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FYI: The summer driving season is officially underway, and true to form, gas prices are at their highest levels of the year. According to AAA, the national average price of a gallon of gas topped $2.80 per gallon for the first time since Thanksgiving. Regards, Ted https://www.bespokepremium.com/think-big-blog/gas-price-hit-a-six-month-high/
Quick perspective. WTI crude oil costs rose to an average $60.09 per barrel (-43.3% y/y), up versus the March low of $44.39. Yesterday, prices eased to $59.52 per barrel. These prices compare to a June 2014 high of $107.95. Gasoline prices jumped 2.0% last week to an average $2.84 per gallon at the pump (-23.1% y/y). They were at the highest level since November, up from the low of $2.04 late in January. Natural gas prices increased to $2.81 per mmbtu last week (-38.7% y/y), the highest level since early-March. Prices were $2.86 yesterday. The gasoline market is tightening. Gasoline inventories grew 1.8% y/y, down from 9.3% growth before the summer driving season. Inventories of all petroleum products increased 8.1% y/y. Gasoline demand strengthened 3.8% y/y and demand for all petroleum products rose 5.1% y/y. http://www.haver.com/comment/comment.html?c=150616B.html
That wouldn't seem to conform with the recent spike in gas prices. Nor does it make sense if water really is running out as another thread claims. (A water shortage should result in higher prices for agricultural products - which is not the case.)
On a related note, the Federal Reserve remains confident they can push consumer price inflation up to 2% per year sometime soon.
"A water shortage should result in higher prices for agricultural products - which is not the case."
California just recently announced water restrictions for farmers which had been spared up to now. Give food prices another year and they should rise. Of course, prices are going up as it is without the drought.
Met coal prices fall another 15%, hitting lowest since 2004 Benchmark prices for metallurgical coal used in steelmaking have plunged an additional 15% from levels that had already hit a six-year low...This summer’s price decline is so steep that it could force cutbacks around the world, even at mines that were profitable as recently as the spring, says Doyle Trading's Ted O’Brien, adding that more U.S. mines likely will be forced to close.. http://seekingalpha.com/news/2586185-met-coal-prices-fall-another-15-percent-hitting-lowest-levels-since-2004 Also reinforcing hank's post: In the metals sector, prices recently weakened substantially. Aluminum prices declined 14% since early last month, leaving them near the low level of early 2014. Steel scrap prices also remain near the lowest level since the end of 2009 (-30.2% y/y), despite an uptick during the last two weeks. Copper scrap prices recently reversed all of an improvement since late February. http://www.haver.com/comment/comment.html?c=150617A.html
TREASURIES
NEW YORK - U.S. Treasury yields fell on Wednesday after the Federal Reserve reduced its growth and federal funds rate forecasts, but said growth this year is still likely strong enough to support an interest rate increase later in the year.
In sum, I would characterize the previous economic expansion as better living through credit, to paraphrase DuPont’s slogan. So, the strength of the previous economic expansion that some yearn to return to was partially due to a financial system that had the capital to support a lot of lending, a Fed that was more than willing to aid and abet financial institution excess lending and lax credit underwriting standards. Those were the days, my friend. You may have thought that they’d never end, but they have. Yes, after the onset of the last financial crisis, the Fed went on a credit-creation binge, which now has ended. But the increase in the Fed’s contribution to credit was offset by a pullback in private financial institutions’ provision of credit. Although some private financial institutions might desire to relax their credit-underwriting standards more aggressively, their regulators will not allow it.... ....Now, of course, there could be some mitigating factors to this dark economic scenario. People might delay retirement. This would prevent growth of the makers from falling as much as projected. We could accept more working-age immigrants, again preventing growth of the makers from falling as much. There could be extraordinary increases in productivity and advances in technology, which would offset the slower growth in the working-age population in terms of output growth. And to some degree, these mitigating factors are likely to occur. But just to be prudent, I still would plan on a slower trend rate of growth in U.S. per capita real GDP in the decades ahead.n http://www.lptrust.com/wp-lptrust/uploads/2015/06/Paul-Kasriel-Commentary-June-2015.pdf
Comments
WTI crude oil costs rose to an average $60.09 per barrel (-43.3% y/y), up versus the March low of $44.39. Yesterday, prices eased to $59.52 per barrel. These prices compare to a June 2014 high of $107.95.
