One of the possibilities we've mentioned since oil prices started their swoon mid-last year is takeovers.
As panic among investors sets in over the concern of where the oil price bottom will be, investors often forget that low prices make assets more attractive, increasing the chance for mergers and acquisitions.
Well, now rumors of such grow.
Shares of BP plc (NYSE: BP) spiked higher Thursday, on a report from the Wall Street Journal that ExxonMobil Corporation (NYSE:XOM) may be considering taking advantage of low oil prices and preparing to bid for companies struggling with the downturn. In addition to BP, Chevron Corporation (NYSE: CVX) was mentioned as a possible target.
And there will be more such stories. Low prices make certain assets attractive.
www.reuters.com/article/2015/02/16/us-japan-economy-gdp-
Goldman Sachs should really be Goldman Government.
The list of central bankers and others with Goldman connections serving or having served in high government financial positions around the globe is long and lush--Carney, Draghi, Paulson, Rubin, Geithner, to name but a few.
So here's an idea from a recent Wall Street Journal article, "After Crisis, Goldman Goes It Alone," and "Regulation Is Good For Goldman" in same issue. Read both from a backdoor perspective as a conservative way to play a rebound in commodities.
If this seems like a paradox here you're getting warm.
And for that matter a bit of government backscratching for Goldman. To play pretend for a second, suppose deflation, a current meme that's just about as overdone in MSM as overdone gets, unexpectedly fizzles out and all that global fiat money printing leads to more inflation than central bankers want?
Oil isn't the only commodity down. Copper, iron ore and many others. Trading commodities is a big part of Goldman business. Now that many of the big banks have left the scene, what does Goldman know that others don't?
After all, we've had declining energy prices, a euro that recently hit a 10-year low and interest rates that if they get much lower they'll have to stand tippy-toe on the bottom just to try to touch the top.
Morgan Stanley is trimming the business, Goldman's stock is up 16% in last year, Morgan Stanley's up 23%. As the article noted commodity trading for Goldman brings in more revenue per employee than any of it's other activities.
At another point Goldman CEO Lloyd Blankfein stated with all of its competitors essentially either cutting back or abandoning their commodity trading desks, Goldman is now alone. Make of that what you want.
Here is a piece about Blankfein from celebritynetworth.com
Lloyd Blankfein net worth and salary: Lloyd Blankfein is an American finance executive who has a net worth of $500 million. Lloyd Blankfein is most known for being the chairman and CEO of Goldman Sachs. Prior to his career at Goldman, Lloyd Blankfein worked as a corporate tax lawyer for Donovan, Leisure, Newton and Irvine. Blankfein is one of the highest paid executives on Wall Street and regularly earns over $50 million per year in salary and bonuses alone. He also owns a significant number of Goldman equity.
Blankfein and Goldman Sachs employees have been major contributors for Democratic candidates, such as, Hillary Clinton and Barack Obama.
With almost a million dollar contribution from Goldman Sachs employees
and Blankfein, their company helped to raise more money than any other
entity during the 2008 campaign for Obama. Lloyd Blankfein made a
statement, during an interview, that he was doing God's work. He later
explained that it was merely a joke and it just came out the wrong way.
http://www.celebritynetworth.com/richest-businessmen/ceos/lloyd-blankfein-net-worth
Well, the mixed market signals continue.
Retail sales--remember them, the ones economists said would soar with the steep decline in gasoline prices--surprised Friday to the downside, oil hit $60 a barrel for the first time this year and the U.S. Dollar dropped a bit as economic growth looks weak based on the University of Michigan February consumer sentiment for January slid lower than what the market expected.
The mixed signals put a damper on just when the Fed will pull the trigger on its long expected rate hike, an event that's almost as anticipated as the dreaded deflation concerns that's been in the news forever and a day. At the same time U.S. government bonds fell in their biggest sell-off in 18 months as yields jumped pushing investors once again out on the riskier asset search limb in their quest for yield.
Currency wars rage on. Another name for it is exporting deflation and the U.S. with its strong dollar has been taking its cue from the Fed by becoming the globe's buyer of last resort. An ill-timed interest rate hike will only complicate the situation.
