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  • Wall Street Breakfast: Global Stocks Rise Following Strong U.S. Growth [View article]
    What do you give a drone for christmas?
    Dec 24, 2014. 09:37 AM | 3 Likes Like |Link to Comment
  • Wall Street Breakfast: Global Stocks Rise Following Strong U.S. Growth [View article]
    Two big contributors were defense and exports. Those likely don't stay so high as the are against trend for the last three years.

    Good news is debt/GDP drops nicely this year. Something to watch with the no growth no inflation EU.
    Dec 24, 2014. 09:36 AM | 2 Likes Like |Link to Comment
  • Wall Street Breakfast: OPEC Producers See Oil Above $70 By End-2015 [View article]
    Some points on the oil issue.

    1st Most think the price decline is due to increasing world wide supplies of oil. That is partially the case but I think it is also a factor of the worlds refinery system coming back into balance with the demand ratio between gasoline and distillates. In the past gasoline was dominate and distillates were the byproduct, now that is no longer the case. Diesel at the local gas station $3.57 gasoline $1.97 that is over an 80% premium. In reality the premium should be about 15% since diesels higher energy content per volume requires more of the energy in a barrel of oil than gasoline. So diesel really takes about 15% more oil to make than gasoline.

    2nd the shift to distillates was result of two factors, globalization and the emergence of EMM's China and high gasoline prices in the EU due to misguided tax policy. This invariably lead to a shift from using gasoline to using diesel.

    3rd the US now imports a lot less oil from the rest of the world, ex North America. Indeed, almost none. That means the price declines for oil we use are also happening in North America. This means the economic impact of the price drop of the commodity will be felt here as well.

    4th the highest cost producers will likely shutter production. That isn't really the US, it is mostly deep sea drillers like Brazil and Norway. Indeed the biggest casualty will be the end to deep sea drilling. With the collapse of Petrobas in Brazil and Venezuela troubles, you can bet your bottom dollar that we can add great economic distress in South America (as if there wasn't enough already) to the near term horizon.

    5th a drop in shipping costs as fleets have become more efficient due to the higher distillates prices in the past few years and now those prices likely also soon coming down and the rise in the US dollar will significantly impact foreign trade. Likely it means job losses here in the US as we buy more goods from abroad because they are cheaper. Another negative to the US economy.

    6th if wages in the Bakkan doubled from 2007 to 2011, you can bet a crash in oil prices will have a significant impact in those areas living large. In Texas, where they have experience with such things, drillers are already getting price breaks from their suppliers that were gorging on the earlier profits. If suppliers can adjust to the lack of revenue and producers can become more efficient, we won't lose the jobs, we will just lose the income (bad for GDP).

    7th if you look at the price differential between diesel and gasoline in the US you see a pattern post Katrina of a sizable runup in price from the summer to the early winter as heating oil demand exacerbates a supply issue. This has happened pretty consistently, so this may just be normal. That means prices for diesel in the US will start coming down rapidly in early 2015 leading to cheaper shipping costs, something we haven't seen yet.

    8th the consumer impact is not as large as stated. The only impact so far is cheaper gasoline which had already spiked in price early in 2014 so isn't nearly as dramatic as some portray it to be. The cost savings from cheaper diesel, isn't there yet and of course sellers are not passing on the price cuts yet or maybe ever. Further, due to the price spike relative to gasoline of diesel, gasoline is seeing a sizable discount in some areas of the country (like mine). That discount will go away once the winter has run its course. That means stabilizing oil prices will likely start to result in increasing gasoline prices which will affect consumer psyche negatively.

    9th nat gas is crashing as well now, that means an abundance of energy in the US but we have yet to fully take advantage of that. While we get a lot of hot air about bailout out the EU from meany Russia, reality is we should have been putting real money into building the infrastructure to use nat gas for rail and trucking. That would have been money well spent, not on dubious battery technology and tax credit for electric cars.

