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By Michelle Seiler-Tucker
After
ducking under $28 a barrel earlier last week, oil rallied back into the low 30s
with Brent, a benchmark for oil prices, closing 10% up Friday, north of $32.
However, what was initially billed as a potential recovery of the gutted oil
market is seeing a reversal once again. Monday, both Brent crude and US Oil
slid back over 4% on Friday’s gain, hovering just above $30 for the time being.
While OPEC officials stated the organization wants to see prices rise, Saudi
Arabia, the dominant player in OPEC, continues to pump oil into the market. [more...]
By Michelle Seiler-Tucker
First
things first: Puerto Rico is turning into America’s Greece. The island
territory is laden with debt it can’t pay, and what’s worse, Americans are the
ones holding the receipts. About 50% of Americans over the age of 40 hold
Puerto Rican debt in some way in California, New York, and Florida; nearly 100%
of the over 40 population is exposed in some way. Puerto Rico’s debt comes from
a laundry list of issues: over 60% of its population is on Medicare or
Medicaid, importing energy is wildly expense, and, not unlike Greece, its
government can be rather stubborn. The way I see it, no one knows what Puerto
Rico will do, but the options are: 1) default (this is bad for everybody; 2)
The U.S. grants Puerto Rico the ability to declare Chapter 9 bankruptcy; or 3)
The U.S. gives Puerto Rico a $70+ billion bailout package. None of this will go
well for anyone, and frankly there is no way to tell what will happen; but we
will see a decision in 2016, and it could put a dent in the U.S. economy. [more...]
By Michelle Seiler-Tucker
For
years, oil companies in the U.S. could count subterranean, untapped oil
reserves as assets in their financial statements, which lead to highly inflated
numbers. Now, with oil around $40 a barrel, the cost of pulling it out of the
earth is greater than the sale price (at least for fracking), so the SEC is
requiring companies to remove these fictitious assets from their books since
investors cannot gain any value from oil that won’t be touched. With billions
of barrels of oil disappearing off books overnight, already tense investors are
growing more fearful of a complete oil collapse. [more...]
By Michelle Seiler-Tucker
Friday
was a good day for the U.S. dollar. Jumping to a seven month high, the
greenback enjoyed a notable increase in value thanks to new job data. The job
report indicated unemployment is now at 5%, the lowest economically viable
rate. The U.S. has not seen such data since April of 2008, suggesting America
is finally finding solid ground. For much of the year now, monetary policy
conversation has swirled around a possible interest rate hike by the Fed. No
one is certain of a rate increase in December, but the futures market indicates
a 75% chance, while financial experts range from skeptical to near certain. I
wrote earlier in the year that America should wait on the Fed rate, and the
country was not yet on sure footing. New job data, especially in the face of
global economic conditions, suggest we might finally be back on track. [more...]
The
major U.S. stock market indices - the S&P 500, the Dow and the NASDAQ -
each fell almost exactly 14% from recent summertime highs to August lows,
culminating in a rapid spike downward on August 21st, 24th, and 25th. Each
index promptly rebounded, then stabilized in a classic double-bounce chart
pattern. It's important to understand several things about this stock market
correction... [more...]
Chinese ownership of U.S. Treasury bonds stood at
7.2% last October with total foreign ownership of Treasuries at 34.4%. "The
worst case would materialize if the largest holders decided to sell their
Treasury securities at the same time," writes Mike Patton at Forbes. Let’s talk about that. There are
several reasons that China might sell U.S. Treasuries; and make no mistake -
such an action could cause a big bond market correction, the likes of which we haven't seen
since 1994. [more...]
Global
equities saw their sharpest fall since the 2008 financial crisis on what's
being referred to as "Black Monday" - as an 8% rout in Chinese shares
sparked worldwide panic. This sudden market volatility comes as no surprise to
those who have read our latest book, DON'T
BANK ON IT! or any of our previous five books or ten white
papers on the subject in recent years. The U.S. stock market has been
"levitated" and "rigged" by the Fed's zero interest rate
policy (ZIRP) as "easy money enriched many stock market speculators in the
casino of Wall Street, which has gone up while the real business economy
wallowed or declined. The Fed has been a pusher, willing and able to give the
stock market its needed fix of easy money. [more...]
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