Crude Oil: Bear Market Territory

[errolanderson]

The ongoing weakness in crude oil has now pushed WTI prices into bear market territory this week.

Combo of rising U.S. oil inventories plus excessive overbought spec positions have triggered fund liquidation.

Crude is king of commodity markets. Corn is king of grain markets. This may impact all equity and commodity markets heading into fall.

U.S. corporate profits have now entered a recession (IMO) despite recent record-breaking highs seen Dow / S&P. Stock markets are now dysfunctional to reality given the ongoing manipulation of central bankers.

http://ow.ly/xy0b302Syya

This is excellent link analysis by Carley Garner via Jim Cramer 'Mad Money'.

Crude's impact will be felt globally heading into the fall marketplace. For your info . . . .

[Hamloc]

It will be interesting to see if a recession does occur and if it affects the outcome of the US election. The fall back in the price of oil is certainly putting a negative feeling in the commodity markets. At present there is little optimism in the grain markets but I think high quality grain will fetch a premium. Getting top quality will be next to impossible with recent weather.

[errolanderson]

U.S. 2nd quarter GDP was a major miss posted at 1.2% last week. The trade was expecting 2.5%.

U.S. economy is actually experiencing no growth. Consumer spending has been 'holding up the fort' and service industry. But most sectors of U.S. have already entered a recession (IMO).

Central bankers have certainly lost their influence. Bank of England is expected to cut rates possibly tomorrow.

2017-18 will be a huge economic challenge for the new U.S. president.

[farmaholic]

Errol.....I am a complete dimwit when it comes to this stuff....but how can something(the "economy") be expected to grow forever without suffering any setbacks or even just being stagnant? It doesn't seem logical to me. So what?......in the future a loaf of bread will be $20.00 because the economy HAD to grow?

Maybe it's the policies being used to not let things "reset" themselves and bring everything back into "balance"....

The games people and governments play. Is it time to stop living the lie?
I don't know....

[fjlip]

Same BS as keep getting bigger/expanding or YOU are going backwards! If you are happy with your situation, and MOST are because we are collectively getting OLDER, so what if there is NO GROWTH? F*cking tired of growing/adding debt. That is for the young guns, go for it guys, we did, 40 years ago. Great to be at a satisfied level with NO WORRIES. Hope you all get there before we are done.

[errolanderson]

farmaholic . . . If you are a dimwit, I'm a dimmerwit. There are an impressive amount of ag business smarts on this forum.

You are right, there have to be recessions from time to time. (IMO) This one is different in that the crisis of 2008 has never been fixed and never ended. Central bankers have muffed the investor along. The race for riskier yield and excessive liquidity (excess money) is slooshing into equities, art, classic cars, real estate etc.

This is not working capital, this is parked capital . . . a big difference.

I'm sensing that this false sense of growth to the investor is about to hit the fan. Japan could ignite this. European banks could ignite this. And the Fed may be cutting rates before they ever hike them, contrary to everything you hear in the media. Had to get that off my chest.

To me, the U.S. economy is now hell-bent headed for a recession in 2017 and it will take economic hostages with it.

[boarderbloke]

errol, where is the USD going? I would expect the CAD loosing to the USD.

[Rareearth]

There feels like room for another round of Quantitative Easing, 4 the stock markets will continue to roll higher and I hope Ag's. There will be stability for another year, and maybe QE5 unless the black swan gets shot.

There isn't enough consumer pain yet, when there is every one will feel the pain ( like pouring rain, flooding, pounding crop into the ground, lodging etc) it's a sinking feeling. Then it's a race to the bottom, who can liquidate stocks, real estate etc consumer confidence gets hammered.

[perfecho]

FJ....have always said I would like to strangle the wonder child who started the "if your not growing, your going backwards" Be content with what you have.... the secret to a happy life!
signed...another total dimwit....

[foragefarmer]

Low oil means low wheat prices, Black Sea producers still need hard currency. They will dump the wheat for next to nothing. Those of you thinking they'll be a premium for high protein don't hold your breath.


As for the stock market crashing Errol, are you in or out, if you've been out as long as you have been saying the market is going to crash, boy have you missed a good run. Trying to predict the market only results in getting double whipped. What does Warren Buffet do? Buy good paying dividend stocks and hold. Reply With Quote Edit / Delete

[cottonpicken]

Errol ain't that bad.
I got the gold,land,wheat and housing right in about 04ish I thought it was game over when they monetized the debt I knew they had to do it because of math I just didn't think everyone would fall for it amongst a whole lot of mistakes I made. Timing is everything. Now it's time to rethink my premise and start a new thesis,started about two yeArs ago,so many more balls in the air now,I'm not sure I can.

[errolanderson]

boarder . . . despite the near term pressure of crude oil, the Cdn dollar tilted lower, but overall remains rangebound.

The big Cdn banks are each taking-a-turn hammering the loonie outlook, but personally don't buy in this bearishness.

The U.S. dollar (IMO) remains vulnerable to a sell-off given the worsening economic conditions stateside. The Japanese Yen continues to strength despite their ongoing central bank stimulus. This wasn't suppose to happen.

Also, the U.S. can ill-afford to maintain a strong dollar. When their recession hits, the Fed will want a weaker USD. And it may force the Fed to actually cut rates in 2017.

This could provide support for the CAD. Technically, CAD has key resistance at 78 1/2 cents. Spot loonie has key support at 75.6 cents. An opinion for what it is worth . . . .

[ajl]

Yeah it has been pretty tough to make money on the short side of the US market the last couple of years. It is likely that markets these days are pretty well in balance. $100 US oil was the product of central bank money printing and war premium. 40-60 US is likely the market getting us the oil we need. Same can be said about farm commodities. $10 canola will not inflate land but will get the needed canola produced. My conclusion is that markets are probably right once there are enough gurus saying things should be otherwise. The US and Canadian economies, while not booming, are doing OK and we will just have to adapt to the low growth environment.