Are US Shale Stocks Finally Set for a Rebound?

After years of meager returns and overspending to boost production at all costs, US shale explorers and drillers are finally about to see their share prices rise next year, according to veteran energy investor Shawn Reynolds.
The new wave of a more disciplined approach to spending and the focus on higher returns will benefit mostly the exploration and production companies. Drilling firms and oilfield services providers are also set to benefit, Reynolds told Bloomberg in an interview published on Friday.
Read Energy Analyst: “Meaningful Upside” for Oil Prices…
Shale companies have already started to realize the need to finally reward their shareholders, and firms are now planning within their means, not just spending to grow production at any cost.
Shale companies now have more growth potential than conventional oil and gas producers, because shale firms face lowered risks in resources extraction, said Reynolds, a fund manager at Van Eck Associates.
‘With shale, you have incredible visibility on growth, possibly the best visibility of any industry in the entire market, and lower risk,’ Reynolds told Bloomberg.

This post was published at FinancialSense on 12/08/201.

Weekend Reading: Recession Risk Hidden In Tax Bill

Authored by Lance Roberts via RealInvestmentAdvice.com,
Since the election, equity bulls have been pinning their hopes on ‘tax cuts’ as the needed injection to support currently elevated stock prices. Stocks have advanced sharply since the election on these expectations, and while earnings have recovered, primarily due to the rise in oil prices, whatever economic growth was to come from tax reform has likely already been priced in.
For some background on our views, both Michael Lebowitz and I have been discussing the tax bills as they are currently proposed since May of this year.
The Spurious Math Of A Tax Cut Rally Corporate Tax Cuts – The Seen & Unseen 3-Myths About Tax Cuts Bull Trap: The False Promise Of Tax Cuts The Conundrum Of Debt, Tax Cuts & The Economy Tax Cuts – The Economic Cure-All Buy The Rumor – Sell The News
We are currently in the second longest economic expansion since WWII. While Republican lawmakers are betting on jump-starting economic growth, the problem becomes the length of the current liquidity-driven expansion. All economic cycles end, and we are already closer to the end of the current expansion than not.

This post was published at Zero Hedge on Dec 8, 2017.

US Futures, Global Shares, Dollar All Jump On Brexit, Basel News, Averted US Shutdown; Payrolls Loom

U. S. equity index futures have bounced on the last day of the week, along with European and Asian shares, oil and the dollar following overnight news that the UK and EU have reached a successful conclusion on Phase 1 of Brexit negotiations, that Congress averted a government shutdown with another can-kicking 2 week measure until December 22, after strong Chinese trade data and an upward revision to Japanese GDP, and ahead of the November nonfarm payrolls data which is expected to cement the December Fed rate hike.
Setting the bullish mood this morning was Christmas coming early for Theresa May, who managed to forge an agreement – if only for the time being – with the EU in the early hours of Friday morning to pave way for phase 2, with talks set to move to trade with support being voiced by Senior Brexiteers, Gove and Johnson. In reaction to this, GBP initially hit a 6-month high, however once the agreement had been confirmed, the pound saw a “buy the rumour sell the news” price action, while gilts were met with selling pressreure with the price making a firm move below 124.00.
Also after the close on Thursday, the House voted 235-193 and Senate voted 81-14 to pass the stopgap spending measure which will avoid a government shutdown and fund government through to Dec. 22nd, kicking the can on and averting a government shutdown for another two weeks.
European stocks advance in a broad rally amid optimism over a newly-struck deal between Britain and the European Union to unlock divorce negotiations and proceed to discussing a future trade deal. The Stoxx Europe 600 Index rises 0.7%, with the index heading for a weekly gain of 1.3%. Banks advance the most, up for a second day, as the sector emerged relatively unscathed from global regulators’ final batch of Basel III post-crisis capital rules, with few lenders needing to raise major new funds. Miners are also among the best indusreptry group performers, following copper prices higher. The FTSE 100 is trailing other European indexes, trading little changed, as the pound climb.

