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The global economy can seem like an abstract concept, yet it influences our everyday lives in both obvious and subtle ways. Nowhere is this clearer than in the current economic state amid the throes of the pandemic.
This voronoi-style visualization from HowMuch relies on gross domestic product (GDP) data from the World Bank to paint a picture of the global economy—which crested $87.8 trillion in 2019.
Some people plan for retirement over the course of their careers, while others wait to think about that next stage of their lives when it gets closer. Not all Americans save adequately for their old age, partially because they can’t afford to do so or because they have other, more present-day financial obligations, such as student loans, child care and high costs of living, to worry about.
Still, there’s a portion of the population, albeit small, that pursues retirement early — in some cases, by the time they’re in their 30s or 40s. They do so by living frugally and dedicating most of their income to the stock market. This movement is known as FIRE, short for “financial independence, retire early.” O’Leary, founder of the O’Leary Financial Group, originally spoke about the FIRE movement with Grant Sabatier, an early retiree and host of the Millennial Money podcast, where they also discussed the skills it takes to achieve such a feat.
The “Shark Tank” host, known as Mr. Wonderful on the show, spoke with MarketWatch about how feasible saving for retirement is for most Americans, how they can become millionaires by the time they retire and why Americans need to take the concept of financial independence so seriously. This interview was edited for clarity and length.
There is a distinct chill in the air when it comes to markets this morning. Whatever Mnuchin and Powell say, the absence of further stimulus in the run up to a possibly tumultuous American election that may stretch uncertainty till Inauguration day in Jan 2021 is dominating the action in the US. (What kinds confusion might occur as they argue who runs the country..?) The “risks are weighted to the downside” says the Fed. The rising dollar is like a falling barometer telling us a Gale is coming.
The glass is falling…
Here in Europe, the dominant force is the Coronavirus, recession and jobs. It’s not just a UK crisis. Growth has fled. Recession in a sinking European economy will deepen. Even Sweden is admitting rising infections require a response – which will be measured, minimal and left to individuals to enforce. Something must be seriously wrong in France – they are copying Boris with 10 pm bar closings. France admitting England is right? That is serious m*rde. It’s not just stocks. Bond markets are beginning to sag with credit under increasing pressure. It’s a sign confidence is waning.
What more can governments and central banks do? We’ve thrown the kitchen sink at the virus, but the numbers are rising. Central Banks have cut rates to historically lowest levels ever and economic activity is falling… QE Infinity promises liquidity is not an issue – but holders want to sell….
Josef notes that US oil production fell 200Kb/d last week due to renewed hurricane activity and declining WTI crude prices. And predicts a decline below US$30/b for WTI is likely during Q4/20.
Each week Josef Schachter will give you his insights into global events, price forecasts and the fundamentals of the energy sector. Josef offers a twice monthly Black Gold newsletter covering the general energy market and 27 energy and energy service companies with regular updates. He holds quarterly subscriber webinars and provides Action BUY and SELL Alerts for paid subscribers. Learn more and subscribe.
EIA Weekly Data:. The EIA data on Wednesday September 23rd showed a production decline of 200Kb/d as Hurricane Sally hit Gulf coast production. Lower 48 production fell to 10.7Mb/d versus 10.9Mb/d in the prior week and down 1.8Mb/d from 12.5Mb/d last year. Commercial crude stocks fell 1.6Mb versus an expectation of a decline of 3.3Mb as net imports fell 267Kb/d or 1.9Mb on the week. Overall commercial crude stocks are 74.9Mb above last year or up by 17.8% as the glut continues. Total product demand recovered after the recent hurricanes to 18.4Mb/d, up 1.4Mb/d from the prior week. Inventories of gasoline fell by 4.0Mb/d as refinery runs fell 1.0 points to 74.8% from 75.8% in the prior week.
Overall product inventories remain high at 1.94Bb or 128.6Mb (6.6%) above the previous year level. Total product demand at 18.4Mb/d is down 2.76Mb/d from a year ago or by 13.0%. Gasoline demand rose a moderate 37Kb/d on the week to 8.5Mb/d but is down 831Kb/d or 8.8% from last year’s level of 9.35Mb/d. Jet fuel consumption fell by 12Kb/d to 935Kb/d and is down 565Kb/d or 37.7% from a year ago. With coronavirus cases picking up again in many US states the US coronavirus case load has risen to 6.9M cases with a new high of over 200K fatalities. The next few weeks will be critical as the colder weather and normal flu season starts. If we see a Wave Two situation as is being seen in France, Spain, the UK, South Korea and some places in China, then greater lockdowns will hit energy demand and depress crude prices further. Cushing inventories were unchanged on the week at 54.3Mb above last year’s level of 40.9Mb.
Baker Hughes Rig Data: Last week Friday the Baker Hughes rig survey showed a two rig increase in the US land rig count. The US rig count is now at 255 rigs working, but remains 71% lower than the 868 rigs working a year ago. The Permian basin lost one rig last week to 123 rigs working and is down by 71% from a year earlier level of 417 rigs. The US oil rig count fell by one rig to 179 rigs and is down 75% from 719 rigs working last year.
Canada saw a significant rise of 12 rigs to 64 rigs working last week as higher natural gas prices lifted activity. While a nice improvement it is still down from 119 rigs working at this time last year.
Conclusion: As we write this, WTI for October is up modestly over US$40/b. We don’t see this as lasting as inventories will start to build again once all US production returns on the Gulf and other places shut-in last week. In addition the increase in production by OPEC will at some point depress prices. It is likely with the rise in coronavirus cases and more business closures that energy demand will wane and OPEC may be forced to cut production once again. The psychological level of US$40/b is being tested and if we breach support at US$36.13/b then it is likely that any bad news on the vaccine or the US moving into a Wave Two situation would trigger WTI crude prices falling below US$30/b during Q4/20.
We see most energy stocks have significant downside risk. The most vulnerable companies are energy and energy service companies with high debt loads, high operating costs, declining production, current balance sheet debt maturities of some materiality within the next 12 months and those that produce heavier crude barrels. Results for Q3 and likely Q4/20 for most energy and energy service companies should be short of the prior year’s level, which when reported will also add to the downside pressure.
Hold cash and remain patient for the next low risk BUY window expected during Q4/20.
The S&P/TSX Energy Index is now at the 69 level today. From the June high at 96 when we recommended profit taking, the index is down by 28%. We see much more downside over the coming months. The support is now at 66.99. When this is breached the next downside target for the index is around the 50 level. Further lows are likely in Q4/20 as tax loss selling is sizing up to be very nasty this year.
Our subscriber September SER Monthly will be out tomorrow and we cover the breakdown in the FAANG momentum stocks and why we see significant downside for the general markets. In the issue we also have a review of insider trading in the energy sector and which companies are seeing purchases by their key insiders.
Subscribe to the Schachter Energy Report and receive access to all archived Webinars, Action Alerts, TOP PICK recommendations when the next BUY signal occurs, as well as our Quality Scoring System review of the 27 companies that we cover. We go over the markets in much more detail and highlight individual companies in our two monthly reports. If you are interested in the energy industry this should be of interest to you.
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