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Insights and Analysis
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21 июля, 17:15

Oil: Economic Landscape of Saudi Arabia

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Most fundamental indicators are flashing bearish signals for oil.  1) Inventories are rising on a seasonally-adjusted basis. 2) Oil production continues to rise in Brazil, Kazakhstan, Libya and the United States, largely offsetting production cuts by the Organization of Petroleum Exporting Countries (OPEC) – which is itself showing cracks in its resolve to maintain production cuts. 3) Vehicles are becoming increasingly fuel efficient, dampening consumer demand for gasoline.   Despite all that, oil is not without upside risks.  In our previous articles, we have discussed the possibility of instability in four major oil producers who have been hard hit by the collapse in oil prices and who lack substantial financial reserves, namely Algeria, Angola, Nigeria and Venezuela.  Together, those four nations produce about eight million barrels of oil per day and related liquids, about two thirds as much as Saudi Arabia, the world’s top oil exporter.  But what is going on with the Saudi economic landscape?  The Saudis are rapidly burning through their currency reserves (Figure 1) and are running a budget deficit of 7.3% of GDP.  And, Saudi Arabia’s domestic and regional politics have taken some dramatic turns in the last few months.  On June 21, King Salman replaced the next in line to the throne, Prince Mohammed bin Nayef, with his 31-year-old son, Prince Mohammed bin Salman.  This change occurred two weeks after Saudi Arabia, the U.A.E., Bahrain and Egypt cut diplomatic ties with Qatar largely at the initiative of Prince Mohammed.  

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19 июля, 00:00

Volatility is Lethargic Even as Uncertainty Abounds

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Off The Charts! examines the pertinent economic issues of the day, providing a deeper dive into complex topics and framing the issues in a way that can lead to a better understanding of the financial and commodities markets.

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13 июля, 18:57

Could Fed Rate Hikes Trigger Flight to Quality?

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Off The Charts! examines the pertinent economic issues of the day, providing a deeper dive into complex topics and framing the issues in a way that can lead to a better understanding of the financial and commodities markets.

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12 июля, 19:20

UK Economy Feels Heat of Complicated Brexit

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The euro-zone economies are doing a little better in the eyes of the European Central Bank (ECB) while the UK economy is being slowly dragged lower by increasing Brexit fears in the aftermath of a surprising June parliamentary election.  And, on the global scene, the pullback of the United States from its leadership position on trade and regulatory deals may well complicate the Brexit negotiations as the European Union (EU) is emboldened to assert itself more aggressively on the world stage, making Brexit a pawn in a much larger game.  We will start with a quick review of the UK election’s implications for Brexit negotiations, move on to the economic analysis of the EU and UK, and close with some perspectives on how developments in the global trade and regulatory scene might impact everything from Brexit to job creation in the United States to global growth. 

11 июля, 19:21

ECB, BOE to Follow in Fed's Monetary Footsteps?

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The Fed has signaled multiple rate hikes in 2018 and 2019, which could be bullish for the dollar. How will the European Central Bank, Bank of England react?

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10 июля, 14:05

Equities Divergence From Earnings a Red Flag?

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High-flying equities are showing no signs of restraint despite lackluster growth in corporate earnings. Does the divergence forebode a market correction?

06 июля, 17:00

Will Fed Rate Hikes Stir Market Volatility?

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Years of low U.S. interest rates and Fed quantitative easing have sapped many markets of volatility. Will a series of rate hikes bring it back?  

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29 июня, 18:09

The Conundrum of Slow Growth & Tight Labor Market

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Off The Charts! examines the pertinent economic issues of the day, providing a deeper dive into complex topics and framing the issues in a way that can lead to a better understanding of the financial and commodities markets.

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27 июня, 19:11

E-mini Russell 2000 Webinar for Active Traders

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For active traders, the return of E-mini Russell 2000® Index futures and options expands an already broad suite of benchmark U.S. equity index products you can trade at CME Group. That gives you even more ways to tap into the liquidity of small-caps stocks. See how in this webinar.  The webinar will cover:  • Russell Index fundamentals, focusing on the small-cap Russell 2000 benchmark  • E-mini Russell 2000 contract highlights, plus margin offsets with CME  • Advantages of trading E-mini Russell 2000 futures in place of ETFs • How to use E-mini Russell 2000 to spread trade small-cap vs. large cap stocks  • Exploring E-mini Russell 2000 options volatility – rich or cheap?

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21 июня, 00:00

Fed Sets Out To Shrink Balance Sheet by Half

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Off The Charts! examines the pertinent economic issues of the day, providing a deeper dive into complex topics and framing the issues in a way that can lead to a better understanding of the financial and commodities markets.

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19 июня, 19:31

Are U.S. Treasuries Undervalued?

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Are U.S. Treasuries undervalued? That might sound like an absurd question if you consider: the 10-year Note has a yield of not far above 2% and the 30-year bond is yielding just less than 3%; the Federal Reserve (Fed) is in the middle of a tightening cycle that involves both raising interest rates and soon, perhaps, curtailing reinvestment of its massive balance sheet.  Even if yields returned to their early 2014 levels, they would be 90 basis points (bps) higher on 10-year notes and 115 bps higher on 30-year bonds.  So, can a case be made that U.S. Treasuries are undervalued?  First, compared to their equivalent in other developed economies, U.S. Treasuries remain among the highest yielding, especially among AAA-composite rated bonds.  Second, despite an eight-year equity bull market, U.S. Treasuries have performed decently for investors, and have exhibited negative correlations to equity markets during that time.  Third, as equities continue to rise, they are decoupling from corporate earnings, which might signal either a period of higher volatility or eventually lead to a sharp correction/bear market that could generate a massive flight to quality towards Treasuries.  Fourth, corporate bonds are also trading splendidly and represent a less attractive alternative than in the past.  Lastly, it is not just U.S. Treasuries that might represent good value: options on U.S. Treasuries are trading near historic lows and could also be in for a bull market if volatility increases.

15 июня, 00:45

Fed to Shrink Bloated Balance Sheet Gradually

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The U.S. Federal Reserve (Fed) is finally ready to shrink its balance sheet gradually.  For a little perspective, back in the days before the 2008 financial panic and the subsequent introduction of Fed asset purchases, known as Quantitative Easing or QE, the Fed’s balance sheet was about 6% of GDP, or less than a trillion dollars back in 2007.  As of June 2017, the Fed’s balance sheet has swollen to almost 25% of GDP or $4.5 trillion dollars.