BOOM as at 12th November 2018

ENERGY CONUNDRUM
US NATURAL GAS PRICE SURGES UP
OIL PRICES CONTINUE FALLING

Energy prices were center stage last week. Oil prices continued to fall with West Texas Crude down another 4.67 % and Brent Crude down by 3.5 %. Everyone should have noticed the fall in gasoline prices at their local service stations by now. The jury is out about the cause. President Trump has claimed that he is solely responsible but that is clearly not an adequate explanation. BOOM has written about delusions of grandeur in previous editorials.

Perhaps this is a warning sign of a serious drop in global energy demand? If so, that implies that many national economies are on the brink of contraction. The IMF (International Monetary Fund) is predicting global GDP growth of 3.9% for 2018 and also 3.9% for 2019. A global recession does not seem to be on the cards if you believe anything coming out of the IMF but such events are hellishly difficult to predict.

While oil prices were falling, the US futures market price of Natural Gas surged upwards by 13.25% in just 5 days of trading. This was explained away as being caused by the early onset of cold weather in the US combined with reduced supply in the US. The amount of natural gas in U.S. storage is 16 percent below the five-year average and the lowest level to start the winter heating season in 15 years. But, nonetheless, a 13.25% rise in just one week is a huge surge in the current uncertain global economic outlook.

Let’s look for another explanation. Perhaps this means that the US economy’s demand for energy is about to rapidly expand beyond previous expectations? And if so, then surely the global economy could not be on the verge of a growth collapse?

Being an optimist, BOOM can see both price moves as a net positive — but it depends upon where you are standing as either an energy supplier or consumer. Lower oil prices will help emerging market economies immensely and so too advanced economies. When global oil prices fall, then the base cost structure of running an economy falls. Thus, energy can be more easily purchased and, hopefully, put to productive use while the consumer’s wallet can at the same time be extended to purchase goods and services other than energy.

A rise in natural gas prices can be seen as a welcome sign for the gas production industry. Prices have been in the doldrums ever since the global financial crisis in 2008. 10 years of low prices is a very long time for any industry to survive and prosper. Prior to 2008, the US Dollar price of Natural Gas in MMBtu (Million British Thermal Units) averaged around $ 7.00 – $ 8.00. There were peaks of price around US$ 14 – $ 18.

However, since 2008, the average price has been mostly below US$ 4.00. Last Friday, after the dramatic 13.25% surge in price over the week, the price settled at $ 3.70. So it is still below $ 4.00. The question must be asked. Is this a sign of “returning to normal”? By that, BOOM means the “normal” economic circumstance that existed prior to the global financial crisis. If that argument is true, then the rise in natural gas price is not only a welcome sign for the energy industry but also a welcome sign for the entire global economy.

So a simultaneously rising natural gas price and a falling oil price can both mean that happy economic days are here again.

THE MASERATI FLEET

The APEC Meeting in Papua New Guinea is coming up this week. APEC stands for Asia-Pacific Economic Cooperation, an inter-governmental forum for 21 Pacific Rim member economies that promotes free trade throughout the Asia-Pacific region.

Cooperation is a much loved word in the world of Geo-politics. BOOM just saw on television the fleet of 40 Maserati cars and three Bentleys that the Papua New Guinea government has purchased to transport the VIPs around Port Moresby. That capital city is one of the poorest capital cities on the planet and its nation is 107th on the list of nations based upon National Nominal GDP (just US$ 23 Billion). On a Per Capita GDP basis, Papua New Guinea is rated 146th on the list.

Is this a sign of a massive global economic boom to come? Does the PNG government know something that we humble financial analysts have not yet seen?

BOOM can only wonder at the “cooperation” here between luxury car manufacturers and the APEC group. After all, surely the politicians and their public servants need protection and comfort as they discuss the existential threat of climate change? The Maserati fleet and the Bentleys will surely assist in the making of excellent decisions? If so, then BOOM can see the essential nature of the purchase. (Please note that this is a BOOM attempt at sarcasm).

GEO-POLITICS

Staying on Geo-politics, there were some extraordinary events worth noting last week. The President of France, Emmanuel Macron, said that the EU should develop the concept of a pan European Army to protect itself against the United States. BOOM will let the reader make his/her own conclusions about that matter but it is perhaps refreshing to see any politician trying out the truth as a political strategy.

And it was reported that Saudi Arabia’s major oil company, Saudi Aramco, and the kingdom’s petrochemicals giant Saudi Basic Industries Corporation (SABIC) are considering an investment in building a petrochemicals processing plant in Russia. Saudi Arabia is also currently discussing the opportunity of building a synthetic rubber plant in the Saudi city of Jubail with French energy major Total, China’s Sinopec, and Russia’s Sibur. Sibur is Russia’s largest petrochemicals firm.

BOOM has watched the steady development of links between Russia and Saudi Arabia over the last few years. It is a welcome sign on the Geo-political scene.

As to Donald Trump’s reaction — he found Macron’s comments “very insulting”. BOOM has not yet heard his reaction to the Saudi French Russian Chinese developments.

