Pathlight Investors’ Top Recommended Reads - October 2014
Ready for some more great articles? Here's our picks for October 2014:
The Fed – despite the financial market dislocation and market chatter of QE4, it doesn’t sound like the Fed is too alarmed w/recent trends. A lot of people have cited the Williams interview w/Reuters from Tues (http://goo.gl/jpe4mr) in which he talked about the possibility of more purchases.
However, Williams didn’t really endorse QE4 but only acknowledged the possibility should the outlook change “significantly”. Meanwhile, Dallas Fed President Fischer (speaking to Fox Business during the day Wed http://goo.gl/ZWqi5C) warned investors not to conflate a market correction w/an economic downturn. Finally, according to Bloomberg (in an article that crossed late in the Wed sessionhttp://goo.gl/ylOzso), Yellen remains confident in the US economic outlook (Bloomberg cited remarks the Chair reportedly made at a closed-door meeting in Washington over the weekend).
Fed – tapering still going to happen in Oct and rate hikes remain probable by mid-’15 but Fed will stay vigilant and could alter its forward guidance in a dovish direction. US Fed officials will reassure investors that they stand ready to act should int’l financial trends threaten the domestic recovery but tapering is likely to end as scheduled at the Oct meeting and rate hikes are probably going to occur by mid-’15. Reuters http://goo.gl/70vjsB
Crude – US shale breaking point may be lower than OPEC thinks; Bloomberg discusses how OPEC (and particularly Saudi Arabia and Kuwait) are attempting to test the “pain point” for US shale frackers. However, that threshold may be at a lower oil price than most assume. Only about 4% of US shale output needs crude north of $80 to be profitable. Bloomberg http://goo.gl/yWlcFh
Crude update – price weakness likely to persist given Saudi Arabia aggression and lack of OPEC coordination. According to a WSJ report (http://goo.gl/Fk5Jqw), Saudi Arabia is making an aggressive push for global market share in both Asia and Europe. The Kingdom recently slashed prices and is now asking buyers to commit to maximum shipments. While some are agitating for more OPEC coordination (Venezuela in particular http://goo.gl/Ya8gQi) there aren’t any signs of a broad supply reduction (http://goo.gl/5xpJre). Kuwait’s oil minister was quoted as saying an OPEC cut wouldn’t do much good given so much production is occurring outside the cartel (he also expressed doubt that Brent would drop below $76-77). http://goo.gl/QhvVRQ
European policy response deemed inadequate as calls grow for more coordination. The ECB is battling w/Germany which is battling w/other European governments over the proper response to the region’s middling growth and disinflationary pressures. Instead of reaching a solution the dithering is only exacerbating the problem. “A growing number of policy makers and advisers say a coordinated push is now needed, comprising aggressive new ECB actions, higher investment spending by Germany and European Union institutions, and bolder economic overhauls in France and Italy” – WSJ http://goo.gl/X6fqO3
German inaction isn’t causing Europe’s economic woes – “Germany’s fiscal prudence doesn’t account for France’s 35-hour work week or Italy’s theater-of-the-absurd labor laws. The next time the finance ministers meet, perhaps Mr. Schäuble might ask his colleagues what they have done by way of reform before they start demanding another German rescue” – WSJ http://goo.gl/QZiXoY
Greece – worries that Athens is trying to exit its bailout package too early and that the antireform Syriza party may come to power have weighed on Greek financial markets – WSJ http://goo.gl/xrjLlG
And On A Lighter Note…
Parrot missing for years returns speaking Spanish: http://goo.gl/w1Le1S