Commodities have been doing poorly for the past year according to Bloomberg commodities. Is this not a predictor of the overall economy? Did this same thing happen before the 2008 collapse? Please tell me I'm wrong and need not worry about this.
Forgive my fat finger typo in the title.
A significant portion of commodities is oil. Oil is way down. Bad for the commodities market, good for vacations.
Streetwiseguy wrote: A significant portion of commodities is oil. Oil is way down. Bad for the commodities market, good for vacations.
Yes OPEC has been doing their best to "flood" the market with their oil in hopes of wiping out North Dakota and Canadian tar sands oil production. OPEC has the muscle to go even cheaper per barrel and for an even longer sustained period of time if they really want to.
And although not considered a commodity, but still somewhat telling in the overall economic picture, real estate prices have really climbed close to pre '08 levels, at least in my area.
OPEC is also trying to keep the US from using our vast amounts of Natural Gas on things we could be using their oil on. It'll work too because we will only switch to NG cars if gas gets too expensive.
RossD wrote: OPEC is also trying to keep the US from using our vast amounts of Natural Gas on things we could be using their oil on. It'll work too because we will only switch to NG cars if gas gets too expensive.
That's perfect for us though, because theoretically they will run out of energy first.
drainoil wrote:Streetwiseguy wrote: A significant portion of commodities is oil. Oil is way down. Bad for the commodities market, good for vacations.Yes OPEC has been doing their best to "flood" the market with their oil in hopes of wiping out North Dakota and Canadian tar sands oil production. OPEC has the muscle to go even cheaper per barrel and for an even longer sustained period of time if they really want to. And although not considered a commodity, but still somewhat telling in the overall economic picture, real estate prices have really climbed close to pre '08 levels, at least in my area.
We are above 08 prices and within 10% of the market peak.
drainoil wrote: Commodities have been doing poorly for the past year according to Bloomberg commodities. Is this not a predictor of the overall economy? Did this same thing happen before the 2008 collapse? Please tell me I'm wrong and need not worry about this. Forgive my fat finger typo in the title.
A summer of volatility..
http://www.marketwatch.com/story/doubling-down-on-a-summer-correction-2015-07-17
Apple, IBM, UTX dowm(UTX is down for bad business decisions in the years past)..
I think it can be pretty safely said that the 2008 collapse had almost nothing to do with commodities.
Enyar wrote: We are above 08 prices and within 10% of the market peak.
I wish. My area still seems to be on the decline. Couldn't even get refinanced 'cause it didn't appraise high enough. Would love to downsize, but can't even sell yet due to being underwater in it.
aircooled wrote: I think it can be pretty safely said that the 2008 collapse had almost nothing to do with commodities.
+1
OPEC (well, largely Saudi Arabia) is not really worried about tar sands and fracking. It isn't always about us (US). They are more concerned with geopolitics in their own region. Lower oil prices keeps money out of their enemies' hands, like ISIS and Iran. Their concern with the nuclear deal is more about sanctions against Iran being lifted than anything else.
Low commodities prices generally helps the US economy, not hurts it. Countries like Texas, Canada and Australia get hurt because they rely more heavily on commodities. Yeah, I know Texas isn't a country, but try to tell Texans that (and I am one).
I'm not exactly feeling for Canada. They were bragging about how immune they were from the economic dislocations of the Great Recession because they were so much smarter keeping out of the mortgage securities business, etc. I was in Toronto when one of their politicians was bragging about how he had single-handedly kept the Canadian unemployment rate low during that time. At the same time, the Canadians were pissed at the US for not allowing Canadian contractors to benefit from US gov't stimulus money. Really?
Commodities got way high due to the pre-recession boom and dropped as a result of the recession, not as a cause. In fact, it was a huge oil shock that helped put the nail in the coffin to the economy before it did the deep dive. Remember when people were predicting $250 bbl oil? Of course, the steep rise in oil prices was a direct result of a huge conspiracy between the oil companies. Funny how those conspiracy theorists disappear when the price drops.
Basil Exposition wrote: Low commodities prices generally helps the US economy, not hurts it. Countries like Texas, Canada and Australia get hurt because they rely more heavily on commodities. Yeah, I know Texas isn't a country, but try to tell Texans that (and I am one). I'm not exactly feeling for Canada. They were bragging about how immune they were from the economic dislocations of the Great Recession because they were so much smarter keeping out of the mortgage securities business, etc. I was in Toronto when one of their politicians was bragging about how he had single-handedly kept the Canadian unemployment rate low during that time. At the same time, the Canadians were pissed at the US for not allowing Canadian contractors to benefit from US gov't stimulus money. Really?
Western Canada's economy mostly improved during the financial crisis. Central Canada relies more on manufacturing, and the thing that hurt them more than anything was the lousy US dollar. It took away their price advantage. The mortgage crisis didn't exist up here, mostly due to Canadians love of "peace, order and good government". Don't laugh...
I remember rolling my eyes pretty hard about the stimulus money. Politicians- all dumb as rocks, no matter their colour.
FYI, The Canadian banks have zero risk exposure to the Real Estate market. Any loan that does not have a significant down payment is "insured" by the Canadian taxpayer. So a bubble burst would have no effect on the banks.
Right about now things look kinda gloomy for the Canadians since manufacturing made a significant exodus after the 2008 crash as all countries pushed to have manufacturing repatriated. It has not returned and adding insult to injury, many of the companies that left collected large number of dollars to stay, just before they left. That the Canadian dollar went up at the same time did not help.
What did help was the high cost of oil as a lot of the workforce shifted Northwest.
So Canada is sitting on oil that sells for less than it cost to extract
Commodities that nobody needs cause China is taking a breather
Real Estate bubble
Huge personal debt.
Record Gov deficits
Crashing dollar
So, nothing new really.