Meanwhile, the guessing about the new normal for oil prices continues. In Europe the current meme is "fairing better" than expected as last week one of the ECB's big guns fronted the view things there are picking up. Whether they are or not, this is more PR than reality.
The big fairing better is 0.3% quarter-to-quarter growth at the end of 2014 versus the forecast 0.2%. Annualized growth, however, was 1.4% compared to 2.6% in the U.S., the global bellwether everyone seems to envy for the nonce and apparently is prepared to do almost anything to match.
Missed or lopsided results remain the concern as Germany and Spain provided much of that growth, according to one report. The key phrase--touted as a positive--was "less tightening of government purse strings." Translation: austerity takes a vacation, the window dressing period is over.
In certain areas of the U.S. there's a controversy over a recent measles outbreak and vaccination.Though the numbers are small, panic in the DNA of reactionaries comes built-in.
So the to-vaccinate-or-not-to vaccinate question hit the news as the government rolled out its heavyweights--including that eminent expert on viral infections, Hillary Clinton, to mandate vaccinations for certain age groups.
That's how it always starts--with certain age groups. Hillary is such an expert on the subject she's probably seen zero cases and treated even fewer.
There comes a time when one realizes what matters, what doesn't, what never did and what always will. But it seems there's a vaccine most politicians and bureaucrats routinely get every few years that assures them immunity from that basic truth.
Who said all vaccines are good?
Economists are not known for their prose.
Mohamed El-Erian is an economic adviser to the big German firm Allianz and a former Pimco guru. He also pens columns for various media groups like the Financial Times and Bloomberg, two outfits one would think employ copy editors.
Maybe they do and maybe they don't. Maybe EL-Erain, like some of those too big to fail banks, is exempt from such petty editorial vagaries. Or maybe his assigned copy editor has already tossed up his hands and given the "Oh well sign" and turned the page.
In one of his latest, "Policy making tug of war leaves investors facing difficult calls," El-Erain penned this convoluted beauty.
In scaling such relative positioning, investors would be well advised to keep one more issue on their radar screens. The prospective moves in markets implied by the divergence theme would tend to complicate rather than facilitate policy making in a world subject to increasing bimodal distribution of potential outcomes and low availability of broker-dealer liquidity during transitions.
If you break this down it means: Since the new regulations hit, broker-dealers have less liquidity. Liquidity moves markets. Without it things could quickly get as calm as Coleridge's painted ship on a painted ocean. And that could leave a whole gaggle of folks holding their bags.
The divergence theme is the big dog, USA, pulling away from the pack. Such a economic fly in central bank soup kitchens muddies the fare.
When you get into statistics you run into distributions, bimodal and otherwise. It's a delicate way of saying stuff can hit the economic fan two ways, one of which might not be expected. You might think of those on-the-other-hand economists Harry S Truman complained so much about were all bimodal.
What Truman was really asking for was a unimodal one.
It's fairly certain señor El-Erian is getting decent bucks to write this stuff.
So for simplicity's sake we'll leave you with another economic term: Go figure.
Meanwhile, know that the Fed has expanded its view of the what-counts factors to include the international scene. So just be careful not to get tugged over the line in this tug of currency wars.
Inside an upscale hotel room in a famous large
southern city, one recently hit with the worst storm in its colorful
history, a prominent news anchor is frantically talking on the phone
with one of his engineers.
NA: Anybody see that body floating past?
E: No, man! Are you in the flooded area?
NA: Hell no, I don't even like water...
E: What's all this floating body crap?
NA: I just looked out my hotel window and there it was, floating past.
E: No fake wires attached, nothin? Outside the Ritz?
NA: No, man...and I'm not smoking anything either.
E: Are you sure Joe Biden hasn't checked in?
NA: Naw!
E: Shit, man...you better report that on the news tonight.
NA: You like it, huh? Gotta make it real!
And as they say, this and the rest of the story is fabricated MSM history.
There's line in Kurt Vonnegut's Breakfast of Champions to describe what's going today in the world's central banks.
