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Energy & Commodities

Clive Maund: Oil Market Update

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Posted by Clive Maund Maund

on Monday, 20 November 2017 05:58

It’s a good time to take an updated look at oil, because the paradoxes we observed regarding gold and silver, which we looked at in yesterday’s new Gold and Silver Market updates are much more extreme in the case of oil.On the latest 5-year chart for Light Crude we see that oil has in recent weeks succeeding in breaking out of its giant Head-and-Shoulders base pattern at last. We also see that volume has expanded greatly over the past 2 years which is viewed as a sign of a completing bottom. Recent strong upside volume has driven both volume indicators to new highs, despite the price still being way below its 2013 highs – this is viewed as a very bullish sign, and suggests that oil will advance at least to the $80 area.

wtic5year201117

.....continue analysis HERE



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Energy & Commodities

Zinc and the Base Metals Are Telling Us Something Important

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Posted by Eric Fry, Macro Strategist - The Oxford Club

on Thursday, 16 November 2017 15:52

  • Investors have avoided commodities like the plague for the last half-decade.
  • But today, Eric reveals how one base metal may be signaling a turnaround in the sector...

Just like Lassie, the lovable TV canine, zinc may be trying to tell us something important. Zinc's message probably has nothing to do with Timmy falling into a well, but it may have a lot to do with the prospect of rising commodity prices. 

You see, the price of zinc has been conspicuously strong, which often portends good things for the rest of the commodity complex. 

Unlike Lassie, zinc doesn't receive much love or attention. No one ever searches for zinc-filled treasure chests... or slides a zinc ring around a wedding finger. In fact, most folks couldn't identify the stuff if you dropped a chunk of it on their kitchen table. 

But this overlooked metal deserves a closer look... right now. Not only is its high-flying price leading the base metals sector, but it is also leading the entire commodity complex.

zinc-takes-flight

For most of the last six years, the commodity sector has been a great one to avoid. After hitting an all-time high in early 2011, the Thomson Reuters CRB Commodity Index tumbled 60% to a 15-year low. Many individual commodities plummeted more than 80%

But the CRB Index finally hit rock bottom early last year. Since then, it has bounced about 20%. However, not all commodities have enjoyed a similar revival. Many are still languishing near their 2016 lows. 

As the chart below shows, base metals and energy have registered the biggest gains from their 2016 lows, while agricultural commodities and soft commodities like coffee and cotton have barely budged.



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Energy & Commodities

GE Looks To Divest Energy Assets As Turmoil Continues

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Posted by OilPrice.com

on Wednesday, 15 November 2017 06:37

UnknownGeneral Electric Corp., as part of a turnaround plan announced November 13, halved its common stock dividend, from $.24 to $.12. per quarter, a fifty percent reduction. Wall Street had anticipated this move, but the stock has declined 8 percent following this announcement.

Given GE’s lengthy connection with the locomotive industry, it doesn't seem inappropriate to view the company as a slow moving train wreck, at least in terms of share price performance. Under former CEO Jeffrey Immelt, GE’s stock declined forty percent while the S&P 500 stock index more than doubled. Today’s dividend cut is simply one more in a long list of indignities for shareholders starting in the year 2000 when the stock peaked at about $60 per share. (It is trading a tad below $19 today.)

But since August this Stamford-based conglomerate has had a new Chairman and CEO, John Flannery. The dividend cut and proposed corporate restructuring are on his watch. As an aside, former CEO Immelt begin his corporate tenure by cutting the stock dividend after the financial conflagration at GE capital. Not an auspicious omen.



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Energy & Commodities

THE U.S. STOCK MARKET: Highly Inflated Bubble To Super-Charged Tulip Mania

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Posted by Steve St. Angelo

on Tuesday, 07 November 2017 06:15

Investors need to be concerned that the U.S. Stock Market is well beyond bubble territory as it has now entered into the final stage of a Super-Charged Tulip Mania.  Not only are stock prices inflated well above anything we have ever seen before, but valuations are also reaching heights that are totally unsustainable.  Unfortunately, these highly inflated share prices and insane valuations seem normal to investors who are suffering from brain damage as years of mainstream propaganda have turned the soft tissue in their skulls to mush.

