Oil markets made history this week as Brent crude prices dipped below $78 to a four-year low. This comes ahead of a meeting by members of the Organization of the Petroleum Exporting Countries on Nov. 27th. Up for debate is whether or not Saudi Arabia, OPEC’s largest producer, will decide to cut production.
The outcome, while perhaps more subtle than a global oil price rout, will be no less impactful. Saudi Arabia has been accused of engaging in a price war of sorts, purposefully keeping output high to flood the market, drive prices lower and make it uneconomical for producers to drill. This is something the Saudi oil minister denied this week.
Friday’s jobs report was something that the market could take in stride and the U.S. Federal Reserve could breeze over in its interest rate policy plotting. Even as the unemployment rate sank to a six-year low, wage growth remains stagnant. Wage growth has to become more robust and consistent before the Fed embarks on raising interest rates, most analysts agree.
The U.S. economy added 214,000 jobs last month, lower than the expected 231,000 in a Reuters’ poll but above the 200,000 mark for the ninth consecutive month.
Volatility has cooled for the moment, even as the U.S. Federal Reserve lifted its quantitative easing program on Wednesday, but Europe, China and Brazil are still concerns for financial markets, according to a veteran investment manager.
On Wednesday, the World Bank urged China to cut its growth forecast next year. Brazil’s stock market is still recovering from a sharp post-election sell off on Monday, and Europe’s financial sector needs some fine tuning.
A dip in 30-year mortgage rates to their lowest level in more than a year and stronger U.S. housing data on Friday appeared to be the green shoots of the next phase of U.S. economic recovery, that being the housing market.
U.S. housing starts were up a whopping 6.3 percent in September. Together, the mortgage and housing data seemed to suggest a housing recovery. That, in turn, fits neatly into the U.S. Federal Reserve’s initial timeline for ending its asset buying program this month, even as the number of sales of previously owned homes disappointed on Monday.
Ebola will not be the last global epidemic, time to hit the reset button on how we treat it – author
(Updates with current news on New York City doctor testing positive for Ebola and World Health Organization’s expectations for a vaccine.)
Ebola will not be the last global epidemic. It is, however, the first to spread as we hop on planes, rely on oil and chocolate from far flung locales and blindly lean on modern medicine’s ability to control and kill the very pathogens that live among us.
Stocks bleeding red are generally a good play for a short seller, who is betting on falling values. Yet activist investors do not wait for rattled markets the likes of which befell markets on Wednesday to sell short a particular company’s stock. Embedded in their sales pitch are well-crafted theories that attempt to challenge Wall Street’s sell-side mentality and, with that, reap a potential cash windfall.
Sahm Adrangi, founder and chief investment officer of Kerrisdale Capital, is among a group of small social media savvy funds who pitch some of their research to the public. Before stocks sank on Wednesday, Adrangi had been pounding the media circuit to get his message out about satellite communications company Globalstar (GSAT), which, he says, has no equity value.
As world leaders gather this week for the annual International Monetary Fund and World Bank autumn meetings, Ebola will be top on the list of priorities. Apart from the human toll, the economic impact will be felt for at least a couple of years, said David Evans, senior economist of the World Bank’s Africa Division.
“What we see is that in the short run, by the end of this year, Guinea, Liberia, and Sierra Leone are likely to be about $359 million poorer than they would have been in the absence of the Ebola outbreak,” Evans told the Global Markets Forum ahead of the meetings. “With our estimates of the impact of West Africa alone, even in a less tragic case, the lost GDP is likely to run into the billions. And in a worse case, we have even higher numbers (more than $40 billion).”
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.
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.
Investors anticipating the first Friday of the month for the release of nonfarm payrolls data were thunderstruck when a week-long string of high performing data ended with a thud. The U.S. Labor Department reported that a mere 142,000 jobs were added to the labor force, close to 100,000 jobs less than expected by many economists.
The disappointing jobs data much like the impossibly optimistic report of a 4.2 percent rise in second quarter U.S. gross domestic product late last month are both indications of an economy that has yet to fully iron out an even recovery.
Bond market investors with millions to spare are not apt to buy debt without first examining the fine print, or at least have a team of financial experts and lawyers do it for them.
Yet many investors fail to do the same due diligence when looking to shelter money, invest it for future generations or just plain spend it, when it comes to purchasing artwork, says one art preservationist.