.52|
Here’s MY Take on Where Prices are Headed …
Crude oil just surged 20 percent from its lows — in only a few days! But when it comes to the future direction of prices, analysts are engaged in a battle royale …
In one corner, you have Citigroup (C, Weiss Ratings: B+) commodities analyst Edward Morse. He just called the rally a “head fake,” and that oil could tank as low as $20 a barrel.
Considering we just hit $54-and-change, that would be one heck of a collapse! Morse’s bearish view echoed one from Goldman Sachs (GS, Weiss Ratings: A-) President (and former oil trader) Gary Cohn, who said we could see $30.
|$20, $30, $100? Where is oil heading?|
In the other corner, you have the International Energy Agency predicting an “inevitable” recovery. The group coordinates energy policies for major world economies, and it said the oil glut that drove prices down is starting to abate.
Prices won’t surge right back to $100, according to the IEA. But they are probably done going down. That view mirrors the outlook OPEC just issued, which I recapped yesterday.
So who’s right? Who’s wrong? Who is totally off his or her rocker?
Intelligent people can disagree, especially when it comes to time frames. I can’t guarantee we’ve seen the absolute, 100 percent low point for Brent crude or West Texas Intermediate oil futures.
But my research shows the collapse in the past several months is one of the worst on record. I’m not just talking about dollar price or percentage declines, but also in terms of negative momentum and negative sentiment. Those kinds of extremes are incredibly rare, and they often lead to dramatic, durable moves in the other direction.
|“The supply and demand forces that contributed to the downward spiral are also starting to abate.”|
The supply-and-demand forces that contributed to the downward spiral are also starting to abate. It’ll happen slowly at first, but that shift should pick up steam over time. Finally, trading action and sentiment indicators in several other markets that impact commodities (currencies, etc.) suggest to me that a key turning point may be here.
So if you asked me which way I’m leaning, I’d tell you I’m going with OPEC and the IEA over Citi and Goldman!
How about you? Are we really going to see $20 a barrel oil? That would suggest gas prices are headed toward $1.50 … or lower! Or was the low from late January THE low? If so, where do you think oil is headed — and over what timeframe? How are you investing your money in light of your bearish or bullish outlook?
Here’s the link to the Money and Markets website. Head over there and get this very important conversation started!
|Our Readers Speak|
The negotiations in Europe between Greece and its creditor nations are going down to the wire — just like they have time and again over the past few years. You never know when the next flashing headline will hit. But while we wait, let’s look at some of the observations you shared about how things should or will play out.
Reader Billy said “Can things actually get worse in Europe? Well, that depends on who you ask. If you are talking the banking community, you bet it can with absolutely nothing solved with respect to the European sovereign debt crisis. Greece is simply the tip of the iceberg.
“However, if you asked an unemployed Greek person, who elected Syriza into power, they say there is now more optimism among the average Greek than in months or years with respect to getting out from under these bizarre austerity plans that were set up by the crony European politicians and bankers. If Greece exits, watch very closely what happens in the other PIIGS countries.”
Reader Michael C. also added his thoughts to the mix, saying: “The EU needs to send Greece packing, or brace for much of the same (perhaps worse) behavior and demands from Italy, Portugal and Spain. It really is just that simple.
“Greece is in a situation that cannot be repaired. Money is fleeing for shelter elsewhere, people don’t like to work all that much (sad but true generality), paying back loans is troublesome at best, the corruption is so widespread that it’s hard to know where to start fixing things and the Greeks simply don’t like paying taxes.”
But Reader Paul B. said that Greece will be up against a wall if it is forced out of the euro currency union. His comments:
“Greece abandon the euro? And then use what for money and trade? Try and reestablish their own currency? Backed by the full faith and credit of the failed, bankrupt state of Greece? Who would ever loan them money again after defaulting on their current debts?”
Regardless of whether we get a last-minute, can-kicking deal … or a full-scale Grexit … several readers noted that the euro currency scheme (and the political and monetary union that backs it), is fundamentally flawed. As Reader Grumpy Old Man said:
“Seth Meyers Saturday Night Live Weekend Update:
‘Two weeks ago, Slovakia said, ‘Hey, we’re not sure about the bailout.’ And Europe said, ‘Why would we care about what you think, Slovakia?’ And Slovakia said, ‘Because we’re in the euro, and all the votes have to be unanimous.
‘Unanimous! Seventeen countries, and it has to be unanimous! I can’t get three friends to agree on a restaurant. Can you imagine how hard it would be if none of us spoke the same language, and our grandparents killed each other in World War II? Why did you ever think you could get on the same currency, Europe?'”
Great observations all around! It certainly has been interesting watching the financial sausage get made in Europe the past few years. Hopefully we can just get this whole process over with soon, though, and go back to focusing on things like earnings, economic data, and actual fundamentals.
In the meantime, here’s where you can add your voice to the mix. Don’t miss out!
|Other Developments of the Day|
You’ve seen the news reports over the past several years: Bank XYZ agrees to pay a gazillion dollars for yet another shady market manipulation or fraudulent practice. But in language straight out of Lawyer 101 class, it “neither admits nor denies wrongdoing.”
Now the Justice Department is reportedly trying to end that, according to the New York Times. Government lawyers want to force banks like JPMorgan Chase (JPM, Weiss Ratings: A-) and Citigroup (C, Weiss Ratings: B+) to enter guilty pleas as part of any settlement of their investigation into bank manipulation of the global currency markets.
Hack attacks. Massive data breaches. Foreign espionage. Our nation’s computer networks and corporations are taking hits from all sides. So the federal government is going to create a cyberattack-fighting agency similar to the National Counterterrorism Center.
Of course, the key open question is whether this will actually improve U.S. cybersecurity … or just create another layer of useless bureaucracy. Your thoughts?
A US Airways plane made an emergency landing in Houston last night after its nose gear failed. Thankfully, all 57 passengers and crew members were unharmed in the belly landing.
I went to college in Boston, so I have some experience with nasty blizzards — not to mention soaked shoes from stepping off the street curb into a six-inch puddle of icy slush. But this year, it’s out of control!
Per CNN, the city is now buried under 70 to 80 inches of snow — all of which came down in the last month. That post-graduation move to Florida many years ago is looking better and better!
As always, don’t forget to share your thoughts on these or other important news items at the website!
Until next time,