Natural Gas Climbs as Record Cold Seen Draining U.S. Stockpiles


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22 November 2018



Video commentary for November 21st 2018



Eoin Treacy's view

A link to today's video is posted in the SUBScriber's Area. 

Some of the topics discussed include: Wall Street continues to test its lows, credit spreads are widening faster in China than the USA but they are all widening, change of leadership in tech and the wider stock market is the driver behind this correction, oil prices steady but not enough to matter yet, gold steady, Japan steadies.



Stock Market Is Even Worse Than You Think It Is

This article by Stephen Gandel for Bloomberg may be of interest to subscribers. Here is a section:

The good news is that drops in valuations tend not to last long, especially big ones like the one this year. In a report last week, UBS strategist Keith Parker pointed out that on average the market has returned 16 percent in the year after one in which P/E ratios have dropped significantly. In fact, going back to World War II, there have been only two years in which the market has dropped after a more than 1 percentage point drop in valuations the year before. Parker predicts that the S&P 500 will rise to 3,200, or more than 20 percent, by the end of 2019.

On top of the valuation drop, he points to a high consumer savings rate, a rebound in companies investing in the U.S. and rising productivity as reasons the market will climb next year. But there are also reasons to believe the traditional rebound won’t materialize this time. First of all, while down, the absolute level of stock market valuations are not that low. For instance, the P/E ratio dropped to 12.8 in late 2008 before the market rebounded the next year. The P/E ended at a lower point than it is now in six of the 10 years in which there were big valuation drops.


Eoin Treacy's view

This is another example of an extremely bearish article which, despite highlighting the tendency of markets to rise after big declines, goes on to conclude “So, no, you’re not wrong that the market is looking shaky. The bad news is that it could still get worse.”




Natural Gas Climbs as Record Cold Seen Draining U.S. Stockpiles

This article by Naureen S. Malik for Bloomberg may be of interest to subscribers. Here is a section:

Gas volatility has soared this month as bulls betting on winter supply constraints clash with bears expecting record production to overwhelm demand for the fuel. Prices soared more than 20 percent on Wednesday before tumbling the most on record the following day. Though output from shale basins is at an all-time high, exports have climbed as domestic consumption rises, leaving stored supplies at a 15-year seasonal low.

“We haven’t had this kind of weather in a long time where it gets cold right out of the block in November,” said Tom Saal, senior vice president of energy trading at INTL Fcstone Financial Inc. in Miami. “That puts the industry on notice that we are going to need a lot of gas this winter. We could see a lot volatility.”


Eoin Treacy's view

The question is not whether there is enough gas to go around but rather how much of it can get to market in a timely manner. That points to a lack of pipeline infrastructure rather than a lack of basic resources.



India Capital Fund Letter

Thanks to a subscriber for this report from which includes a great deal of data which may be of interest. Here is a section:



Eoin Treacy's view

A link to the full report is posted in the Subscriber's Area.

It occurs to me that the rise of the global consumer is predicated on the rising standards of living of billions of people who have never experienced that condition before. Most people think about China when we talk about the rise of the global consumer but China’s consumers are already middle class; or most of them are. India is the world’s most populous nation and its drive towards improving sanitation, access to electricity, the introduction of the digital economy and growing the manufacturing base are tomorrow’s story and therefore should command our attention today.



Long-term themes review October 29th 2018



Eoin Treacy's view

FullerTreacyMoney has a very varied group of people as subscribers. Some of you like to receive our views in written form, while others prefer the first-person experience of listening to the audio or watching daily videos.

The Big Picture Long-Term video, posted every Friday, is aimed squarely at anyone who does not have the time to read the daily commentary but wishes to gain some perspective on what we think the long-term outlook holds. However, I think it is also important to have a clear written record for where we lie in terms of the long-term themes we have identified, particularly as short-term market machinations influence perceptions.

Let me first set up the background; I believe we are in a secular bull market that will not peak for at least another decade and potentially twice that. However, it also worth considering that secular bull markets are occasionally punctuated by recessions and medium-term corrections which generally represent buying opportunities.

2018 has represented a loss of uptrend consistency for the S&P500 following a particularly impressive and persistent advance in 2016 and 2017. Many people are therefore asking whether this is a medium-term correction or a top. There is perhaps no more important question so let’s just focus on that for the moment.




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