If you like lists, here's a good one--China, European Union, Canada, Australia, Denmark and Japan. Those are just a few of the central banks that have been talking up deflation, cutting interest rates and debasing their currencies.
Denmark liked it so much they cut their rates four times in less than fortnight. It's viewed as an act of survival. Japan for now might be the monetary policy Breakfast of Champions. The Japanese central bank appears set to pull the lever and open the flood gate again give or take what happens in the next few months.
According to one source, half the central banks of the Group of 20 developed and large emerging economies have eased their monetary policy this year, some in the form of interest rate cuts and others via more subtle maneuvers.
Left standing at the chapel is the United States. They've already shot that bird. Three times over.
Japan, Denmark and China are all export-dependent countries. And their are others often referred to as emerging markets.
Symbols are symbols and have symbolic meaning for a reason. They predate the Gutenberg press and computers. Look at a dollar and on some still floating around you'll see the symbol of a truncated pyramid with a radiant eye at the top and some Roman numerals etched at the base.
How'd they get there and why? It's a mystery and as Vonnegut wrote: Not even the President of the United States knew what that was all about. It was as though the country were saying to its citizens, 'In nonsense is strength.'
There are some medicines out there, three of them, for those unfortunate enough to have been exposed to AIDs. It's usually from a puncture wound, a needle stick.
Needle sticks are an occupational hazard for health care providers, policemen, firemen and many others, sometimes just innocents who don't routinely even work in health care.
The suspected victim is prescribed two of the three and given a 28-day supply.
The dreaded thing is exposure to body fluids and there are many ways to get exposed to them. According to the CDC, it's a government sponsored agency, should you choose to believe them, even if you get stuck with a contaminated needle from a known positive HIV carrier, your chances of developing the disease are 0.3 per 1,000.
That's a lot better odds than what Vegas offers. And that should tell you something about human behavior and human reactions. But this should not be misconstrued for implying in any way that HIV is nonsense. Not in the least.
It's about understanding the risk and not about panic.
The medicines are not without side effects. In some cases worse than the feared disease.
The feared disease for central banks is so-called deflation, an economic event so the story goes central banks have little experience or luck treating. That might help explain the current panic.
Who among us doesn't fear the unknown, all the more reason to believe they're flying bureaucratic stained pants upside down.
But no one knows for sure the difference between real deflation and just low prices. One might be troublesome, the other quite healthy.
Since the prices of all things don't deflate at the same time, at least they haven't so far, who gets to roll the dice, you who are out here on the firing line or a committee table full of bureaucrats?
If you track the history of fiat money you'll see the point. Forget Roman numerals. Etched on the base that truncated pyramid and on the front section of global central bank charters should be: In nonsense is strength.
Crude oil up in mid-day trading as fear about falling rig count grows. See our previous posts, oil-cuts-continue. and montana-bakken.
Brent crude at $58.45.
SAN FRANCISCO (MarketWatch) — Crude-oil futures headed higher on Monday
for a third straight session, helped by a further drop in rig counts in
the U.S. that could eventually ease the supply glut that has sent prices
tumbling over several months.
marketwatch.com/story/oil-prices-volatile-after-weak-china-trade-data-rig-count-drop-2015-02-09?
Much of the news centers on German Chancellor Angela Merkle's visit today with President Obama about the escalating situation in the Ukraine.
Ad we noted last week we're seeing more Western editorials calling for Western powers to send arms to the Kiev government. Last week the Financial Times and the Wall Street Journal piped out similar tunes.
As odd as it seems, fear mongers and war monger sometimes occupy the same boudoir.
(Reuters) - German Chancellor Angela Merkel is set to argue in Washington on Monday against arming Ukraine
in its conflict against Russian-backed rebels, while in Brussels EU
ministers held off tightening sanctions to give peace talks a chance.
Merkel's message that sending
Western weapons to Kiev risks escalating the conflict is likely to get a
sympathetic hearing when she meets President Barack Obama later in the day.
reuters.com/article/2015/02/09/us-ukraine-crisis
