Market Worry Spurs Safe Haven Buying

The S&P 500 Index continued its downward trending Monday,closing down 29.82,or 1.56%.This was based on the decline of light sweet crude below the 30.00 mark,down 2.42% to 29.77 a barrel.Brent crude fell even harder,down 6.62%,but didn't crack the 30.00 threshold,closing at 30.05.Safe havens gold and silver both appreciated,with gold closing at 1108.8 an ounce,up 1.1%;and silver closing at 14.255 an ounce,up 1.444%.*
There is a lot of concern in the markets over the devaluation in China and the collapse of oil,said Bob Baur of Principal Global Investors.We think a huge devaluation is not ahead.I think China is more interested in a stable currency rather than devaluation.We're finally seeing some stability in the commodity markets.We do think 30.00 is low for oil prices.*
Overall,we're not seeing the kind of consumer spending we were expecting.Lending is going up,but consumers are still reducing their spending.China has slowed dramatically,so there's a real concern about growth slowing.There's an awful lot of worry about a global recession.We think growth is being rebalanced.We are in a place where growth is not going to be what it was.The engine is there-it's just not going to be what we're used to.*
We've recapitalised the banks.Private and household debt has come down.Private debt has come down since 2005.*
Australia is doing remarkably well.The job growth there is good.The US economy has been resilient.Consumer spending is robust.It's awfully hard to see a recession occurring there,Mr.Baur noted.*
In the short-term,we could see some short-term rebound;but long-term,we are still bearish over the next 12 months,cautioned Jason Low,equity strategist at DBS Private Bank.*
Market Vectors Gold Miners ETF (GDX),Silver Wheaton Corp (SLW)

Oil Prices Drop To Milestone Lows - when will this end?

Brent crude bottomed out at 36.05 in early trading Monday,its lowest level in 11 years,before recovering slightly.In the US,the energy sector is the worst performer in the S&P 500 Index,down more than 20% year to date.A perfect storm of ample supply,a mild autumn and mild early winter outlook,and the coming back to market of Iranian,Libyan and US oil exports is driving oil prices down to bedrock levels.In parts of the US,this has allowed the price of gasoline to slip to 1.53 a gallon in Owasso,Oklahoma.*
Mid-term,however,Lukoil CEO Vagit Aleperov told CNBC,prices may rise to 40-50 dollars a barrel in 2016 as exploration cutbacks during the downturn take hold and start to reduce supply.Near term,we would need OPEC to move in order to support prices.The US lifting its ban on oil exports will simply lead to US prices equalling Brent prices.
Lukoil stock rose 11.60 rubles,up 0.50% in Monday trading.*
LKOH:PJSC Lukoil (MICEX)

The Problem With Falling Oil Prices

Plummeting oil prices are affecting those who deal in bundles of loans to energy companies.Collateralised Loan Obligation managers are being forced to sell.We're seeing a lot of pressure on these businesses that have automatic sell programs.I believe we're at a technical level here that's being forced to be sold by the global markets,said Chad Brownstein,CEO of Rocky Mountain Resource Holding Inc.I clearly believe that a stable number for the energy industry is about 70.00 a barrel.*
The problem they're going to have is,the large offshore oil drillers are going to feel it.The real victims are the large drillers at a cost of 50.00 a barrel to produce.Oil services are going to get hurt,the technical levels and the prices of the debt that are attached to the major oil companies.Currencies of oil dependent countries such as Canada,Mexico and Norway are getting crushed,Mr.Brownstein pointed out.*
Sustained low prices could halt some drilling projects,postpone others,squeeze certain fracking operations and even lead to the loss of certain jobs within the energy sector,wrote contributor Kevin Mahn in the December 3 issue of Forbes magazine.The net long-term effect could actually become somewhat of a drag on US GDP if oil prices drop further and/or remain at those lower prices for an extended period of time.*
If credit dries up for energy companies,restaurant chains may suffer in oil-dependent states like Texas and California.Every major restaurant chain has high exposure in these states.*
Rocky Mountain Resource Holdings is a limited liability company that acquires and develops natural resource assets such as oil and gas reserves,agribusiness,energy infrastructure,and industrial minerals and chemicals.With offices in Los Angeles and Denver,it seeks to leverage its deep relationships in the industry to facilitate off-market acquisitions of private assets,including family-owned assets,in the midst of both asset and generational transitions,the company says.*
In Monday trading,WTI crude closed at 55.91 a barrel,down 2.14,or 3.70%;while Brent crude closed at 61.06 a barrel,down 1.83,or 2.96%.