Also, we are way beyond “Boiling Frogs” now.  Yes, we passed that stage a while back.  Today, the typical U.S. investor has been fried to death.   Investors now resemble a super-crisp chicken-wing with very little meat on it but at least will offer, one hell of a crunch.  Please realize I don’t mean to be harsh about my fellow investor.  However, when I look around and see what 99% of the market is doing, it reminds me of a famous line from the movie Aliens.  The star of the movie, after being found lost in deep space for many years, said the following in a meeting, “Did IQ’s drop sharply while I was away?”

We find out in the rest of the movie that the so-called Mainstream experts were totally wrong about their assessment of the situation.  However, billions of dollars were still spent and many lives lost because high-level individuals infected with stupidity (in the Aliens Movie) still controlled the shots.  No different than today.

Regardless, the U.S. Stock Market has entered into the last stage, which I call the Super-Charged Tulip Mania.  In this stage, it wouldn’t matter if the North Koreans launched a nuclear missile and declared war on the rest of the world, the universe and all Aliens floating around in space.  By God, the Dow Jones Index would look at these as a catalyst to reach the next important psychological level of 25,000 points.  Reaching that new level wouldn’t really be that hard as the Fed would just need to hire a few dozen more trading geeks and provide them with an endless supply of Hot Pockets and Starbucks.  Easy-peasy.

Okay… it’s time to get serious.  Here are a group of charts that show just how insane the markets and valuations have become today.

JP MORGAN & CATERPILLAR:  Exponential Share Price Increase & Insane Valuation

Let’s take a look at two of the companies listed in the Dow Jones Index.  JP Morgan Chase has benefited immensely from the U.S. Government bailout of the garbage assets such as Mortgaged Back Securities after the housing and banking collapse in 2008.  JP Morgan has seen its share price surge four times from $25 in 2012 to over $100 currently:

JP-Morgan-34-Yr-Chart

Furthermore, if an investor was lucky enough to buy a bunch of JP Morgan stock back in 1983 at $2.50 a share, he or she wouldn’t be complaining a bit today.  JP Morgan’s stock price is up a stunning 3,933% over the past 34 years.  If we look this chart, we can see that the share price is now moving up in an exponential trend.  Sadly for JP, all exponential trends never last.  While they may continue higher a bit longer, all will collapse sooner or later.

Another stock that has moved into the exponential territory, is Caterpillar.  After years of falling sales, Caterpillar has emerged out of the ashes to increased sales, profits and with it… a skyrocketing share price:



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Energy & Commodities

Trump’s China Trip To Reap Billions In Energy Deals

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Posted by OilPrice.com

on Friday, 03 November 2017 06:52

Oil-drum-imageU.S. President Donald Trump will visit China November 8-10 for a series of bilateral and commercial events, including a meeting with Chinese President Xi Jinping.

On that trip, President Trump’s first visit to China—the country that he has repeatedly criticized for trade practices and the way it has handled relations with North Korea—the administration will be taking some 40 U.S. companies on a trade mission to forge deals and discuss Chinese investments in the U.S.

One of the biggest deals up for discussion is an investment of around $7 billion by an alliance including China Petroleum & Chemical Corporation, or Sinopec, for an oil pipeline in Texas and an expansion of an oil storage facility in the U.S. Virgin Islands, Bloombergreports, quoting a person familiar with the proposal. The deal is likely to be in the form of a non-binding memorandum of understanding, not a definitive contract. According to insiders, the investment will still need a final go-ahead by both the U.S. administration and China.

Sinopec, in partnership with ArcLight Capital Partners—a Boston-based private equity firm focused on energy infrastructure assets—and with Connecticut-based Freepoint Commodities, is expected to propose a project for building a 700-mile-long pipeline from the Permian to the Gulf Coast and a storage facility at the Coast, according to Bloomberg’s source. Sinopec also wants to expand an oil storage facility on St. Croix, U.S. Virgin Islands.



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