Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
The Death of the US Real Estate Dream - 22nd Jul 18
China is Now Officially at War With the US and Japan - 22nd Jul 18
You Buy the Fear in Gold - 22nd Jul 18
Trumponomics Stock Market 2018 - The Manchurian President (1/2) - 21st Jul 18
The Death of Japan's Real Estate Dream - 21st Jul 18
SMIGGLE Amazing Mega Shopping Haul, Pencil Cases, Smigglets and Giant Back Packs! - 21st Jul 18
Cayton Bay Beach Caravan Park Holiday - What's it Like? - 21st Jul 18
Gold Stocks Investment Wanes - 20th Jul 18
Diversifying Your Stock Investing Strategies is Smart Investing - 20th Jul 18
Custom Global Stock Market Indexes May Be Sounding Alarms - 20th Jul 18
S&P 500 Just 2% Below Record High, But There's More Stock Market Uncertainty - 19th Jul 18
Stock Market Technical Picture - 19th Jul 18
Gold Market Signal vs. Noise - 19th Jul 18
Don’t Get Too Bullish on Gold - 19th Jul 18
Bitcoin Price Rallies to Upper Channel – What Next? - 19th Jul 18
Trump Manchurian President Embarrasses Putin By Farcically Blowing his Russian Agent Cover - 19th Jul 18
The Fonzie–Ponzi Theory of Government Debt: An Update - 19th Jul 18
Will the Fed’s Interest Rate Tightening Trigger Another Financial Crisis? - 18th Jul 18
Stock Market Investor “Buy the Dip” Mentality is Still Strong, Which is Bullish for Stocks - 18th Jul 18
Stock Market Longer-Term Charts Show Incredible Potential - 18th Jul 18
A Better Yield Curve for Predicting the Stock Market is Bullish - 18th Jul 18
U.S. Stock Market Cycles Update - 18th Jul 18
Cayton Bay Hoseasons Caravan Park Holiday Summer 2018 Review - 18th Jul 18
What Did Crude Oil - Platinum Link Tell Us Last Week? - 17th Jul 18
Gold And The Elusive Chase For Profits - 17th Jul 18
Crude Oil May Not Find Support Above $60 This Time - 17th Jul 18
How Crazy It Is to Short Gold with RSI Close to 30 - 16th Jul 18
Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18
Stock Market Uptrend Continues, But... - 16th Jul 18
Emerging Markets Could Be Starting A Relief Rally - 16th Jul 18
(Only) a Near-term Stock Market Top? - 16th Jul 18
Trump Fee-Fi-Foe-Fum Declares European Union America's Enemy! - 16th Jul 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Oil Price Major Shift Afoot

Commodities / Crude Oil Aug 01, 2014 - 10:16 PM GMT

By: Raul_I_Meijer

Commodities

Oil prices are dropping as Exxon announces a -5.7% plunge in output. And as Shell, as I said yesterday, can think of nothing better to do with its remaining funds than to spend it on share buybacks and dividends. Perhaps shareholders should take the money and run. Because what sort of future can they expect for a company that acts like that?

Western oil companies have tens of billions invested in Russian projects they may or may not have access to anymore now the sanctions are coming into effect. The scourge of insecurity. Never good for industry, never good for markets. Prices will rise again, and a lot, just ask Putin, but that doesn’t take away the insecurity over Big Oil’s chances of – even medium term – survival.


The BLS jobless report came in quite a bit less sunny than hoped and expected (unemployment rose to 6.2%, only 209K jobs created), but it would be good to realize that the importance of the report has fallen substantially lately. There will be many, many people in the finance world who are going to get burned because they don’t acknowledge that, or at least not rapidly enough.

While Janet Yellen can perhaps change course by a few degrees in the face of less than sparkly numbers, it’ll still be steady as she blows. Wages didn’t move one bit, nor did part-time jobs, and Yellen did hint at making those numbers more important, but then again the participation rate squeezed up by 0.1%, so those who want to see silver linings don’t have to look that far. It’s all in the eye of the beholder.

The failure – whether intentional or not – of the Fed’s multi-trillion stimulus is now plain for everyone to see. Yellen is not going to fool anyone with another trillion. The next FMOC meeting may announce a temporary taper hiccup, but what use would it be in the face of the past 5-6 years of not achieving much of anything for Main Street with the printer working both day and night shifts?

It’s of course nice, or funny, or hilarious, to see that while GDP rises 4.0% (well, in the first estimate only), the unemployment rate goes up. Upside down Bizarro.

Still, as I’ve noted repeatedly over the course of the last two weeks, what will drive US financial policy as we move forward has much less to do than before with domestic issues, and much more with global ones. That this will throw Americans in front of the steamroller (even more than before) is being taken for granted, and has been ‘absorbed’ into policy making.

The lure, and the advantages, of forcing the entire planet to fight over, and give up much more than before for, US dollars, have won the day. Undoubtedly not a rash decision, but something that’s been decided behind the curtains way back when everyone was still focused on other things. Like the recovery that never came.

This perhaps becomes easier to understand when you take a good look at that -5.7% fall in Exxon output. And the $110 billion that the shale industry comes up short every single year. What numbers like these spell out is the end of an era, the end of our way of life, perhaps the end of our societies as they exist today.

That end won’t come tomorrow morning, but the combination of rising demand and shrinking supply of fossil fuels points to one single and inescapable conclusion: we will need to divide what’s left, and being the humans that we are, that means we’re going to do the dividing by fighting over it. No prisoners.

And while there will be many physical proxy battles over oil and gas, just watch Ukraine, the first major battles will take place in the financial world. Having everyone and their pet poodle scramble to get hold of your particular currency is a mighty mighty weapon in those financial battles.

There are a numbers of goals in this for the people who’ve taken over, and factually run, America: make sure you get as much of what’s left of the fossil fuels as possible, and make sure others get as little as possible. But also: make sure less of it is used going forward, and store the difference under your own control. That goes both internationally, where you make nations and their citizens poorer so they can afford to buy less fuel, and domestically, where you make Americans themselves poorer so they will drive and heat and cool less.

Making Americans poorer may seem a bit counterintuitive in what is still in name a democracy – how to still get their votes? -, but when you start from the realization that shrinking energy supplies automatically mean a shrinking economy, and an end to the growth model the country is based on, in which at present everything needs to be borrowed because far too little is being produced, it all makes a lot more sense.

There is a major shift afoot, or actually already behind us, and unemployment numbers are now but an immaterial little sideshow the media put on. And no matter how many of those 4.0% GDP growth numbers you see, make no mistake: from now on, the -5.7% Exxon output number is much more important. That’s what will drive US policy going forward.

The taper will continue, far fewer dollars will be available globally and domestically, interest rates will rise, as will unemployment and foreclosures. Oil prices will suffer at first from falling international demand, but with supply falling just as fast not too long from today, we will be looking at $200. And then some.

The more the US fails internally, the more it will chest thump abroad. And with both the reserve currency and the by far largest weapons arsenals, it has extremely powerful tools to thump its chest with. Both at home and abroad.

By Raul Ilargi Meijer
Website: http://theautomaticearth.com (provides unique analysis of economics, finance, politics and social dynamics in the context of Complexity Theory)

© 2014 Copyright Raul I Meijer - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
Raul Ilargi Meijer Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules