Crude oil inventory levels change based on demand and supply trends. Demand is primarily from refineries that process this crude into refined products.
One measure for this is the VIX or CBOE Volatility Index (otherwise known as the fear gauge). The index tracks the implied volatility in S&P 500 options.
Many people are worried about Europe slowdown, so eurozone stock prices already reflect a fair amount of risk. But prices in the region still could be cheaper.
Oil is currently trading a little low given the current supply situation and inventory levels. Prices aren’t high enough to discount potential large events related to a Middle East crisis.
While US valuations currently look reasonable, they’re predicated on a U.S. economy growing at around 2% to 2.5%. The risk of slower growth is not priced into the market.
“What worries you the most?” “What keeps you up at night?” I get these questions a lot from investors looking for insight into what might cause the next market correction.
I continue to see relative value in select areas of the fixed income market such as tax-exempt bonds, commercial mortgaged-backed securities (or CMBS) and U.S. high yield.
In this environment, many investors are still determined to wait out the bond market, believing that rates will eventually normalize and provide investors with a risk-free 5% yield, though this isn’t likely to happen anytime soon.
While I still expect that the yield on the U.S. 10-year Treasury note will rise modestly throughout the rest of this year and 2015, the backup in yields is likely to be a slow, modest climb characterized by volatility and back and forth movement.
Why? The reality is that while the U.S. economy continues to recover, short-term interest rates are likely to remain anchored at zero for the rest of 2014.
A key question on investors’ minds remains how long low rates, and the accompanying search for yield, are likely to continue.
Stubbornly low yields have made income tough to come by in recent years, and they have sent investors searching for yield and income wherever they can find it.
US consumption spending accounts for over two-thirds of the country’s gross domestic product. A favorable trend in consumer spending on non-durable goods is a positive indicator for the non-alcoholic beverage industry.
According to the Bloomberg Consumer Comfort Index, perceptions of the economy are highly negative, at 29% positive versus 71% negative.
The Thomson Reuters/University of Michigan Consumer Confidence Index is an important indicator of the consumer’s perception of the US economy.
Consumer spending indirectly drives mall REITs. More spending drives more stores and lowers vacancy rates.
The “Empire State Manufacturing Survey” is put out by the New York Fed. The report shows that the economy is kicking into second gear. Firms are generally optimistic about the future.
Industrial production and capacity utilization are numbers that get a lot of attention from the Fed. These figures not only help forecast economic activity but also impact inflation.
The US Department of the Treasury increased the weekly auction amounts for four-week, or one-month, T-bills last week. The issuance was $40 billion.
The auction demand for 13-week Treasury bills (or T-bills) was almost unchanged from the previous week. The bid-to-cover ratio came in at 4.7x.