Sometimes, I think my view of the world is off kilter, missing the mark, somehow disconnected from reality. For example, I read an article this morning, written by Richard Heinberg, a Senior Fellow at the Post Carbon Institute, a seemingly reputable “think tank which provides information and analysis on climate change, energy scarcity, and other issues related to sustainability and long term social resilience.” The man has written 11 books on the subject at hand. He appears to be a bright fellow (pun intended) and he suggested in his article …

  • For oil traders, price volatility may offer opportunities for profit. But for everyone else, it is treacherous. Price volatility only hints at the real extent of our peril: We have built an economic system overwhelmingly reliant on a nonrenewable, depleting resource. This is not a sustainable situation. Unless our dependency on oil somehow magically disappears, we are in for a wild ride on an unmapped road.

Now, I don’t disagree with the above necessarily, but I find it interesting in the article that there is no mention of any global movement toward renewable energy, and for the current state of fundamental reality that oil is in a glut at a time when demand is dropping, even if the demand drop is slight. To not include this reality, and then finish with “Unless our dependency on oil somehow magically disappears …” suggests to me the writer has not thought this through clearly, or I am missing something in my study of the world today.

No, the global dependence on oil will not disappear magically, nor will it go away in a decade or two, but the world is transforming one country at a time and the fast-coming future is not oil; it is renewable energy deriving from the sun, the algae in the ocean, and just about everything else in between. It seems to me we are smarter than we ever have been and with the aid of computers (really fast quantum computers), we are finding ways to create energy that does not require burning fossil fuels.

As to the market today …

Again, it seems to be behaving in a normal manner, given the reality of our times. The Fed “when” issue still bothers many in the market, and the economic news coming out today is, again, both good and not so good.    

  • Euro zone businesses ramped up activity this month as the European Central Bank started printing money to spur economic growth, while a slowdown among Chinese factories fueled expectations of more monetary stimulus.

And the above is just one aspect of the information the market is seeing today, but before we get to that, some folks will say that the Eurozone pick up is artificial, related only to the QE stimulus coming down the European pike. As far as perception and business and consumer confidence goes, this is true, but as far as the actual reality of using the “money” that is now funneling through, well …

  • “I wouldn’t want to give QE too much credence at this stage. The ECB has only been buying for a couple of weeks and QE takes a long time to have any impact – if at all,” said Peter Dixon at Commerzbank. “The outright QE itself has had zero impact; growth was already happening.”

As to the US, which still drives the global economy, the economic news that came out today is good, for what that is worth, relative to the ultimate driver, corporate profit.

  • U.S. manufacturing activity growth also edged up despite a stronger U.S. dollar and the threat of an interest rate rise from the Federal Reserve later this year.

Actually, the US dollar is not as strong as it was week ago and it is showing strain trying to keep above 97. And, more on the straining side, China is finally and consistently showing a trend toward much slower growth, which should take a toll on oil pricing.

  • China’s flash HSBC/Markit PMI dipped to an 11-month low of 49.2 in March, below the 50 level that separates growth from contraction.

Yes, Richard Heiberg, China is an excellent example of how much the world still depends on oil, but if you look closely, China is one big country slowly transforming and its current economy is indicative of that transformation.

  • In the first three quarters of 2014, China spent $175 billion on clean energy projects, a 16 percent jump from the previous year, according to data from Bloomberg New Energy Finance. This comes on top of the $54.2 billion invested in China’s renewable energy market in 2013, far more than any other country.

The data above comes from later 2014, but that is only five months ago, and 2015 is looking stronger than 2014.

  • Chinese solar investment reached a record of $12.2 billion this fall and the country could very well add more than 14 gigawatts (GW) of solar capacity this year, almost one-third of the worldwide total. And China exceeded its goal of installing 100 GW of total installed wind capacity by 2015; Renew Economy predicts China may surpass that benchmark by as much as 30 percent.

So, what I see and what others see sometimes seems disconnected, but, now that I think about it, this is the way of the world. We all see what we see …

  • Greece said it will present a package of reforms to its euro zone partners by next Monday in hope of unlocking aid to help it deal with a cash crunch and avoid default.

I guess Greece is now seeing the light. No more money unless they play by the rules. It has always been that simple.

Trade in the day; invest in your life …

Trader Ed