    10th Russia's demise is much overhyped. Russia's budget is in Rubles not dollars. That means the recent price crash is actually a price increase for Russia. Since Russians spend Rubles they are poorer in our eye but in reality not much so. The question comes down to inflation and as Japan can get inflation to show its head despite a sizable currency devaluation, it is likely not to be in issue in Russia either. What is an issue is that many Russians will no longer be able to vacation in the warmer parts of the world outside of Russia.

    There are all important points to consider. In the end, I think the distillate imblance in refining capacity is the critical point. With the US now flooding the world oil market with light sweet crude there is a good chance that this imbalance can be addressed in the not to distant future. Heating oil is already tracking gasoline, now we just need that clean diesel to follow and distillates power to pull up oil prices may well have waned and there won't be this miraculous rebound.
    Dec 23, 2014. 07:32 AM | 26 Likes Like |Link to Comment
  • Wall Street Breakfast: Global Market Rally Continues [View article]
    JC, I think it is a short covering rally into the expected santa rally. Shorts had bet the fed would remove the language and were waiting for one last dip before needing to cover for the santa rally.

    The biggest thing to come from this is the likely shock that the fed members got from this rally. 700 points guarentees they will be more aggressive with their language. They were only cautious this time because they feared a market sell-off, none of them expected or would have wanted this massive rally.
    Dec 19, 2014. 11:00 AM | Likes Like |Link to Comment
  • Wall Street Breakfast: Global Market Rally Continues [View article]
    Russian companies may default on their western held debts, that I can see but Russia itself doesn't have a problem. They fund their budget with oil and oil is sold in dollars not Rubles. So this steep decline in dollar terms is offset by the steap devaluation of the Ruble for them. The only fear is inflation. If they can get their people to switch from buying dollar denominated imports to Ruble or other EMM currencies, it won't be an issue for Putin.
    Dec 19, 2014. 10:59 AM | 2 Likes Like |Link to Comment
  • Wall Street Breakfast: Global Shares Rise On Upbeat Fed [View article]
    Some interesting data to consider in the weekly EIA report. Gasoline is 69 cents cheaper Y-Y at retail, heating oil 81 cents and diesel (must be low sulfer) only 45 cents. These price differentials clearly show the arguement I have made, namely that ultra clear diesel regulations in Europe and the US caused the oil spike. What is new now is that the overall demand increase for diesel has now been negated as production from the world refineries has adjusted to meet demand. That is why heating oil (dirty diesel) has fallen so much in price.

    So we clearly see in these year over year price movements what is what and who is to blame, i.e. what caused the price rise in the first place.
    Dec 18, 2014. 12:37 PM | Likes Like |Link to Comment
  • Wall Street Breakfast: Global Shares Rise On Upbeat Fed [View article]
    polecat, you hear little about ISIS but apparently all of that bombing isn't working. They are actually making some progress in Iraq again, especially in Anbar province.

    So enjoy the holidays but the middle east is a mess thanx to seriously flawed US policies. Backstabbing Qhadaffi and Mubarak were massive strategic blunders on a level that could very well exceed the massive blunder JFK made with Vietnam.
    Dec 18, 2014. 11:29 AM | 3 Likes Like |Link to Comment
  • Wall Street Breakfast: Global Shares Rise On Upbeat Fed [View article]
    Reality is that the excess profits from oil in many oil producing countries were used to pay off the public. They can't afford to do that anymore so more instability in these countries is likely. The middle east could become an even bigger mess.
    Dec 18, 2014. 11:26 AM | 1 Like Like |Link to Comment
  • Wall Street Breakfast: Global Shares Rise On Upbeat Fed [View article]
    But the Russia uses their oil profits to fund their budget and their budget is in Rubels. So according to the latest stats they are actually still running a budget surplus.