This post was published at Zero Hedge on Dec 8, 2017.

The One Indicator OPEC Must Watch

Authored by Nick Cunningham via OilPrice.com,
‘We will not let go of our current approach until we reach a balanced market,’ Saudi oil minister Khalid al-Falih saidMonday at a news conference in Riyadh.
OPEC ended months of speculation last week when it decided to extend its production cuts through the end of 2018, easing concerns that the limits would be lifted before the oil market was ready. But while it put some uncertainty to rest, the next question is what OPEC does when the oil market becomes ‘balanced’? What is the exit strategy?
There isn’t one at the moment, and we can assume OPEC doesn’t know what comes next. But we do know that the group has one key metric in mind: inventories. The target is to bring global oil inventories back down to the five-year average.
Oil inventories exploded between 2014 and 2017, hitting record levels that left the world awash in oil. That metric, arguably more than any other, exemplified the glut of supply that led to the crash of prices.
It has been a stubborn thing, getting those inventories back down to average levels. A wave of shale bankruptcies didn’t do it, the vanishing rig count didn’t do it either. That led OPEC and a handful of non-OPEC countries led by Russia to limit their production. But even that deal didn’t seem to be doing the trick at the start of 2017, as inventories remained stuck at elevated levels. The euphoria that followed the announcement of the initial deal gave way to a renewed sense of gloom, which pushed WTI back down into the low-$40s by mid-2017.

This post was published at Zero Hedge on Dec 6, 2017.

THE NEXT TECH BOOM IS ABOUT TO UNFOLD HERE…

Everyone’s heard the story about the government’s promise to spend $1 trillion on fixing America’s aging critical infrastructure. But there’s another big money story that few investors know of…
Trump’s trillion-dollar pledge won’t come close to fixing our infrastructure. It’ll take $3.6 trillion to make this happen. And in the midst of this infrastructure crisis, one little-known company has launched an artificial intelligence coup that could save us billions.
Consider the dire straits of a massive network of critical infrastructure that industries, the environment and human lives all count on, every minute of every day:
S. dams are failing from coast to coast: 15,500 of our 90,500 dams now a high-hazard potential for public safety and the economy and it will take $60 billion to fix them. 180,000 people were recently evacuated in California because of fears that the largest dam in the U. S. would collapse. Pipelines have caused almost 9,000 significant accidents in only 30 years, hitting us with $8.5 billion in damages, killing hundreds and injuring thousands. The U. S. spends almost $3 billion every year just cleaning up spills in our waterways. The over 140 oil refineries in the U. S. are potential disasters waiting to happen, with more than 500 accidents since 1994, and explosions killing and threatening millions with fatal toxins.

This post was published at The Daily Sheeple on DECEMBER 4, 2017.

The Venture Capital Bubble Is Imploding! (The Beginning Of The Great Bubble Deflation?)

Following The Great Recession and The Fed’s extraordinary response, there was a lot of money available that we seeking risky assets, such as equities, housing and apartments.
Venture capital, the darling of business schools (that rarely look at the data, but focus on the snake oil-aspect of VC), has been in decline since 2014 after a meteoric rise after 2007.

This post was published at Wall Street Examiner by Anthony B Sanders – December 1, 2017.

Maduro Unveils “The Petro”: Venezuela’s Official Cryptocurrency To “Overcome Financial Blockade”

You sure he didn't say 'KLEPTO-currency'? — Wild Goose (@TrueSinews) December 3, 2017

Three months ago, in a not entirely surprising move meant to circumvent US economic sanctions on Venezuela, president Nicolas Maduro announced that his nation would stop accepting dollars as payment for oil imports, followed just days later by the announcement that in a dramatic shift away from the Petrodollar and toward Beijing, Venezuela would begin publishing its oil basket price in Chinese yuan. The strategic shift away from the USD did not work quite as expect, because a little over two months later, both Venezuela and its state-owned energy company, PDVSA were declared in default on their debt obligations by ISDA, which triggered the respective CDS contracts as the country’s long-expected insolvency became fact.
Fast forward to today when seemingly impressed by the global crypto craze, Maduro on Sunday announced the creation of the “Petro“, Venezuela’s official cryptocurrency “to advance in the matter of monetary sovereignty, to make financial transactions and to overcome the financial blockade”.
“Venezuela announces the creation of its cryptocurrency, the Petro; this will allow us to move towards new forms of international financing for the economic and social development of the country,” Maduro said during his weekly television program, broadcast on the state channel VTV.

