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Energy & Commodities

The Blood Bath Continues In The U.S. Major Oil Industry


Posted by Steve St. Angelo - SRSrocco Report

on Thursday, 09 February 2017 06:11

The carnage continues in the U.S. major oil industry as they sink further and further in the RED.  The top three U.S. oil companies, whose profits were once the envy of the energy sector, are now forced to borrow money to pay dividends or capital expenditures.  The financial situation at ExxonMobil, Chevron and ConocoPhillips has become so dreadful, their total long-term debt surged 25% in just the past year.

Unfortunately, the majority of financial analysts at CNBC, Bloomberg or Fox Business have no clue just how bad the situation will become for the United States as its energy sector continues to disintegrate.  While the Federal Government could step in and bail out BIG OIL with printed money, they cannot print barrels of oil.

Watch closely as the Thermodynamic Oil Collapse will start to pick up speed over the next five years.

According to the most recently released financial reports, the top three U.S. oil companies combined net income was the worst ever.  The results can be seen in the chart below:

Top-Three-US-Oil-Companies-Net-Income

In 2011, ExxonMobil, Chevron and Conocophillips enjoyed a combined $80.4 billion in net income profits.  ExxonMobil recorded the highest net income of the group by posting a $41.1 billion gain, followed by Chevron at $26.9 billion, while ConocoPhillips came in third at $12.4 billion.

However, the rapidly falling oil price, since the latter part of 2014, totally gutted the profits at these top oil producers.  In just five short years, ExxonMobil’s net income declined to $7.8 billion, Chevron reported its first $460 million loss while ConocoPhillips shaved another $3.6 billion off its bottom line in 2016.  Thus, the combined net income of these three oil companies in 2016 totaled $3.7 billion versus $80.4 billion in 2011.

Even though these three oil companies posted a combined net income profit of $3.7 billion last year, their financial situation is much worse when we dig a little deeper.  We must remember, net income does not include capital expenditures (CAPEX) or dividend payouts.  If we look at these oil companies Free Cash Flow, they have been losing money for the past two years:



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Bonds & Interest Rates

Why you shouldn’t fear rising interest rates …


Posted by Larry Edelson - Money & Markets

on Wednesday, 08 February 2017 06:40

I’ve got to hand it to the majority of pundits out there. They just never learn to think for themselves. They keep dishing out the same nonsense, over and over again.

For instance, the notions that rising interest rates will kill off equity market gains, particularly in the U.S. … or choke off a real estate recovery … or kill the gold market for good — are myths. Period.

It might be true if interest rates were at record highs and well above the rate of inflation. But they are not. Interest rates are coming off of historic record lows in many parts of the world — even below zero in some countries — and they are far below the rate of inflation.

That’s important to understand. As rates rise from essentially 5,000-year-low levels — no matter what any central bank does — many investors will run for cover. But the only market that rising interest rates will truly hurt is the value of sovereign bonds. In other words, it will demolish governments’ ability to ever borrow again (a good thing).

Screen Shot 2017-02-08 at 6.22.25 AMConsider what’s happening right now with real estate. Why would rising mortgage rates — at this point in the economic cycle and recovery — be bad for property prices?

They won’t be bad. For the simple reason that as mortgage rates start to rise, all the pent-up demand for property will come out of the woodwork and start buying — in anticipation of further increases in the cost of borrowed funds.

That’s precisely what is happening in the U.S., in particular, where a housing recovery is well underway.

Consider the latest data from brokerage Douglas Elliman Real Estate, where January 2017 was an excellent month for high-end sales in Connecticut and where sales from $1 million all the way up to $5 million increased significantly compared to January 2016.

Overall, total inventory is down to 447 houses which is 13 lower than last year at this time, while total sales are up 16.



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Currency

U.S. Exorbitant Privilege At Risk?!


Posted by Axel Merk - Merk Investments LLC

on Wednesday, 08 February 2017 06:38

If the road to hell is paved with good intentions, American’s exorbitant privilege might be at risk with broad implications for the U.S. dollar and investors’ portfolios. Let me explain.

2013-09-09-in-debt-we-trust

The U.S. was the anchor of the Bretton Woods agreement that collapsed when former President Nixon ended the dollar’s convertibility into gold in 1971. Yet even when off the remnants of the gold standard, the U.S. has continued to be the currency in which many countries hold their foreign reserves. Why is that, what are the benefits and what are the implications if this were under threat?



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Stocks & Equities

VIX Update: Has Volatility Bottomed?


Posted by The VIX Channel

on Wednesday, 08 February 2017 06:32

Summary

- Even after a small gain last week, the VIX is still near its lows.

- Long and short VIX strategies both have arguments in their favor.

- A Long VIX bias may be warranted, but active risk management is a must.

- Investors need to be nimble to take advantage of VIX spikes and switch to a short bias.

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....continue reading HERE



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Gold & Precious Metals

Silver Market Set Up For Much Higher Price Move Than Gold


Posted by Steve St. Angelo - SRSrocco Report

on Wednesday, 08 February 2017 06:27

When the paper markets finally collapse, the silver market is set up for much higher price gains than gold.  Why?  Because the fundamentals show that precious metals investment demand has put a great deal more pressure on the silver supply than gold… and by a long shot.

There are three crucial reasons why the silver price will outperform the gold price when the highly inflated paper markets disintegrate under the weight of massive debt and derivatives.  While many precious metals investors are frustrated by the ability of the Fed and Central Banks to continue to prop up the markets, the longer they postpone the day of reckoning, the worse the collapse.

The first reason I wrote about in my article, Critically High U.S. Silver Supply Reliance In Jeopardy When Paper Markets Crack:

US-Net-Import-Reliance-Percentage-Of-Consumption-2015

the United States silver net import reliance as a percentage of total consumption, was 72%, versus 36% for copper and a negative 48% for gold.



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