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Strategist: We’ve Hit ‘Peak Negativity’ in the Energy Sector

Ratcheting oil prices up higher. Earlier this year, Bank of Montreal Chief Investment Strategist Brian Belski called energy stocks a value trap . He has become more constructive, upgrading the sector to market weight, from underweight. A confluence of factors influenced the strategist’s decision to "neutralize" his portfolio position for both U.S. and Canadian energy stocks. The first is that the sector has reached what he called "peak negativity," underperforming the Standard & Poor’s 500-stock index by the most since 1986, when the last supply side-driven crash in oil prices occurred. Second, a prolonged period of low oil prices is now baked into analysts’ earnings expectations, although some Canadian analysts will probably have to ratchet down their estimates even farther. "Earnings per share revisions are one of our most trusted contrarian indicators and the fact that they have hit extreme negative levels is encouraging to us for sector performance […]

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UBS Sees Sovereign Assets Shrinking by $1.2 Trillion

Central bank and sovereign wealth fund assets will shrink by $1.2 trillion, or almost 7 percent, by the end of the year as China and petrostates including Russia and Saudi Arabia dip into their savings amid slower growth and lower crude revenues, according to UBS Group AG. The decline will be driven by China withdrawing its foreign exchange reserves, while oil-producing countries tap foreign assets to support government spending, Massimiliano Castelli, head of global strategy at UBS Asset Management, said in a phone interview from Zurich Tuesday. The fall in sovereign assets will likely continue into next year and also be driven by an expected drop in investment returns, he said. Assets held by central banks and sovereign wealth funds amounted to more than $18 trillion at the end of 2014, according to UBS. Sovereign wealth funds from Oslo to Riyadh and Doha to Moscow are preparing to withdraw […]

Posted On : Published By : Tom Whipple
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Why Are The IMF, The UN, The BIS And Citibank All Warning That An Economic Crisis Could Be Imminent?

The warnings are getting louder. Is anybody listening? For months, I have been documenting on my website how the global financial system is absolutely primed for a crisis, and now some of the most important financial institutions in the entire world are warning about the exact same thing. For example, this week I was stunned to see that the Telegraph had published an article with the following ominous headline: “ $3 trillion corporate credit crunch looms as debtors face day of reckoning, says IMF “. And actually what we are heading for would more accurately be described as a “credit freeze” or a “credit panic”, but a “credit crunch” will definitely work for now. The IMF is warning that the “dangerous over-leveraging” that we have been witnessing “threatens to unleash a wave of defaults” all across the globe… Governments and central banks risk tipping the world into a fresh […]

Posted On : Published By : Tom Whipple
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Four Ways the Oil Price Crash Is Hurting the Global Economy

Crude consumption. Lower oil prices were roundly celebrated as a tailwind for global growth. In theory, the movement of wealth from commodity producers, which often stow away oil revenue in sovereign wealth funds, to consumers, which spend a far larger portion of their income, is a positive for economic activity. But strategists at Credit Suisse believe that so far, the global economy has seen only the storm from lower crude, not the rainbow that follows. "The fall in the oil price was considered by many investors, and ourselves, to be a significant positive for global GDP growth," a team led by global equity strategist Andrew Garthwaite admitted. The net effect of this development, according to their calculations, has turned out to be a 0.2 percent hit to the global economy. The negative effects of lower oil—namely the large-scale cuts to capital expenditures—are having a large and immediate impact on […]

Posted On : Published By : Tom Whipple
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IMF warns on worst global growth since financial crisis

Sign up for quick access to a wealth of global business news, including: IMF warns on worst global growth since financial crisis Newspaper + Premium online Newspaper + Premium online Premium Full FT.com subscription Premium Full FT.com subscription Standard Full news & archive Standard Full news & archive Trial Try Premium online Trial Try Premium online Price Monthly Annual $66.30 $11.77 per week $53.00 $9.25 per week $36.00 $6.45 per week $1.00 for 4 weeks $1.00 for 4 weeks FT Alphaville plus selected FT blogs yes yes yes yes Unlimited FT.com article access yes yes yes yes Unlimited mobile and tablet access yes yes yes yes Unlimited fast FT yes yes yes yes 5 year company financials archive yes yes yes yes The LEX column yes yes no yes ePaper access yes yes no yes Three exclusive weekly emails yes yes no yes Daily newspaper delivery yes no no […]