This post was published at Zero Hedge on Dec 3, 2017.

WTI Slumps Despite OPEC ‘Deal’ As Russia Questions Remain

Both WTI and RBOB prices are tumbling this morning after OPEC member agree to limit oil output through the end of 2018. While this is bullishly longer-than-expected (6-9mo was expected), OPEC members now rely on Russia to agree to these terms, and it appears the market is questioning that. Furthermore, despite US shale output at record highs, Saudi officials are shrugging off any impact.
As The Wall Street Journal reports, OPEC members agreed in principle Thursday to keep limiting their output through the end of 2018, according to people familiar with the matter, providing assurance for an oil industry still struggling through a fragile recovery.
The accord signals that the world’s biggest oil-producing countries believe that a global oversupply of oil is still weighing down oil prices, even a year after they struck their first agreement to cut crude production. Oil in storage – a proxy for the global glut – remains well above historical averages, national oil ministers said.
Any agreement OPEC strikes will be contingent on support from a group of producers outside the cartel led by Russia, which pumps more crude than any country in the world. The Russia-led delegations are meeting with OPEC to hash out a final agreement.

This post was published at Zero Hedge on Nov 30, 2017.

WTI Tumbles Below $57 As OPEC-Hype Fades

Goldman’s Damien Courvalin seems to have perfecvtly summed things up – the market was pricing in an OPEC production cut extension of 6-9 months (accounting for around a $2.50 premium in the price). Today’s jawboning from Russia seems to signal April discussions (so a 6-month extension) which is a disappointment – and so WTI prices are tumbling…
Sell the leaked, jawboned news?
As we previously wrote, in conclusion, Goldman believes that oil prices have overshot fundamentals and that price risks are skewed to the downside into Thursday’s meeting.

This post was published at Zero Hedge on Nov 29, 2017.

America’s Opiate Crisis Helping to Drive Up Home Prices

Financial Sense Newshour recently spoke with Dr. Frank Nothaft, Executive and Chief Economist at CoreLogic, about the US housing market and why home prices are likely to continue appreciating, though at a slightly lower rate, in 2018.
For related podcast, see Jim Puplava on Oil; Dr. Nothaft on US Home Prices

Source: CoreLogic Home Price Insights
Good News: Demand Is High and Rising
The real estate market could be up 5% or more this year, Nothaft stated, and could possibly rise another 5% next year in 2018.

This post was published at FinancialSense on 11/27/2017.

OPEC, Russia Said To Announce Oil Pact Extension On Nov 30

Authored by Tsvetana Paraskova via OilPrice.com,
Saudi Arabia and Russia have agreed that OPEC and non-OPEC allies should announce an extension of the cuts at the highly-anticipated meeting in Vienna on November 30, Bloomberg reported on Friday, quoting people involved in the talks.
Recent OPEC/non-OPEC oil pact chatter had it that Saudi Arabia was pushing for an announcement of the cuts extension next week in Vienna, while Russia was more hesitant about telling the market on November 30 how the participants in the deal would act. Russia appeared to be stalling and playing for an announcement to be issued closer to the current expiration deadline of the deal, March 2018.
According to Bloomberg’s sources, now Russia and Saudi Arabia have agreed on the need to announce some sort of a deal next week, but Russia has insisted on additional phrasing in the extension deal that would link the size of the cuts to the state of the oil market.

This post was published at Zero Hedge on Nov 26, 2017.

Largest employer in each U.S. state: In 22 states Walmart is the largest employer.