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

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Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

EMAIL: gerry [@] boomfinanceandeconomics.com

PRICE PULSE DOMINANCE CHANGES DURING LAST WEEK Ended 11th November 2018:

1. NATURAL GAS (SPOT PRICE) — Changed to UP Arrow Dominant
2. COMMODITIES INDEX (USCI) — Changed to DOWN Arrow Dominant

NATURAL GAS FUTURES

COMMODITIES

NOTE — RED ARROWS INDICATE BOOM PRICE PULSE DOMINANCE in the present moment (as indicated by the date of the chart and taking into account the 3 year time frame shown).  The charts are now arranged in PRICE PULSE RED ARROW DOMINANCE.    NOTE: All Charts are WEEKLY Charts over the last 3 YEARS time frame.  Arrows indicate PAST price action (not future).  No predictions are implied from past action.

Comments refer to past PRICE PULSE (Red Arrow DOMINANCE) over the last 3 years, the week ended 11th November 2018.  You can RIGHT CLICK a chart and OPEN in a New Tab.   Make your own conclusions, do your own research. BOOM does not offer investment advice. 

PLEASE NOTE — Many charts are ETF’s from NY Market  (not the base commodity or currency etc). The NY Stock Code is in the Top Left Hand Corner of each chart.
Charts are produced from http://www.stockcharts.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

PRICE PULSE RISING — (RED ARROW UP DOMINANCE)

# NATURAL GAS (SPOT PRICE) — UP Arrow Dominant
# BRAZIL STOCK INDEX — UP Arrow Dominant
# PALLADIUM PRICE — UP Arrow Dominant
# ARGENTINA STOCKS — UP Arrow Dominant
# US INFLATION PROTECTED BOND PRICES — UP Arrow Dominant
# US UTILITIES STOCKS — UP Arrow Dominant
# RWR (US Real Estate REIT Fund) — UP Arrow Dominant
# VALE STOCK (Iron Ore) — UP Arrow Dominant
# US BIOTECHNOLOGY INDEX — UP Arrow Dominant
# WEST TEXAS OIL PRICE — UP Arrow Dominant
# US DOW STOCK INDEX — UP Arrow Dominant
# RUSSELL 2000 INDEX — UP Arrow Dominant
# US TRANSPORT INDEX — UP Arrow Dominant
# US INSIDER SENTIMENT (KNOW) — UP Arrow Dominant
# NASDAQ COMP INDEX — UP Arrow Dominant
# US JUNK BOND PRICES — UP Arrow Dominant
# US 3 MTH T BILL YIELD — UP Arrow Dominant
# LIBOR — UP Arrow Dominant

PRICE PULSE FALLING — (RED ARROW DOWN DOMINANCE)

# COMMODITIES INDEX (USCI) — DOWN Arrow Dominant
# SWISS FRANC (AGAINST $US) — DOWN Arrow Dominant
# FRANCE STOCKS — DOWN Arrow Dominant
# AUSSIE ALL ORDS INDEX — DOWN Arrow Dominant
# THAI SETI INDEX — DOWN Arrow Dominant
# GERMAN DAX — DOWN Arrow Dominant
# TAIWAN STOCKS — DOWN Arrow Dominant
# FVL — VALUE LINE — DOWN Arrow Dominant
# US KBW BANK INDEX — DOWN Arrow Dominant
# US LONG BOND PRICE (TLT) — DOWN Arrow Dominant
# YEN (AGAINST $US) — DOWN Arrow Dominant
# DENMARK STOCKS — DOWN Arrow Dominant
# COAL ETF (KOL) — DOWN Arrow Dominant
# TED SPREAD — DOWN Arrow Dominant
# COPPER PRICE — DOWN Arrow Dominant
# INDUSTRIAL METALS ETF (DBB) — DOWN Arrow Dominant
# YUAN (AGAINST USD) ETF — DOWN Arrow Dominant
# HANG SENG — DOWN Arrow Dominant
# SOUTH KOREA STOCKS — DOWN Arrow Dominant
# SINGAPORE STOCKS — DOWN Arrow Dominant
# AUSSIE DOLLAR AGAINST US DOLLAR — DOWN Arrow Dominant
# CANADIAN DOLLAR AGAINST USD — DOWN Arrow Dominant
# BRITISH POUND AGAINST USD — DOWN Arrow Dominant
# NOMURA HOLDINGS — DOWN Arrow Dominant
# EURO (AGAINST $US) — DOWN Arrow Dominant
# PLATINUM PRICE — DOWN Arrow Dominant
# SHANGHAI STOCKS — DOWN Arrow Dominant
# BITCOIN INDEX $NYXBT — DOWN Arrow Dominant
# DEUTSCHE BANK SHARES — DOWN Arrow Dominant
# FOOD INPUT PRICES (DBA) — DOWN Arrow Dominant
# EURODOLLAR INDEX ($XED) — DOWN Arrow Dominant

PRICE PULSE UNCERTAIN NON-DOMINANCE OF RED ARROW –

# GOLD PRICE in USD —NO Arrow Dominant
# GOLD PRICE (in Aus Dollars) — NO Arrow Dominant
# TRIM TABS US FLOAT (TTAC) — NO Arrow Dominant
# US HIGH GRADE CORP BONDS (LQD) — NO Arrow Dominant
# AGGREGATE US BOND PRICES (BND) — NO Arrow Dominant
# INDIAN STOCKS — NO Arrow Dominant
# SWISS STOCKS — NO Arrow Dominant
# RUSSIAN RTSI STOCK INDEX — NO Arrow Dominant

Disclaimer: All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

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MOLS   Denmark

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