U.S. Industrial Production Edges Up as Factory Output Firms
Industrial output nudged 0.1% higher (-1.0% y/y) during September following a 0.5% August decline, revised from -0.4%.
Capacity utilization improved to 75.4%. It has been moving sideways this year following a decline from the 2014 peak of 78.9%. Factory sector utilization also rose to 74.9%, but remained below the 2014 peak of 76.3%.
Last 3 months: Total output +0.1%, manufacturing +0.1%. Markit’s latest PMI survey recorded the smallest rise in new orders of 2016 to date, with export orders in decline.
- Ex-Energy IP also negative YoY (Bespoke Investment):
- The New York Fed regional manufacturing activity keeps weakening.
The details don’t provide much hope of a quick turn:
This won’t help:
Ford Cuts Production at Several Assembly Plants Move comes amid slowdown in U.S. light vehicle sales
(…) Ford executives have warned softening new-car demand and intensifying price competition could dent profits in the back half of the year.
Ford’s U.S. sales fell 8% in September as the broader new-car market sputtered, despite generous Labor Day deals and deeper discounts during the month. Ford’s light-duty truck inventory stood at a 93 days’ supply at the month’s end, well above the level considered healthy by the industry, according to WardsAuto.com. (…)
OIL
Oil price of $50-$60 is sufficient – Saudi Aramco board member
(…) As a member of the board of Saudi Aramco – the state oil company of Saudi Arabia – Mr Gould’s comments carry additional weight and indicate people advising the kingdom’s oil company believe it does not need to seek a much higher price in the near term, even as Riyadh moves to curb supply and bolster the market.
Mr Gould said there was enough lower cost oil that would prosper “even in a world where service and equipment costs will have to rise from their depressed levels”. (…)
Here is the oil cash cost curve for major producers with and without required payments to the government (via Morgan Stanley). (The Daily Shot)
Hmmm…I can’t believe everybody is making money now.
Oil groups ‘threatened’ by electric cars Fitch says growth in battery powered vehicles could prompt investors to sell out of energy companies
(…) “Widespread adoption of battery-powered vehicles is a serious threat to the oil industry,” says a report from Fitch Ratings that urges energy companies to plan for “radical change” spurred by new technologies that could arrive faster than expected. (…)
The agency says the threat of electric cars could create an “investor death spiral” as nervous asset holders sell out of oil companies, making debt and equity more expensive. (…)
“One of the most difficult things for oil companies there would be if China decide ‘Actually we don’t want petrol cars in five years’ time’. (…)
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Bloomberg/McKinsey report on the future of cars (PDF). Link
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What OPEC’s Oil U-Turn Missed: Peak Demand Keeps Getting Closer
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Motor industry: Pressure on the pump Electric cars could make up a quarter of the world’s automobiles by 2040. How will it affect oil demand?
THANKSGIVING?
Some of the biggest harvests in U.S. history are underway but there’s little celebration at the farms. Corn and soybean crops are hitting a a global market already sitting on the largest-ever grain stockpiles, the WSJ’s Kelsey Gee and Jesse Newman report, making storage of the stuff a bigger deal than transporting the goods to market. It is a dramatic turnaround from four years ago, when extreme drought slashed production of major row crops and prices for many commodities soared to the highest levels U.S. producers had seen. The boom-bust cycle is familiar in the U.S., but the difference is it’s gone global. Crop and livestock farmers in other countries have adopted farming practices that largely mirror those in the U.S. breadbasket. That raises the risks and rewards as events in in far-off countries have a greater impact on U.S. food prices than ever before, and experts say it means the pricing bust is more likely to persist as long as the production keeps stockpiles growing. (WSJ)
Norway’s oil fund urged to invest billions more in shares
Norway’s $880bn oil fund should invest billions of dollars more in equities and take on more risk, according to the conclusions of a government-commissioned report.
The study recommended that the world’s largest sovereign wealth fund should invest 70 per cent of its assets in shares, up from today’s 60 per cent.
The move is highly significant for global markets as the oil fund owns on average 1.3 per cent of every single listed company in the world and 2.5 per cent in Europe. (…)