oil

2015 Recap: High Yield Bonds, Instability, and Financial Contagion

 
2015 recap

“It’s tough to make predictions, especially about the future.” -Yogi Berra

 

Is this the start of a high yield bond rout that many bond experts have been predicting?

Is the S&P 500 performance this year a good indicator of the overall market?

Will instability in the bond market spread to other asset classes?

What is the blueprint for the next financial crisis?

These are all questions that clients have asked recently and I thought this would be a good chance to discuss these issues as a wrap up of 2015.

Lets start by taking a look at what has happened this year, where we stand today, and try to pass some judgement on what could happen in 2016. Normally I don’t write about “predictions”. Yogi Berra was a wise man. However I think this post is relevant to the nature of the markets and the growing instability that is occurring under the surface.

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Inflation Monitor – February 2015

 

inflation monitor


 

Inflation Monitor – February 2015 – Introduction

It is now February and it is off to a good start with the New England Patriot winning the Super Bowl… Sorry the big game. Even if you were not a fan, it was a great game to watch up until the last play. The win helped warm the city from the cold chill of deflation setting in around the US. It has been a few months since I have started the Inflation Monitor and each of those months has been marked with deflation. I have been saying for the past few years that deflation is in our future despite all the money printing by the Federal Reserve. It appears as if this is now become apparent to everyone else. Although there are many deflation deniers out there who think it cannot happen and wont happen.

I just got back from the TD Ameritrade conference in San Diego. One of the keynote speakers was Craig Alexander, the Chief Economist at TD Bank. Normally this is one of my favorite speakers at the conference each year, however this time I noticed something different…

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144 Products Made From Petroleum And 4 That May Shock You

products made from petroleum
 

What products and uses does Petroleum have outside of Gasoline?

an April 2007 nationwide online survey revealed that 72 percent of the American public does not know that conventional plastic is made
from petroleum products, primarily oil. This is not surprising

According to the US Energy Information Administration (EIA), this is a list of petroleum products and their share of total US petroleum consumption in 2013.

  • Gasoline 46%
  • Heating Oil / Diesel Fuel 20%
  • Jet Fuel ( kerosene) 8%
  • Propane / Propylene 7%
  • NGL / LRG 6%
  • Still Gas 4%
  • Petrochemical Feedstocks 2%
  • Petroleum Coke 2%
  •  

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Inflation Monitor – January 2015

 

inflation monitor
 

Inflation Monitor January 2015 – Introduction

I hope you had a pleasant holiday season. Now that the eggnog has run out (although probably more likely the rum), your trees and menorahs have been put away until next year, and you are getting back to work in this cold weather (what else is there to do when it is this cold except work). Lets see what the new year has brought for us as a present. In this month’s issue I will mainly be discussing oil prices and the US Dollar. The two areas which are generating the most interest.

To start the year I am going to play around with the format a bit to see what works best for people. In this months issue I am planning on breaking the bottom section of the Inflation Monitor into separate excerpts through out the month based on thoughts or ideas that I have had rather than wait until the end of the month. I will try to spread this out a bit more a see if this is a more desirable setup. While this might be a bit scatterbrained, it might get back to what this section was supposed to be: inflation monitor data, then some ideas, not a lengthy dissertation. This month was difficult to focus on much else since oil has played such a large part of the public’s interest. So we will focus more on oil and the US Dollar.

This is the first issue of the Innovative Advisory Group Inflation Monitor in 2015. We continue to receive a lot of positive feedback on our first few issues of the Inflation Monitor. As you will notice, we have taken some of this feedback and make some minor adjustments to our issues each month. As always, please contact me to send your feedback on how I can make this monthly Inflation Monitor a better tool or resource for you.

Thank you for reading and I hope you enjoy this month’s issue – Inflation Monitor January 2015.

Kirk Chisholm

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Where is the Price of Oil Going?

 shale vs sheik

US Shale vs Saudi Sand?

For Christmas I asked Santa to get me a crystal ball. He rarely disappoints. Hopefully after reading this post you will have some insight into my thoughts and the future direction of oil prices.

Commodity prices in general have been declining for years. According to the Rogers International Commodity Index, the commodity super-cycle peaked in Jun 2008. While it is still possible that we could break those all time highs, it is highly unlikely given the deflationary forces at play in the global markets. If you have been reading the inflation monitor for a number of months you know which side of the inflation-deflation fence I sit on. The future of commodity prices will most likely continue on the path that they are currently on. There does not seem to be inflation on the horizon of commodity prices.

Investing in a commodity is a difficult task since it produces no cash flow. So how do you price a commodity? Many smart investors have raised this point before. You cannot say what is the correct price of a commodity unless you have a free market determining the price based on supply and demand. This is basic Economic 101. While reality should be driven by data and facts, in some cases it isn’t. One of these cases in Oil.

Oil the “Political Commodity”

Oil is what I would call a political commodity. What this means is…

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Inflation Monitor December 2014

inflation monitor
 

Inflation Monitor December 2014 – Introduction

This is the third issue of the Innovative Advisory Group Inflation Monitor. As you will notice, we have made some additional changes to the inflation monitor based on your feedback. Keep the feedback coming, since this will ultimately benefit you.  As always, please  contact me to send your feedback on how I can make this monthly Inflation monitor a better tool or resource for you.

This month I have added the following indicators:

  • US Population

In this month’s issue I will be discussing interest rates, gas prices, Gold and Silver, and more. Given the recent sell off in the price of oil and drop in interest rates, I think it would be a good time to discuss the effects on the US economy.

Thank you for reading and I hope you enjoy this month’s issue of the  Inflation Monitor.

Kirk Chisholm

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Inflation Monitor November 2014

inflation monitor

Inflation Monitor November 2014 – Introduction

This is the second issue of the Innovative Advisory Group Inflation Monitor. We have received a lot of positive feedback on our first issue of that Inflation Monitor. As you will notice, we have taken some of this feedback and made some minor adjustments to our issue this month. As always, please contact me to send your feedback on how I can make this monthly Inflation monitor a better tool or resource for you.

This month I have added the following indicators:

  • The Rogers International Commodity Index®,
  • US 10 year TIPS,
  • Personal Expenditure Consumption Index,
  • Real median income to the list for reference.
  • US Debt as a percentage of GDP

In this month’s issue I will be discussing Japan, Deflation, US Oil production, Gold and Silver. Given the most recent US market sell off, I think it would be a good time to discuss the other side of inflation… Deflation.

Thank you for reading and I hope you enjoy this month’s issue – Inflation Monitor November 2014.

Kirk Chisholm

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