Oil Returns to Bear Market Oil prices are back in bear-market territory, frustrating OPEC members that cut production in an attempt to boost prices and renewing fears that falling prices could spill into stocks and other markets.
U.S. oil production is up 7.3% to 9.3 million barrels a day since OPEC announced plans in November to cut output, and the number of active rigs in the U.S. is at a two-year high.(…)
Prices are down 20.6% since Feb. 23, marking the sixth bear market for crude in four years and the first since August. Crude prices have lost 62% since settling at $115.06 a barrel three years ago. (…)
Saudi King Ousts Nephew as Crown Prince, Installs Son The move carries far-reaching implications for the monarchy and the biggest economy in the Middle East.
(…) Prince Mohammed bin Salman’s ascension signals a potential generational shift, one that would bring the monarchy more in line with the country’s young population. But it also risks a backlash within the vast House of Saud, whose members have long ruled through consensus among its various branches. (…)
Did you miss PROFIT MARGINS: THE SQUEEZE IS UNDERWAY?
LIKE SWISS CHEESE?
From John Mauldin:
(…) And the SNB is buying massive quantities of dollars and euros, paid for by printing hundreds of billions in Swiss francs. The SNB owns about $80 billion in US stocks today (June, 2017) and a guesstimated $20 billion or so in European stocks (which guess comes from my friend Grant Williams, so I will go with it).
They have bought roughly $17 billion worth of US stocks so far this year. They have no formula; they are just trying to manage their currency. (…) Switzerland is now the eighth-largest public holder of US stocks.
From the ZH post, I did a quick and dirty calculation: of the $17B in U.S. equities the SNB bought in Q1, nearly 20% were FAAMG stocks.
Likely helping these trends, courtesy of Evergreen Gavekal:
Notice that the chart is not including 2016? That’s because the FANGs were not all that strong last year as Cliff Asness discussed in a recent post.
From my lens, what’s important is the market breadth when valuations get really excessive. We seem to be there now. Bob Farrell’s #7:
Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names
Sam Zell Speaks His Mind The real estate investor sounds off about property, Donald Trump, immigration, pot, Amazon, marriage, malls, and newspapers.
A few nuggets from Barron’s interview:
- Last year, you predicted a recession for 2017. Then you walked back that prediction.
Another Democratic administration would have led to a recession. Trump’s election gave us extra innings because there’s more optimism in the business sector. Smaller businesses were basically destroyed by the Obama administration. Compliance was a giant animal that gobbled up everything. However, this recovery began in 2009. There aren’t many examples of 10-year recoveries in U.S. history. (…)
In 1999, instead of Amazon, I talked about Cisco Systems [CSCO]. I said that at the growth rate on which it was being valued, it would be 25% of the U.S. economy in 10 years. Well you could say the same thing about Amazon—to justify 150 times earnings, you have to assume it will be 25% of the U.S. economy in 10 years. Not likely.
- What’s your view of commercial real estate today?
A very significant supply is coming on. In previous periods of oversupply, new supply was added serially. This time, from the end of the Great Recession till a couple of years ago, very little office space was added. Over the past 18 months, New York added Hudson Yards, with 18 million square feet of space. Nobody has identified new demand to fill the supply. I usually have an optimistic answer. This time, I don’t have one.
Amazon is launching Prime Wardrobe, a new program that will let you try on clothes before you buy them. Once you select at least three Prime Wardrobe-eligible pieces from over a million clothing options, Amazon will ship your selections to you in a resealable return box with a prepaid shipping label.
After you try on the clothes, you can put the ones you don’t want back in the box and leave it at your front door — Prime Wardrobe also comes with free scheduled pickups from UPS. If you decide to keep at least three items you will get a 10 percent discount off your purchase, and if you keep five or more pieces the discount rises to 20 percent. (…)
Interesting post from Horan Capital Advisors. Well worth your next 2 minutes.