That’s my conclusion based on all the reporting I’ve seen about the production-freeze meeting there.
Oil ministers from 16 separate OPEC and non-OPEC nations got together at a Sheraton hotel in the Qatari city to discuss locking in January’s near-record production level.
The talks followed months of media leaks suggesting the Russians, Saudis and other Middle Eastern and South American producers were on the verge of signing a draft agreement.
But in the end, Iran effectively scuttled the deal. The country didn’t attend the gathering and made clear that it would continue to boost production back toward pre-sanctions levels.
Saudi Arabia insisted that it wouldn’t roll back output without Iran’s participation. And that was that – the talks collapsed after going on several hours past their expected conclusion.
|OPEC and other oil-producing nations are is still struggling to agree on production cuts.|
Crude oil initially plunged on the news, falling more than 6 percent in early trading. But then oil started rallying off the lows, in part because a large oil-worker strike in Kuwait is cutting output in that country by more than half. That helped support energy stocks and the broader market, with the averages ultimately shrugging off the Doha debacle.
Me? I continue to see a split market. This late in the credit cycle, you simply don’t want to be taking too many risks with lousy companies in vulnerable sectors that sport ugly Weiss Ratings. Instead, as this Wall Street Journal story notes, some of the biggest winners out there are reliable, Steady Eddie, safe-yielders that don’t have extreme economic sensitivity. That’s where I continue to see opportunity.
Want to know more, including specifics on exactly what to buy and sell? Then a great place to start is my just-released, hard-hitting documentary “The Unseen Hand.” It’s available online for a limited time here, and I believe it provides you with crucial guidance in these increasingly uncertain times.
My beliefs about what’s next for the markets and the economy can be found in the video. But you definitely have some strong opinions of your own, based on the comments you posted over the past couple of days.
Reader J.P.F. shared this take on the interaction between governments and markets: “When the ‘invisible hand’ stops playing with the government’s tinkering hand, and allows market interest rates to rise to assume their proper levels, according to risk …. we will all breathe easier.
“Yes, surely some weak hands will be forced into bankruptcy, and either reorganize, or be liquidated. Such is the price for a freer market. As we all know, they are never ‘free’ as tax policies vary, tariff policies vary, and currency values float daily.”
Reader Bonnie E. added this observation on stocks: “I have an online trading account. I recently stopped by my e-broker’s local office. Usually, they are like a ghost town! But this time, there were several other people/customers in the office. Everyone was adding money to their accounts. The lady in front of me, when it came her turn, told the representative that she was there ‘to fund her future.’
“I thought ‘Yep, they’re buying into the ‘smooth sailing ahead’ line that’s being touted by all the talking heads on TV. Must be time to sell!”
When it comes to the underlying economy, Reader Anthony G. said: “The mal-investment economy is now exposed. The real economy is a complete con game. The global decline is a welcome relief from inflated prices.”
And Reader Chuck B. said: “We all know that the cost of actually living (food, clothing, fuel, utilities, housing, etc.), continues to rise, much faster than earnings do. That means there is less available for other things like travel, entertainment, luxuries and such (unless we can borrow it).
“Those are the things by which prosperity is measured, and our economy is NOT growing much. It could even be starting to shrink, as people are more conscious of costs, and are trying to save a little here and there for the future. They know that there is no longer any certainty about jobs and income, and government benefits are not as certain as they were. People are more on their own now.”
Finally, when it comes to the recent China “recovery,” Reader Walter S. offered this take: “We all look at China and believe the official growth figures of 6.8% or 6.5% or whatever. The truth of the matter is that when you have the government that China does, growth figures are a ‘command performance’ number, which is far from the truth.
“I have a business that manufactures in China, and therefore I have firsthand experience of Chinese factories. I can tell you that, at least in the electronics/appliance industry, most of the factories that I have visited within the past six months are running around 30% of capacity. That is down from over 100% a few years ago. So, you can draw your own conclusions.”
I appreciate all the remarks, especially the “on the ground” observations about China, brokerage firm customer behavior, and more. My belief is that we’re at the tail end of this expansion, which wasn’t much of a recovery anyway on Main Street.
I lay out my primary reasons for that forecast in my brand new documentary, “The Unseen Hand.” Please do take some time to watch it if you want to know where I stand on the markets here, and how to profit in 2016 and beyond.
The list of credit-cycle casualties continues to grow by the day. Another five firms defaulted on their debts worldwide last week, pushing year-to-date defaults to more than $50 billion. That makes this the worst year for corporate debt performance since the Great Recession of 2009.
Brazil’s President Dilma Rousseff lost the support of Brazil’s lower house of congress, which voted 367-137 to impeach her. The Senate will now decide whether to vote to kick her out of office. The economy is mired in a brutal recession, a wide-ranging government bribery scandal, and more.
The more policymakers try to fix past problems, the more they create new ones. Case in point: China is trying to make credit easier and money cheaper to keep its economic slump from deepening. But while that helped boost growth in March, it also has helped re-inflate massive bubbles in big-city housing markets.
The Financial Times reports that home prices surged as much as 63% in Shenzhen and 30% in Shanghai from a year earlier last month. Mortgage borrowers jumped 60% in the first quarter, according to one estimate.
So regulators are responding with new home-buying regulations – essentially, trying to fix the new bubble that was created by their efforts to fix the bursting of the last bubble. You have to love this new era of activist policymaking, eh?
Now, it’s your turn to weigh in. What do you think about the political turmoil in Brazil, and its implications for emerging market investments? How about China’s latest bubble du jour? Are you concerned about spreading bond defaults like I am? Share your opinions in the comment section.
Until next time,
P.S. There is still time to save your wealth and profit! The information in this news special, “The Unseen Hand,” is cutting edge; ripped from today’s headlines. We cannot leave it online past this week and it may go offline at any time without notice.
Hurry — Click this link to view the 30-minute video!