Energy & Commodities
Like the vultures Elizabeth Warren claims they are, billionaires are now circling over the soon-to-be dead corpses of companies in the U.S. oil and gas patch, as they look to pick up assets on the cheap.
This comes at the same time that the volatility (read: decimation) of the oil and gas industry has scared off many other investors, according to Bloomberg.
Names like Sam Zell, Tom Barrack Jr., and Jerry Jones are all being tossed around as investors who are looking at distressed assets. Zell has teamed up with Barrack Jr. to look at oil assets in California, Colorado and Texas. Jones’ company, Comstock Resources, is looking to acquire natural gas assets from Chesapeake Energy.
Companies are eager to sell at cheap prices to try and get ahead of an upcoming credit crunch.
The U.S. has become the world’s largest oil producer due to the shale revolution, but the investors behind that drive have little to show for their efforts. Many companies have plowed through their cash while providing poor returns, as independent oil and gas drillers are down more than 40% since 2014.
Easy money enabled the boom, and we have noted here on Zero Hedge over the last several years how poor resource allocation, crowded wells and overly optimistic estimates have caused a turn for the worse for U.S. oil and gas investors. Now, its time to face the consequences.
With oil prices still low, the number of active drilling rigs in the U.S. has declined and some of the biggest players in the industry have lowered their growth plans… CLICK for complete article
“Despite concerns in the third quarter, bears never had a strong argument for why stocks were overvalued and the major indexes simply traded sideways for much of the last six months, wrote Robert Sluymer, technical strategist at Fundstrat Global Advisors.
“We ‘continue to view the market cycle as being a normal pause in an ongoing secular bull market similar to what developed in 2016, 2011 and the ‘cycle’ pullbacks that developed during the secular bull markets in the 50s-60s and 80s-90s.”
It is an interesting point. The current bull market certainly seems unstoppable, but the question that must be answered, fundamentally, is if this is indeed a “secular bull market,” and if so, “where are we” within that cycle.
What is a “secular market?”
“A secular market trend is a long-term trend which lasts 5 to 25 years and consists of a series of primary trends. A secular bear market consists of smaller bull markets and larger bear markets; a secular bull market consists of larger bull markets and smaller bear markets.”
In a “secular bull’ market, the prevailing trend is “bullish” or upward-moving. In a “secular bear” the market tends to trend sideways with severe drawdowns and sharp rallies…CLICK for complete article
The U.S. stock market, as measured by the S&P 500 Index, is up 23.4% this year and recently reached a new record high, but five signs of investor euphoria suggest growing risks, according to Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets. She endorses RBC’s year-end 2019 target of 2,950 for the index, 4.7% below the Nov. 12 close, according to a recent story in Barron’s.
Calvasina discussed these five signs in a note to clients:
- Asset managers have bullish positions in U.S. equity futures similar to the highs before the financial crisis, risking a big negative reaction to bad news.
- U.S. stock valuations are near their late 2017 highs.
- Earnings forecasts for 2020 are too optimistic.
- Stock prices anticipate a phase one U.S.-China trade agreement, but business confidence remains seriously damaged.
- The S&P 500 has risen nearly 32% above its Dec. 2018 low, similar to previous rallies off lows in 2010, 2011 and 2016 that paused.
Significance for Investors
“We haven’t learned anything in the current reporting season that justifies euphoric positioning and peak valuations,” Calvasina wrote. “Reporting season has been better than feared, but the overall tone around demand/macro, tariffs and cost savings all sounds very familiar–it’s what companies have been saying all year,” she added.
On the other hand, money market fund assets are $3.4 trillion, a 10-year high and still rising, undercutting the “euphoric positioning” narrative. Several strategists see this as a bullish indicator, per The Wall Street Journal.
Calvasina predicts that a pause by the Fed in cutting interest rates limits the upside for equity valuations. If 2020 earnings disappoint, as she anticipates, stock prices should sink….CLICK for complete article
Ousted Uber co-founder Travis Kalanick sold more than half a billion dollars’ worth of stock last week, and many expect he will be redirecting that cash windfall to his new startup.
Kalanick co-founded Uber in 2009 but was ousted as CEO in 2017 after a series of scandals rocked the company. However, he still owns 4 percent of the rideshare giant and remains a director on its board.
Video game stock performance in the two months heading into the holidays has given investors about an even shot at gains and losses over the last decade, historical price data show.
Unless you include Microsoft Corporation.
When looking at six video game stocks’ performance during October and November each year since 2009, Microsoft (which also makes plenty of other consumer goods that holiday shoppers buy) skews the data quite a bit.
Shares of Microsoft have gone up during the two-month period in eight out of the last 10 years.
The other five video game stocks aren’t as sure of a play in the fall. Stocks in the sector fell during the two months slightly more often than they rose….CLICK for complete article
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