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An ailing global economy starts to weigh on US job market

WASHINGTON (AP) — A sagging global economy has finally caught up with the United States. Nervous employers pulled back on hiring in August and September as China’s economy slowed, global markets sank and foreigners bought fewer U.S. goods. Friday’s monthly jobs report from the government suggested that the U.S. economy, which has been outshining others around the world, may be weakening. Lackluster growth overseas has reduced exports of U.S. factory goods and cut into the overseas profits of large companies. Canada, the largest U.S. trading partner, is in recession. China, the second-largest economy after the United States, is growing far more slowly. And emerging economies, from Brazil to Turkey, are straining to grow at all. A result is that economists now expect the Federal Reserve to delay a long-awaited increase in interest rates, possibly until next year. Employers added just 142,000 jobs in September, and the government sharply lowered […]

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IMF chief warns of ‘disappointing’ growth

Sign up for quick access to a wealth of global business news, including: IMF chief warns of ‘disappointing’ growth Newspaper + Premium online Newspaper + Premium online Premium Full FT.com subscription Premium Full FT.com subscription Standard Full news & archive Standard Full news & archive Trial Try Premium online Trial Try Premium online Price Monthly Annual $66.30 $11.77 per week $53.00 $9.25 per week $36.00 $6.45 per week $1.00 for 4 weeks $1.00 for 4 weeks FT Alphaville plus selected FT blogs yes yes yes yes Unlimited FT.com article access yes yes yes yes Unlimited mobile and tablet access yes yes yes yes Unlimited fast FT yes yes yes yes 5 year company financials archive yes yes yes yes The LEX column yes yes no yes ePaper access yes yes no yes Three exclusive weekly emails yes yes no yes Daily newspaper delivery yes no no For 4 weeks […]

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The receding tide of oil price foreshadows the incoming DEFLATION TSUNAMI.

The receding tide of oil price foreshadows the incoming DEFLATION TSUNAMI. Nothing grows indefinitely in a finite system, not even debt! Almost all (90%) of ‘money’ in existence today is debt (credit) . This debt is created from thin air with every form of loan, from credit cards, through corporate debt to Treasury Notes. All this debt comes with an interest component that demands never ending growth in order to repay it. Again, the current monetary system REQUIRES that we have never ending economic growth. It is one massive pyramid scheme because, if we ever stop growing, who is paying the interest? Total U.S. debt has soared over the last 35 years: Debts are claims on future goods and services with interest and are essentially a bet that the future economy will be bigger than the present. However: The economy is the summation of all goods and services and […]

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Worries Rise Over Global Trade Slump

A sharp drop in global trade growth this year is underscoring a disturbing legacy of the financial crisis: Exports and imports of goods are lagging far behind the pace during past expansions, threatening future productivity and living standards. For the third year in a row, the rate of growth in global trade is set to trail the already sluggish expansion of the world economy, according to data from the World Trade Organization and projections from leading economists. Before the recent slump, the last year trade underperformed during an economic expansion was 1983. “We have seen this burst of globalization, and now we’re at a point of consolidation, maybe retrenchment,” said WTO chief economist Robert Koopman. “It’s almost like the timing belt on the global growth engine is a bit off or the cylinders are not firing as they should.” Since rebounding sharply in 2010 after the financial crisis, trade […]

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Asian shares tread water as Fed meeting looms

A man holding an umbrella walks past an electronic board displaying graphs showing recent movements of the Nikkei share average outside a brokerage in Tokyo September 8, 2015. Asian shares and the dollar inched higher on Tuesday but caution reigned after Wall Street skidded as investors awaited this week’s U.S. Federal Reserve policy decision. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.1 percent, after Wall Street logged losses, with U.S. trading volume at its lowest in a month as markets awaited the Fed outcome. Japan’s Nikkei stock index .N225 rose 0.6 percent as investors awaited the outcome of the Bank of Japan’s two-day policy meeting later this session, as well as BOJ Governor Haruhiko Kuroda’s post-meeting speech. A few investors were betting that Japan’s central bank would muster additional easing measures. But the majority believe that the BOJ will simply warn of heightening global risks while […]

Posted On : Published By : Tom Whipple