With the holiday season comes the usual mindless shopping and stampedes of people looking for that blowout sale. If you have any doubt about how far we have slid into a low wage nation just look at the largest employer data for each state. Walmart is the largest employer in 22 states. Instead of the majority creating things we now have the majority consuming things in mass. This is also one part of the complicated calculus that has hollowed out our middle class and has exported our savings out of this country and across the world to other places where manufacturing is occurring. Now this data might be known by some but watching the mainstream press you realize that people are really out of touch with how most Americans are living. People are living paycheck to paycheck and the standard of living is slowly being chipped away. Welcome to Walmart Nation.
Walmart dominating employment
It might be worth looking back at 1955 to see who the biggest employers were then:
GM
Chrysler
U. S. Steel
Standard Oil of New Jersey
Amoco
Goodyear
Firestone

This post was published at MyBudget360 on November 26, 2017.

Is $40 WTI Now More Realistic Than $60?

Authored by Tsvetana Paraskova via OilPrice.com,
The current rise in oil prices is more of a fear trade right now, driven by fear of what is going on in the Middle East, rather than a result of growing OPEC chatter or inventory reports, Todd Horwitz, chief strategist at Bubbatrading.com, told Bloomberg on Wednesday.
‘The oil premiums are very narrow going out to the future, which means that this is more of a fear trade in the front month,’ Horwitz said on ‘Bloomberg Markets’. ‘To me, this is more of just another farce of what OPEC is trying to do, and trying to push these prices higher,’ the strategist noted.
OPEC and its non-OPEC partners in the production cut deal are scheduled to meet in Vienna on November 30 to discuss the extension of their pact.

This post was published at Zero Hedge on Nov 24, 2017.

Shale Hedges Threaten Oil Rally

Surge in hedging puts downward pressure on the oil futures curve. By Nick Cunningham, Oilprice.com: The 20 percent increase in oil prices since September led to a wave of hedging by U. S. shale drillers eager to lock in future production at prices not seen in years. The flip side of that hedging wave is that locking in prices could cut the price rally off at the knees, ensuring that more supply will be forthcoming in the next few quarters.
Shale drillers were hesitant for much of the year, but kicked their hedging programs into high gear after oil prices posted strong gains beginning in September. ‘The past three months have seen a significant increase in oil hedging, with the volume of new positions more than twice the volume of Q3 hedges that rolled off the books,’ Standard Chartered wrote in a recent research note.

This post was published at Wolf Street on Nov 24, 2017.

Lessons From Squanto

Authored by MN Gordon via EconomicPrism.com,
Governments across the planet will go to any length to meddle in the lives and private affairs of their citizens. This is what our experiences and observations have shown. What gives?
For one, politicians have an aversion to freedom and liberty. They want to control your behavior, choices, and decisions. What’s more, they want to use your money to do so.
Here in the United States, bureaucrats, flush with authority, will stand in the way of a fellow who’s striving to find his own way by his own means. Licenses, permits, fees, employer identification numbers, state board of equalization registrations, workers compensation insurance…you name it. All this – and more – are needed prior to hanging out your shingle and making your first sale.
Many cities in the land of the free require school kids to get a permit just to operate a lemonade stand. And don’t even think of opening an auto shop, let alone a medical practice. You’ll spend your first year’s profits getting your hazardous materials business plan approved by the fire department. What a waste of time and resources so you can store a couple tanks of oil and gas and keep a couple waste drums to put the dirty rags in. Does all this rigmarole make you safer?
After that, your time will be spent keeping up the requisite documentation and reporting. Actually acquiring and serving customers will be secondary. Then, after paying federal, state, and local taxes, you’ll be left with less money than if you’d just kept your day job. Why bother with the risk if there’s no reward?
Perpetuating Mistakes Certainly, some government programs were initiated with well-meaning intentions. Food stamps, for instance, are issued so people can buy food so they can eat. Isn’t that a good thing? On surface, the answer is yes. But below the surface unintended consequences simmer.

