Supply, Step, Step, Demand, Turn, Step, Step

There’s too much supply (alt): “years of high commodity prices fueled a boom in investment around the globe by companies extracting resources — and by the many others, big and small, that depend on them…Huge levels of output helped drive commodity prices down, and many analysts believe they will stay low: Large stockpiles remain, and some producers are carrying on despite lower prices.”  There’s too little demand: “of the $55 drop in the price of oil since the start of July, about $24, or 44%, seems attributable to broader demand factors rather than anything specific happening to the oil market.”  Furthermore, the author attributes “sinking yields to ongoing weakening of the global economy, particularly Europe.  And slower growth of world GDP means slower growth in the demand for oil.  Other indicators of an economic slowdown outside the United States are falling prices of other commodities and a strengthening dollar.”  Also, “since the mid-2000s, American car travel has been on the decline, an anomaly relative to, well, the entire history of personal automobile travel.”  But in reality, it takes two to contango (alt): “Floating storage gives traders an opportunity to lock in an almost risk-free profit.”  K, real quick, go watch the futures, forwards and arbitrage videos from Khan Academy and come back.  Meanwhile, Izabella Kaminska has a great article on how the oil market is changing structurally: “In short, because the [shale] industry can bring new supply to market relatively quickly, we go from a spare capacity model, to a just-in-time model instead.  The key consequence of that fact: the market no longer needs so great a risk premium embedded into the spot price, because supply can be delivered to the market as and when needed, without too much concern of a system-choking shortage ever happening…the equivalent of not having to depend on one large weekly supermarket shop, which has to be planned meticulously if shortages or waste are to be avoided, to going to a ‘pop-in’ to your local supermarket as and when you need it, and buy only what you need for that day.”  Meanwhile, Gavyn Davies says “for investors and central bankers, two questions are dominating discussion — how much deflation will be seen in 2015, and how severe a threat does it pose to the health of the global economy?”  He goes on to discuss the difference between “good” (read: Oil) deflation and “bad” (read: Europe) deflation, as well as discuss US inflation forecasts (“The 12 month headline inflation rate will drop to a low point of -0.4 per cent in July”), and “after much debate, a consensus is emerging that the decline in price inflation, with wage inflation remaining roughly unchanged, will result in a major boost to real consumers’ expenditure in the developed economies.”  Furthermore, “this relatively sanguine assessment of the deflation shock is increasingly being priced into the financial markets.”  Meanwhile, you better buckle up there Ace, cuz it’s about to get jolty!


Global: Fresh Round Of M&A Sweeps Pharma Sector (Alt)


Japan: ICYMI: Japan Is A “Test Case” For The Rest Of The Developed World (Alt)


WM: JPMorgan Says Flows Data Reflects Expectations For QE


WM: Reminder: Geographical Headquarters Is Somewhat Arbitrary For Multinationals

But try telling that to Burger King et al.


WM: When The CEO Is A Big Investor, Should You Buy Too? (Alt)


China: Penny Stocks Are Killing It In Shanghai

Amazon And Netflix Are #Winning At Critical Acclaim


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