david after the dentist is this going to be forever

Oil Prices

The drop in oil prices is claiming another victim: earnings estimates.  “Just two weeks ago, 2015 earnings growth was estimated at 8.8 percent.  As of Tuesday, it’s down to 7.6 percent.  Revenue is expected to grow an anemic 1.4 percent.  Most of this is due to an expected drop in oil company profits.  A couple weeks ago growth in the S&P Energy sector was expected to be down 13.6 percent next year.  Now it is expected to be down 21.3 percent…Energy is roughly 9 percent of the S&P 500.”  Meanwhile, Oppenheimer says “neither energy companies nor analysts are really confronting the possibility of a permanent drop in oil prices…Sudden drops in oil prices have rebounded pretty well in the past, but history can be misleading because OPEC price manipulation has been such a major factor.  Now that OPEC is more interested in fighting for market share than supporting prices, the market may not behave the same way.”  Meanwhile, “the Obama administration will approve more exports of ultralight oil from the US shale drilling boom (alt)…it will authorise more companies to sell oil condensate that has been processed through a basic distillation tower…also published a list of answers to common questions about petroleum exports, providing guidelines for the first time on a matter that has been shrouded in confusion.”


A Look At The Horses At The End Of The Year

“The exchange-traded fund winners this year were biotech and mainland China.  It was a home run for biotech across the three largest ETFs…ETFs that invest in mainland China had a big year, thanks to a surge in interest in trading mainland China shares after that country made it easier for foreigners to invest in November.”  Meanwhile, the “bubble” in REITs just got a lot bigger (alt): “for 2014, real-estate stocks have produced a total return of 32.3% including dividends…Analysts and investors attributed the sector’s beefy gains mainly to an unexpected fall in interest rates…’Exactly what everyone thought was going to happen this past year, the opposite happened.’”  Here’s another example of that: “smart-beta” ETFs.  “Over the last one- and three-year periods, they have on average lagged their plain-vanilla counterparts in almost every category.”  Also, here are the 5 worst stocks of the year (SPOILER ALERT: 4 of them are oil companies).


The United States Is The Herd’s Bet For 2015

The soaring U.S. dollar is squeezing companies in emerging markets (alt) from Brazil to Thailand that now face higher costs on roughly $1 trillion in bonds sold to investors…The dollar’s rise means it costs more to make regular bond payments and pay off outstanding bonds as they mature.  That is starting to hurt earnings at many companies, will likely force some to dip into emergency reserves and could trigger defaults on some corporate bonds, analysts warn.”  Meanwhile, have you heard that the United States is the only place worth putting your money to work?



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