This post was published at Zero Hedge on Nov 23, 2017.

Asian Stocks Smash Records; Dollar Slides As Crude Surges To July 2015 Highs

Global shares hit another record high on Wednesday, propelled higher by what increasingly more call (ir)rational exuberance, and investors’ unflagging enthusiasm for tech stocks. That said, S&P futures are unchanged the morning before Thanksgiving (at least before the market open ramp), as are European stocks (Stoxx 600 is flat), despite the euphoria in the Asian session which saw the MSCI Asia Pac index hit a new all time high…

… as oil jumped, rising as much as $1.15 to $57.98/bbl, the highest since July 2015, following yesterday’s API report which showed crude stocks fell another 6.4mmbbls and a Keystone pipeline outage shaprly tightened the market, while the dollar fell after Janet Yellen warned against raising rates too fast and the euro gained amid new moves to end Germany’s political impasse.

This post was published at Zero Hedge on Nov 22, 2017.

Nebraska Regulators Approve Keystone Pipeline Route Days After South Dakota Leak, Shutdown

TransCanada received its final required pipeline route approval, winning Nebraska’s permission to build its long-delayed Keystone XL crude oil pipeline across the state… just days after a 5,000 barrel spill in South Dakota shut the pipeline.
The decision will almost certainly be challenged in court.
Just a few short days after 210,000 gallons of crude oil spilled in South Dakota, Bloomberg reports that Nebraska’s Public Service Commission voted three to two Monday, removing one of the last hurdles to the Calgary-based company’s construction of the $8 billion, 1,179-mile conduit (1,897-kilometer), which has been on its drawing boards since 2008.
For those who aren’t familiar with the project, the pipeline links Canada’s Alberta oil sands to U. S. refineries. While a portion of the pipeline has been operating, part of it had still not been approved by state regulators… until today’s decision by Nebraska.

This post was published at Zero Hedge on Nov 20, 2017.

100 billion reasons to have non-reportable assets

In early March 1938 in a dusty corner of the Arabian desert, Max Steineke finally had the breakthrough he was hoping for.
Steineke was the chief geologist for the California Arabian Standard Oil Company (CASOC), a venture owned by what we know today as Chevron.
And he hadn’t had a lot of success despite years of effort.
Steinke was convinced that massive oil reserves were beneath the sands. He just couldn’t find any.
His prized oil well, what was called Dammam #7, had been riddled with mishaps, accidents, and delays, and it was costing the company a LOT of money.
Steinke was about to be shut down when, finally, on March 4, the well started gushing. And Saudi Arabia was never the same.

This post was published at Sovereign Man on November 20, 2017.

Before You Book That Vacation, JPM Warns Multiple Spoilers Are Converging In November

One week ago, Jan Loeys – the person who wrote “The JPMorgan View” for 15 years – announced his exit, as he transitioned from tactical asset allocation to longer-term strategy, and that he would be handing over the authorship to John Normand, and soon Nikos Panigirtzoglou and Marko Kolanovic, but not before summarizing what he has learned in 30 years of investing in a must-read bulletin which he published last week.
In any case, this weekend it was Normand’s turn to regale JPM’s countless retail and institutional clients with a preview of the upcoming key “spoilers” which according to Normand boil down to 3: a reality check on US tax reform, weaker-than-expected China data, and a Russian rethink on extending oil cuts. Not surprisingly, JPM focuses on the first issue, because as Norman writes, “tax overhaul seems the most complicated market driver given its fluid composition and tortuous legislative process.”
By contrast, China’s slowdown looks familiar and was already part of our economists’ baseline; hence, our neutral recommendation on base metals ex aluminum. The November 30th oil producers’ summit is not a drop-dead date for extending their year-old agreement, but we took profits anyway on a long Brent trade last week because oil’s geopolitical premium looked excessive.
For those curious what the largest US bank thinks will be dominant events over the balance of the month, here it is straight from the horse’s mouth.

This post was published at Zero Hedge on Nov 19, 2017.