Weekend Nov 29, 2014
SAN FRANCISCO (MarketWatch) —Oil futures on Friday settled at their lowest in five years as the Organization of the Petroleum Exporting Countries’ decision to keep crude production the same heightened fears that the existing glut in the oil market would persist.
It was the first chance for U.S. markets to react to the cartel’s move, announced Thursday, and the flurry of selling intensified as closing time neared — adding to downward momentum that was already threatening to be severe.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January CLF5, -10.45% was off $7.54, or 10%, to settle at $66.15 a barrel on Friday.
Marketwatch
In Europe, consumer prices rose in November at their slowest annual pace in five years, deepening fears the continent may be tipping toward deflation. In Japan, the core consumer-price index in October rose at its slowest pace this year.
WSJ Front Page Weekend Edition
Reuters
The fundamental problem facing Greece is not slow economic growth but political inequality. To the benefit of a favored few, cumbersome regulations and dysfunctional institutions remain largely unchanged, even as the country’s infrastructure crumbles, poverty increases, and corruption persists. Greek society also faces new dangers. Overall unemployment stands at 27 percent, and youth unemployment exceeds 50 percent, providing an ideal recruiting ground for extremist groups on both the left and the right. Meanwhile, the oligarchs are still profiting at the expense of the country -- and the rest of Europe."Let's start with the US Dollar
Of Two Minds
Apparently the liquid spill on my macbook is proving to be a problem. Canada is a commodity based country and currency, hence the big drop at far right lower right Friday.
Commodities denominated in dollars fell across the board.
The Canadian dollar and Australian Dollar dropped sharply.
Car companies, airlines,and cruise lines jumped on cheaper fuel costs.
The percent of spx stocks above their 150 day MA is rolling over, my guess is that bonds advance and stocks pull back during December.
The Bottom Line
We are apparently embarking on the third down turn in since Year 2000.
Year 2000 - Dot.com meltdown
Year 2008 - Sub Prime Real Estate Meltdown, Brokerage Firms Evaporate
Year 2014 - Oil Crash
With near zero interest rates in Europe already, it is hard to see what Draghi and his group think they will do for more stimulus. THe article in Friday's WSJ about the difficulty of starting a business in Spain explains why the unemployment is so persistent. If a company lays off 250 workers, you do not produce 250 entrepreneurs.
While lower energy costs may well get more shoppers to stores, in the larger world view it just reflects slowing economies, less demand for energy. And ratcheting the energy price down to protect market share will eventually harm those energy producers aS well.
Social Mood
Robin Wong produces and excellent photography blog. What caught my eye was that in the tiny fishing village of Hoi An Vietnam the US Dollar is the preferred currency. That is all you need to know about the strength of the US Dollar.
I had originally thought we would have a low in stocks for the 40th anniversary of the low in the Dow in 1974. Instead Alternation rules, and we have an all time high in stocks with a low in oil prices. That springs from the 1973 oil embargo which raised prices and depressed markets back then.
But we are on track politically. Barack Obama is about where Nixon was in the 1973 period. Even Chuck Schumer is trying to distance himself from Obamacare with a speech at the National Press Club. IT looks like a rough two years ahead, politically speaking.
Can the Central Banks keep the markets up amid so much negative social mood? They have so far.
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