    The big issue for Putin will be inflation because then he will have to increase pension payments and such. Fortunately for Putin the things that are spiking in cost now are imports and buying less imports is a good thing, not a bad thing.
    Dec 18, 2014. 11:24 AM | 1 Like Like |Link to Comment
  • Wall Street Breakfast: Global Shares Rise On Upbeat Fed [View article]
    The communist bulwark in the south is collapsing and looking for a lifeline. Why in the world do we need to do that? All it will do is maintain anti-American pro communist sentiment in the area.

    What we need is the total utter destruction of these economies and for the people that voted these idiots into office to really suffer for their own stupidity. That is the only way to get them to part with their failed fanatic anti american ideology.

    We certainly don't need them.
    Dec 18, 2014. 09:59 AM | 3 Likes Like |Link to Comment
  • Wall Street Breakfast: Global Shares Rise On Upbeat Fed [View article]
    North Korea already runs the US, haven't you been watching the movies?
    Dec 18, 2014. 09:56 AM | 2 Likes Like |Link to Comment
  • Wall Street Breakfast: Global Shares Rise On Upbeat Fed [View article]
    It is likely that Cuba will suck up used cars not new ones. That should bolster used car prices in the US.
    Dec 18, 2014. 09:56 AM | 2 Likes Like |Link to Comment
  • Is The 'Oil Glut' A Myth? [View article]
    Nice article but why is everyone talking about oil? Oil isn't what is causing the price rise in oil it is clearly distillates or diesel. You can see this by the abundantly obvious price differentials we have seen over the last 10 years in diesel and gasoline prices here in the US.

    Diesel is what changed and the primary reason we saw the price spike to $150 in oil. The reason why? Right idiotic environmentalist driven government mandates to switch to clean and ultra clean diesel in the US and the EU. This "mandate" totally ignored the reality of the world refining system AND the blends of crude that were available in the market. What resulted was a sudden shift to the use of light sweet crude for clean diesel production. Throw in supply disruptions in light sweet crude suppliers like Libya and Nigeria and you had the perfect storm that lead to diesel pulling up the price of oil.

    That stopped in 2008 when the world economy collapsed and demand abated. Further new refineries that could refine diesel with dirtier oils were brought on line. Then we got economic growth again and once again diesel pulled up the price. Something evident from the separation of the price of brent from WTI over the last few years.

    Fracking then created a huge new supply of light sweet crude that displaced US light sweet crude demand from countries like Nigeria. With US production finally reaching levels were it was relieving significant stress on the worlds light sweet crude supply prices could finally drop.

    So if the hypothesis is correct that the need to use light sweet crude to produce clean diesel resulted in oil 10 years run, then with US fracking the imbalance caused by this has finally mitigated and we should look forward to prices in oil that are more in line with prices before Katrina than after.

    This run in oil to the mid $60's is going to be a time to sell, not buy. The world now has plenty of the variety of oils it needs to produce the fuels it requires. The shift from gasoline centric to diesel centric has run its course. Especially now that people might actually have figured out that it takes more physical oil to make a gallon of diesel than it does a gallon of gasoline and thus warrants about 15% price premium to gasoline.

    P.S.: Gasoline this morning $2.18 diesel at the same station $3.89, enough said.
    Dec 18, 2014. 07:33 AM | 17 Likes Like |Link to Comment
  • Wall Street Breakfast: Global Shares Rise On Upbeat Fed [View article]
    For Cuba, a lot, for us not much. Now we just need to bailout the other communist countries in south america like Venezuela.
    Dec 18, 2014. 07:21 AM | 7 Likes Like |Link to Comment
  • Wall Street Breakfast: Oil Prices Slide Ahead Of Fed Meeting [View article]
    MD, I would assume that considerable time likely meant a year. They should have removed it last time but didn't due to the October market correction. Now they will remove it and it signals they will raise rates sometime later next year in all likelihood.
    Dec 17, 2014. 10:51 AM | 1 Like Like |Link to Comment