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In The News

July 2014

Macroeconomic Factors For most of June the US economic data were a bit stronger, suggesting a rebound after a weather-influenced first quarter. In the last week the picture became mixed. The final results for Q1 GDP were revised to a negative 2.9%, the worst level outside of...

Posted on 06/30/2014 at 13:59.
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May 23, 2014

Macroeconomic Factors
  • Industrial production increased due to utilities and then weakened with the warmer weather.
  • Employment has improved, as measured in both job losses (lower initial claims) and net job creation.
  • Today’s reports on new home sales show strength in March and April, once again after the worst of the weather. Mortgage rates have hit another new low.
  • China seems to be growing at slightly less than the 7.5% government target.
Potential Risks The turmoil in Eastern Ukraine over the Russian Federation’s role in the region continues to dominate headlines in energy markets. A recent Bank of America commodities report suggests this is the most significant...

Posted on 05/23/2014 at 13:51.
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APRIL 17, 2014

  Macroeconomic Factors
  • Initial jobless claims have dropped to a fresh post-recession low of about 300,000 per week.
  • The most recent data on Chinese GDP shows growth of 7.4%, slightly lower than the target of 7.5%, but in line with most estimates.
  • Growth in Europe has improved slightly, and European central bankers have shown more attention to fighting deflation. This has been reflected by successful bond auctions in Spain, Italy, and even Greece.
  • To summarize, the economic data have improved with the weather in the US, suggesting modest upside pressure on energy prices.
  Potential Risks Russia’s sudden invasion and subsequent occupation of the Crimean Peninsula rocked international energy markets in the month of March. Given that Russia is the world’s largest exporter of oil...

Posted on 04/17/2014 at 16:13.
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February 20, 2014

Macroeconomic Factors
  • The simple fact is that we have a couple of months of data where the implications are unclear. The recent Fed minutes said as much. We expect continuing modest growth in the spring.
  • China looks a little weaker based upon the HSBC "flash PMI" but still slightly positive on the "official" version. We prefer to look at harderdata, and that seems to show continuing growth in the 7 - 7.5% range.
  • The extreme cold is also influencing energy demand, mostly natural gas prices. There is spillover into gasoline.
  • And finally, we have the potential for increased supply. It was a pretty lucky season for hurricanes and other weather effects. This has shifted the official forecasts in a friendly direction.
  Potential Risks As the month of February draws to a close, the rise in crude oil prices that accompanies the spring and summer becomes more apparent. According to

Newsday:

"The price of gasoline held steady into early February, but an increase is almost inevitable this time of year. Pump prices have gone up an average 31 cents per gallon in February over the past three years. And although this year's rise might not reach the heights of years past, there are reasons for drivers in some regions - like the Northeast - to worry about a painful spike.

'We're going to get increases and they are going to be noticeable,' says Tom Kloza, chief oil analyst at Gasbuddy.com and the Oil Price Information Service. 'We're going to get that pop relatively soon.' The price of crude oil has risen 8 percent over the past month, to $100 per barrel. And analysts expect fuel supplies to begin to decline as refineries dial back production to perform maintenance and make the switch to summer fuels."

Pricing The...

Posted on 02/20/2014 at 16:26.
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December 24, 2013

Macroeconomic Factors
  • Employment gains have increased and the unemployment rate is lower.
  • The ISM’s manufacturing index jumped to 57.3, also consistent with growth above 4%.
  • China’s exports are rebounding, with an overall growth target of 7.5% still expected.
Potential Risks
  • Domestic gas prices rose the past month, and will likely continue to rise based on stronger economic data. According to the Associated Press:

“The price of oil moved higher above $97 a barrel Friday, buoyed by stronger economic growth and falling unemployment in the world’s largest economy.

By early afternoon in Europe, benchmark U.S. crude for January delivery was up 27 cents at $97.33 a barrel in electronic trading on the New York Mercantile Exchange. On Thursday, oil rose to near $98 for the first time in five weeks before closing at $97.38, up 18 cents.

U.S. data showed the outlook for hiring is improving and the economy is growing at its fastest pace in more than a year.”

 
  • On the international stage, Iran’s reintroduction to OPEC holds a number of implications for prices at the pump. Experts warn this move could precipitate a global increase in prices. Euro News reports:

“Iran has already tried to get OPEC quotas changed in its favor, restoring market share taken by Iraq, and an increasing number of OPEC members are wondering if their low production costs means they could sell more if the price was lower.”

  Pricing December prices have risen to the highest level since earlier in the fall. While the front month price is still lower than it was in September, the...

Posted on 12/24/2013 at 16:57.
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