By Chris Berry (@cberry1)
For a PDF copy of this note, please click here.
Amidst the once in a lifetime events we’ve endured in recent weeks, the simultaneous crash in prices across asset classes is one of the most notable. The US Dollar has been the singular beneficiary of the volatility and the worsening COVID-19 pandemic. Extreme levels of fear in financial markets indicate that this is likely to continue. The breathtaking collapse in the oil price, ignited by the desire of the Saudis and Russians to control the oil price and wipe out US shale, is also indicative of stagnant growth in the global economy. It remains to be seen if lower oil prices really are the “tax cut” consumers receive via lower gasoline prices given the sudden stop in the global economy.
This geopolitical tussle is an important one as the oil price, perhaps one of the most watched metrics in the world,
By Chris Berry (@cberry1)
For a PDF version of this note, please click here.
As is the case this time of year, we start to close the books on 2015 and position for 2016. While we have effectively and indefinitely moved “to the sidelines” with respect to stock picking in the junior mining space, there were some notable successes, in particular with the merger between Western Lithium (WLC:TSXV) and Lithium Americas. This combination positions the new company in a unique strategic light as electrification, underpinned by the lithium ion battery, gathers steam in 2016. Galaxy Lithium’s (GXY:ASX) restructuring is another positive development. We’ll be watching the developments with these two companies closely.
In 2015, there was very little to be cheerful about in the metals markets and to be blunt, we expect this malaise to continue into 2016. China’s RMB devaluation last summer...
By Chris Berry (@cberry1)
For a PDF copy of this note, please click here
It would appear that Chair Yellen’s press conference yesterday in the set the stage for a Fed Funds rate increase in June or September of this year. We remain unconvinced.
It was interesting to note how financial markets reacted to the removal of a single word (patience) from the Fed’s most recent statement. The Dow, gold, and oil all roared higher and seemingly (for the moment anyway) forgot about the increasingly disappointing economic data in the US including housing starts, retail sales, and industrial production. Export growth also slowed, and you can thank the strong US Dollar for that.
By Mike Berry
For a PDF copy of this note, please click here.
Bob Farrell’s Rule #9: When all of the experts and forecasters agree – something else is going to happen.
I have been through two previous oil swoons. In March 1999 oil bottomed at $10 per barrel. I was invested - a money manager with Heartland Advisers at the time. The Economist magazine (March 6, 1999) forecast oil to move lower, perhaps $2. It was a painful experience but oil never went lower.
By Mike Berry
“For they sow the wind, and they shall reap the whirlwind.” Josea 8:7
Will the Saudis now reap the whirlwind?
I thought this bit of recent commodity price history of interest. Income boost from today's gasoline prices versus what I paid on July 22, 2014 for regular gasoline at EZ Check (gasoline prices in Whippany, New Jersey).
By Chris Berry (@cberry1)
To view this entire piece in a PDF, Click here.
“It’s tough to make predictions, especially about the future.”
- Yogi Berra
In the time that I have been writing on the metals markets and global economy, one mainstay has always been reading the tsunami of year end research reports laying out predictions for the year ahead. Almost universally, these well-written and tirelessly researched musings all share one consistent trait: they are almost always off the mark.
Last year at this time, I was reading about the looming interest rate increases in the United States (not even close), Japan finally conquering deflation and returning to growth (fourth recession since 2008), oil prices never falling below $100 per barrel (no comment necessary), the junior mining markets turning higher (I think we’re several years from this) and electric vehicles taking a much larger piece of automotive market share (not yet, but eventually).
I don’t mean to denigrate those who make predictions as it’s a necessary part of portfolio construction. The fact that so many predictions are so spectacularly wrong I think speaks to how interconnected markets are which makes it difficult to anticipate any sort of domino effect.
