IT'S NEVER JUST ONE THING
Hello and welcome once again to the No Straight Lines Investments blog, I am grateful for your time.
If you folks recall previous missives (how could you not, they are all so compelling….), I have made the case that 3 key charts to monitor continuously are: crude, the $US and the U.S. 10-year treasury yield.
The low oil price has been a tailwind to U.S. consumer spending and a meaningful contributor to the helpful trend in inflation.
The break >$70 is technically significant, although I’m not certain it will last.
I would be shocked if energy executives did not use the price spike to hedge production at much more attractive economics than a week ago, particularly as the global economy is clearly slowing, and OPEC+ is determined to remove previous pre-emptive production cuts.
Precisely when economists and investors were penciling in a steady if not declining oil price, geopolitics enters the arena.
The debate regarding the direction of the $US is apt to continue. My observation from this chart dating back to 1967 is that volatility in the level of the $US is the norm, not the exception. It is notable that the trading band tightened significantly post 2016.
Charts from Marko Papic, BCA
Further weakening in the $US is usually predicated on some combination of the above charts, which neatly summarize into the view that continuous funding of US budget deficits is unsustainable.
However, I have saved the most interesting $US chart for last…
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This week I cover: #utility, #uranium, #space, #athleisure, #energy holdings in my portfolio.
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