Long time no see, friends. I am very glad to be back in the blogosphere to update you with what has been going on in the markets and the world. I have been away studying for and took a certification exam, which excuses me from being a lazy bum the past few weeks and not posting. No worries though- more frequent and regular posts to come. Let’s get to it, shall we?
Kev’s Morning Reads
First off, let’s recap what has happened over the past few weeks when I was reading textbooks instead of newspapers and current events. I covered in my 2015 predictions the drastic decline in oil we have seen over the past few weeks. There has not been an increase in oil prices since we saw a 50% drop since last year. Quite honestly, I am starting to believe low oil prices will be the new normal.
For those who have not been following oil- OPEC has been over producing oil in an effort to bring down prices to squeeze out shale oil production. In the long run, shale is a lot cheaper…. as long as the price per barrel is above somewhere around mid $40’s.
The drop in oil is not due to any US, economic, or fundamental factors. OPEC is being a bully and manipulating prices to kick out the competition. This has tons of implications, including loss of US jobs, increased consumer spending, uptick in money velocity leading to inflation (extremely unlikely). Bloomberg adds more light. But the long and short of it is I believe we will continue to see low oil prices this year, without any major negative economic impacts.
But what will the Federal Reserve do about raising interest rates? They were expected to make the move sometime this year. Now it seems like they may not raise rates at all this year. What? WSJ has more.
I am at the TD Ameritrade National LINC conference. Because I am such a fixed income nerd, I found myself laughing so hard I was choking when TD’s chief economist said in a general session: “the US is now a high yield bond market”. Compared to other countries, this is true. Additionally we are the safest country to invest in. Weird times my friends.
Oh yeah, lots of shenanigans in Europe. The Swiss un-pegged their currency from the euro, and freaked out people and markets for awhile. The European Central Bank announced a US Quantitative Easing-like stimulus to prevent the looming recession in Europe. CNN provides a good overview.
Speaking tomorrow morning for the TD National LINC conference, but I can’t sleep because my fellow finance and economic people have made me all giddy and excited. Plus the three hour time difference and ridiculously warm weather has completely confused my internals.
Thanks for joining everyone. If you’re at the conference, come by and say hello. Just look for the ridiculously and annoyingly maroon Virginia Tech financial planning shirts.