300 point rally? WTI up 12.3%? (one of the best gains since 2009), maybe the market is beginning to match up with the fundamentals (which in my view are far better than stock prices would indicated...)
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300 point rally? WTI up 12.3%? (one of the best gains since 2009), maybe the market is beginning to match up with the fundamentals (which in my view are far better than stock prices would indicated...)
I can't help thinking that lower oil prices will benefit the world economy more than quantitative easing.
Lower petrol prices,lower plastic prices,cheaper resins,cheaper hair products,asphalt,detergents,packaging,cheaper transportation.And so the list continues.Lower pump prices mean more money for NZders to spend.
Another sector to benefit will be tourism. A German tourist coming to NZ will benefit from our low $, his flight to NZ will be lower,his fuel bill will be a lot lower for his rental vehicle.As it becomes more affordable,so the number of tourists will increase.
I think the NZ economy will benefit in a big way as a lot of people are employed in the tourist sector.
I think that is true,Percy if oil is still cheap,but not extremely cheap (to the point that it brings down developing countries who depend on it and affects banks that are heavily involved) Somewhere around the $50 mark where its still a good deal for the things you suggest,but not at the expense of the reasons I suggested. (its not a great thing for countries to fall over for many reasons).--I get the feeling that those who are thinking of the benefits are not considering this--They are thinking of how things look in their western country--Its easy for us to get an insular frame of mind but we are better off IMO if everyone is looked after(at least on a basic economic survival level)
These wild swings are typical in this kind of economic (most say Bear)markets overseas--expect more
Shanghai will open on Monday so they will be in the mix this week
i agree with winner--Also keep in mind that this whole post GFC has been a fiscal experiment that has yet to prove itself--Yellen finally raised interest rates in an attempt to return to normalcy and look what has happened ,now that markets are not getting the free ride of QEs.
Successful,gradual raising of interest rates by the Fed is what will show if this scheme has worked ..or not-(along with good solid earnings as winner suggested)-Its very easy to think it can go on forever(injecting money) but it cant,the debt repercussions will catch up at some point---They know this ..thats why they are doing it(interest rates)--Ten years ago would you have ever dreamed that countries would desperately be trying to achieve inflation?
OPEC has agreed to try to achieve some cutbacks in oil production,(which is what has caused this rally)but their are alot more players involved now that are desperate so we will see how that goes.
earnings has generally been in line with expectations, some above, some below. Looking at several underlying indicators (in both NZ and the US) are looking good (particularity relative to how world markets are reacting) ... manufacturing activity, retail sales, employment data
It is hard to say "things are terrible" when several 'bottom line' indicators are looking good, and this could show in the next quarter.
From what I have seen, the big earning season drop is mainly thanks to energy and materials sector, with other sectors expecting a drop, but only in the very low single digits, and some continuing to improve - it could not be further from the truth to assume every sector is going backwards, something truly indicative of a recession.
The first article, that is about 3 months old, mentions: "When compared with analyst expectations, about 72 percent of companies have beaten profit forecasts. That's only because the consensus has been sharply cut in the past few months." Even if the consensus has been sharply cut, clearly things were no where near as bad as the 'consensus' believed.
The (potentially) more accurate and more recent retail sales, employment data and manufacturing activity would suggest things are not going backwards, rather just stumbling along, which would not be a surprice given the low inflation environment we are in... certainly not falling off a cliff.
http://www.fxstreet.com/analysis/ind...2016/02/01/05/
"The energy sector is currently reporting a -78.6% decline in profits from last year, driven heavily by a -35.9% drop in revenues; the equivalent numbers for the materials sector are -24.7% and -14.9%. On the other side of the coin, the Telecom (+28.1% earnings growth and +11.9% revenue growth) and Health Care (+7.2% and +7.7%) sectors are outperforming"
"According to the earnings mavens at FactSet, the “blended” (combining actual results from companies that have already reported and estimated results for companies yet to report) earnings decline is tracking at -5.8% year-over-year, with the blended revenue decline currently coming in at -3.5% y/y.
"Analysts do expect earnings and revenue growth to return in the first half of this year, though traders are understandably skeptical until results actually start to improve"
Alot of the disappointing US earnings results has been heavily impacted by the US dollar strength, not necessarily by a 'world slow down' and although I haven't bothered working out sales of every S&P 500 company converted with 'last years' exchange rate, it would probably look significantly better. Also good to note than analysts expect things to improve, something I'm not surprised at as global oil prices stabilize and US companies further get use to a high(er) exchange rate.
That chart (Bloomberg link) is pretty telling - esp if we put another down quarter for dec15 and the likelihood of a down Mar16 quarter.
Analysts expect ions are positive - did you like that chart I posted yesterday showing how the analyst earnings expectations are generally pretty useless.
t_j - an "earnings recession" indicates that the recovery since the last recession is running out of steam - and they are often a prequel to the next full-blown recession.
Earnings decline in an over valued market not good