Basil Exposition wrote: is not really worried about tar sands
I don't think anyone is. It is an incredibly capital intensive, long term way to earn money. There are no "new" plants planned at this time (or the planned ones that aren't built have been cancelled). You can't just scale up and scale down the oil sands like you can frac'ing.
Oilsands are only a big deal in long term thinking. Short term, I don't think they are even a blip on the radar. These plants will continue mining for the next 50+ years. When oil eventually (and it will, make no mistake) goes back up to $150/barrel, that's where these guys' bread and butter comes into play, by planning ahead and having the infrastructure in place now.
NOHOME wrote: FYI, The Canadian banks have zero risk exposure to the Real Estate market. Any loan that does not have a significant down payment is "insured" by the Canadian taxpayer. So a bubble burst would have no effect on the banks.
That's not quite how it works. There would be serious knock-on effects no matter the safeguards.
HiTempguy wrote:Basil Exposition wrote: is not really worried about tar sandsI don't think anyone is. It is an incredibly capital intensive, long term way to earn money. There are no "new" plants planned at this time (or the planned ones that aren't built have been cancelled). You can't just scale up and scale down the oil sands like you can frac'ing. Oilsands are only a big deal in long term thinking. Short term, I don't think they are even a blip on the radar. These plants will continue mining for the next 50+ years. When oil eventually (and it will, make no mistake) goes back up to $150/barrel, that's where these guys' bread and butter comes into play, by planning ahead and having the infrastructure in place now.NOHOME wrote: FYI, The Canadian banks have zero risk exposure to the Real Estate market. Any loan that does not have a significant down payment is "insured" by the Canadian taxpayer. So a bubble burst would have no effect on the banks.That's not quite how it works. There would be serious knock-on effects no matter the safeguards.
that and fracking, fracking needs to be around $90 per barrel to be profitable. Why do you think that a particular section of this country wants us to go to war with Iran. It would give us the opportunity to take over another oil state.
My commodities keep running, but if I jiggle the handle they stop.
Clicked thinking it was about Smithfield food (hogs/sows) being owned by China.....
I, for one, do NOT welcome our new bacon overlords.
I don't know about most of you guys, but my (the Canadian) economy is toast, because manufacturing and resource-based commodities are hugely hit. The Canadian dollar is the lowest is has been in almost 11 years.
etifosi wrote: Clicked thinking it was about Smithfield food (hogs/sows) being owned by China..... I, for one, NO rikey new bacon overrords.
ftfy
In reply to rcutclif:
Isn't that straight out of the intro to The Road Warrior?
rcutclif wrote:RossD wrote: OPEC is also trying to keep the US from using our vast amounts of Natural Gas on things we could be using their oil on. It'll work too because we will only switch to NG cars if gas gets too expensive.That's perfect for us though, because theoretically they will run out of energy first.
I have no problem accomodating them
NOHOME wrote: FYI, The Canadian banks have zero risk exposure to the Real Estate market. Any loan that does not have a significant down payment is "insured" by the Canadian taxpayer. So a bubble burst would have no effect on the banks.
By "Real Estate market" I think you mean consumer mortgages. If so, what you say is correct as far as it goes. However, the real estate market is far broader than that and the banks are exposed to it in various ways. Commercial real estate, for example, including office buildings, shopping centers, etc. Back in the 90's RBC got badly burned on construction loans for high rise condos in Toronto. During the Great Recession they lost a substantial amount of money lending to US homebuilders, but not enough to really hurt them. Last I heard there was another building boom of condos in Toronto, though I quit paying attention when I got laid off by RBC a few years ago. So a real estate bust, in the broad meaning of the term, could certainly impact the banks negatively. Remember also, that the larger Canadian banks have a substantial portion of their risk exposure outside the Canadian market, for better or worse.
So we' ll be just fine then?
drainoil wrote:Streetwiseguy wrote: A significant portion of commodities is oil. Oil is way down. Bad for the commodities market, good for vacations.Yes OPEC has been doing their best to "flood" the market with their oil in hopes of wiping out North Dakota and Canadian tar sands oil production. OPEC has the muscle to go even cheaper per barrel and for an even longer sustained period of time if they really want to.
That still makes zero sense to me... that North American oil isn't going to disappear. They're taking long-term losses for short term losses. All they're going to do is force a consolidation(*) as the weaker players fold and the bigger players who can weather it out longer snap their claims up, while putting a large market pressure on finding cheaper ways of extracting that oil.
But I guess "fark you, that's why" is still a valid business model.
Basil Exposition wrote: OPEC (well, largely Saudi Arabia) is not really worried about tar sands and fracking. It isn't always about us (US). They are more concerned with geopolitics in their own region. Lower oil prices keeps money out of their enemies' hands, like ISIS and Iran. Their concern with the nuclear deal is more about sanctions against Iran being lifted than anything else.
That... does make sense. With those things in mind, their actions snap sharply into focus.
Yeah, I know Texas isn't a country, but try to tell Texans that (and I am one).
Reminds me of a line from one of the "Round Table" meetings at the Rallycross National Championship in Tulsa one year. Jon O. had the mic and said (paraphrased) "Really, guys? I get wanting to put the championships at the end of the season, but fall in Oklahoma is balls-cold and camaraderie sucks when everyone disappears to hotels right after competition ends." Someone from the vocal Texas group shouted "Texas next year!!" Jon just said "No, we want to hold it in America, guys..."
Remember when people were predicting $250 bbl oil? Of course, the steep rise in oil prices was a direct result of a huge conspiracy between the oil companies. Funny how those conspiracy theorists disappear when the price drops.
"Bush is going out of office soon, so the oil machine is cashing in their chips."
It was insane when it happened. The price of fuel went from $4.50 to under $2 in what seemed like one week.
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