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from Global Markets Forum Dashboard:

More volatility expected as Fed rate rise looms – Cumberland Advisors’ David Kotok

A healthy dose of fear has re-entered financial markets in the final three months of the year. The Chicago Board Options Exchange VIX, a widely tracked measure of market volatility, rose to a two-month high on Wednesday.

David Kotok, Cumberland Advisors

David Kotok, Cumberland Advisors

Varying news reports offered threats from the Ebola virus and a stagnating European economy as tangential reasons. Perhaps another point is many investors view the U.S. Federal Reserve’s pending decision to raise interest rates as a rumbling train far off in the distance that they now hear headed their way. Closer to the horizon are headlines that can no longer lean on “Fed easing” to explain away rising asset prices and a rising stock market.

“We are in a new period of volatility and it's been developing for the last two or three months,” David Kotok, chairman and chief investment officer of investment advisory firm Cumberland Advisors told the Global Markets Forum on Wednesday. “When you suppress all interest rates to zero you dampen volatility and you distort asset pricing. Now the outlook for interest rates is changing so we are restoring volatility.”

The changes, he said, are evident in a rising U.S. dollar, falling commodity prices and the spread between the high yield and U.S. bond markets.

from Expert Zone:

The benefits of falling oil prices for India

(Any opinions expressed here are those of the author and not necessarily those of Thomson Reuters)

The fall in global oil prices couldn’t have come at a more opportune time for India. In August, oil imports dropped 15 percent year-on-year, driven primarily by a fall of $10 per barrel in prices. Brent has fallen below $100 over the past month, and could slip further. Increasing supplies from the United States and slowing demand are contributing to the weakness in prices.

from Breakingviews:

Sinopec’s petrol station revamp is an uphill job

By Ethan Bilby

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Chinese oil giant Sinopec wants to sell more from its 23,000 pump-side stores. But as a new Breakingviews calculator shows, even a dramatic increase in non-fuel sales won’t do much to lift the $58 billion valuation that outside investors have put on the business.

from Breakingviews:

Ecuador economic ‘miracle’ meets maturity

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Turn on state television here, and within an hour or so a public service message will appear extolling the “Ecuadorean miracle” of President Rafael Correa. The advertisements highlight big new infrastructure projects and endorsements by experts, even an American or two.

from Expert Zone:

How falling crude prices affect India

(Any opinions expressed here are those of the author and not necessarily those of Thomson Reuters)

Brent crude prices have dropped below $100 a barrel, causing anxiety within the Organization of the Petroleum Exporting Countries (OPEC) and giving some relief to India and China. The market is bearish at present but the future is unpredictable.

from Breakingviews:

Double-digit oil promises lubrication not seizure

By Ian Campbell

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Double-digit oil is a welcome sign, not a harbinger of deflationary doom. The decline of the price of a barrel of Brent crude to just below $100, down 13 percent from its June peak, is good disinflation. It will help consumer spending and global economic recovery.

from Expert Zone:

India Markets Weekahead: Time to prune positions in an extended honeymoon

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The Nifty closed at a new closing high of 7,954 amid volatility in an eventful week that started with the Supreme Court ruling that the allocation of more than 200 coal blocks over the past two decades was illegal.

With nearly 3 trillion rupees at stake, this had a direct effect on the metals and power sector. It also affected banking, which has exposure to the two sectors.

from Global Markets Forum Dashboard:

U.S. shale revolution continues to upend geopolitics

Dominick Chirichella, president, Energy Management Institute

Dominick Chirichella, president, Energy Management Institute

Oil traders who bet on rising prices were hit with a double whammy on Tuesday in the way of announcements from the top two energy data agencies. The still-nascent U.S. shale energy revolution is upending eons-old geopolitical events and it still seems to be in the early days.

Global energy watchdog the International Energy Agency revised lower its outlook for oil demand this year back to 2012 levels as the U.S. Energy Information Administration (EIA) said July U.S. oil production rose to its highest in more than a quarter century.

from MacroScope:

Moment of truth for EU sanctions

The logo of Russia's top crude producer Rosneft is seen in Moscow

President Barack Obama and the leaders of Germany, Britain, France and Italy agreed on a conference call last night to impose wider sanctions on Russia’s financial, defence and energy sectors.

EU ambassadors are meeting today and are expected to target state-owned Russian banks and their ability to finance Moscow's faltering economy.

from Counterparties:

Drill, baby, drill

North Dakota is in the middle of something the rest of the country can only dream of: an economic boom. The state has become a massive success story over the last five years, with unemployment at 2.6 percent and its population growing rapidly to fill demand for oil jobs. “The state's modern history has been rewritten by the energy industry in just four short years,” writes Bloomberg’s Nicholas Kusnetz. But is it sustainable? Thanks to the shale boom, the state is currently producing as much oil in a month as it did in all of 2004, and production is growing at an exponential rate. That kind of growth can’t go on forever, says Fivethirtyeight’s Ben Casselman. Eventually it’s going to have to flatten out, and that has major implications for the economic stability of a state that has been very suddenly made rich (and just as suddenly dependent on this oil production).

Predictably, Katie Brown, at Energy In Depth (which is funded by the Independent Petroleum Association of America) says Casselman is wrong. It’s not just about recoverable oil, but about changing technology, she says. The U.S. Geological Surveyrecently doubled its estimate of the amount of recoverable oil in North Dakota, an estimate which is up 25-fold since 1995, according to Brown. Better technology is going to mean more oil, essentially. “It’s important not to get trapped by assumptions of static technology, especially in an industry like oil and gas, where innovators have proved over and over ... that the recoverability of resources increases over time,” Brown writes.

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