Gasoline prices jumped 2.0% last week to an average $2.84 per gallon at the pump (-23.1% y/y). They were at the highest level since November, up from the low of $2.04 late in January.
Natural gas prices increased to $2.81 per mmbtu last week (-38.7% y/y), the highest level since early-March. Prices were $2.86 yesterday.
The gasoline market is tightening. Gasoline inventories grew 1.8% y/y, down from 9.3% growth before the summer driving season. Inventories of all petroleum products increased 8.1% y/y. Gasoline demand strengthened 3.8% y/y and demand for all petroleum products rose 5.1% y/y.
http://www.haver.com/comment/comment.html?c=150616B.html
selling short Crude Oil prices
That wouldn't seem to conform with the recent spike in gas prices. Nor does it make sense if water really is running out as another thread claims. (A water shortage should result in higher prices for agricultural products - which is not the case.)
On a related note, the Federal Reserve remains confident they can push consumer price inflation up to 2% per year sometime soon.
Talk about mixed messages.
California just recently announced water restrictions for farmers which had been spared up to now. Give food prices another year and they should rise. Of course, prices are going up as it is without the drought.
Benchmark prices for metallurgical coal used in steelmaking have plunged an additional 15% from levels that had already hit a six-year low...This summer’s price decline is so steep that it could force cutbacks around the world, even at mines that were profitable as recently as the spring, says Doyle Trading's Ted O’Brien, adding that more U.S. mines likely will be forced to close..
http://seekingalpha.com/news/2586185-met-coal-prices-fall-another-15-percent-hitting-lowest-levels-since-2004
Also reinforcing hank's post:
In the metals sector, prices recently weakened substantially. Aluminum prices declined 14% since early last month, leaving them near the low level of early 2014. Steel scrap prices also remain near the lowest level since the end of 2009 (-30.2% y/y), despite an uptick during the last two weeks. Copper scrap prices recently reversed all of an improvement since late February.
http://www.haver.com/comment/comment.html?c=150617A.html
TREASURIES
NEW YORK - U.S. Treasury yields fell on Wednesday after the Federal Reserve reduced its growth and federal funds rate forecasts, but said growth this year is still likely strong enough to support an interest rate increase later in the year.
After contracting in the first quarter, the economy is now on track to grow between 1.8 percent and 2.0 percent in 2015, according to the central bank's latest policy statement and new projections issued by Fed policymakers.
http://www.reuters.com/article/2015/06/18/morningcall-india-idUSL3N0Z41NA20150618
Here's a good read that also meshes with http://www.mutualfundobserver.com/discuss/discussion/21802/withdrawals-from-401-k-retirement-plans-exceed-new-contributions-a-shift-that-could-shake-up-u-s#latest
June 11, 2015 | Econtrarian
“Those Were the Days, My Friend; We Thought They’d Never End.”
Twenty-three quarters after the 2009:Q2 business-cycle trough, real GDP growth has been the weakest of any 23-quarter post-cycle trough starting with that of 1961:Q2.
In sum, I would characterize the previous economic
expansion as better living through credit, to paraphrase
DuPont’s slogan. So, the strength of the previous economic
expansion that some yearn to return to was partially due
to a financial system that had the capital to support a lot
of lending, a Fed that was more than willing to aid and
abet financial institution excess lending and lax credit underwriting
standards. Those were the days, my friend.
You may have thought that they’d never end, but they have.
Yes, after the onset of the last financial crisis, the Fed went
on a credit-creation binge, which now has ended. But the
increase in the Fed’s contribution to credit was offset by a
pullback in private financial institutions’ provision of credit.
Although some private financial institutions might desire to
relax their credit-underwriting standards more aggressively,
their regulators will not allow it....
....Now, of course, there could be some mitigating factors to
this dark economic scenario. People might delay retirement.
This would prevent growth of the makers from falling as
much as projected. We could accept more working-age
immigrants, again preventing growth of the makers from
falling as much. There could be extraordinary increases in
productivity and advances in technology, which would offset
the slower growth in the working-age population in terms of
output growth. And to some degree, these mitigating factors
are likely to occur. But just to be prudent, I still would plan
on a slower trend rate of growth in U.S. per capita real GDP
in the decades ahead.n
http://www.lptrust.com/wp-lptrust/uploads/2015/06/Paul-Kasriel-Commentary-June-2015.pdf