Clearly, the market is running from something. Some 440 points down in two days and the end might not be in sight just yet. It will take some good news, economic or otherwise, or a positive perception, to break the spell, but don’t be surprised if some days see big money buying in …
The reader below presents and interesting question, especially since my attention has been turned to energy recently.
- And, what’s up with Nat Gas? Do you see $6 to $7 anytime soon? Jeepers, what takes so long to make progress, I wonder?
Let me take the last question first. Natural gas is one of the alternative energy sources still waiting to be fully integrated into the main stream of energy use here in the US. Finding it and harvesting it is not an issue, other than the environmental issues around fracking technology. The politics of it are fairly neutral, meaning both Democrats and Republicans want to see it develop. The issue is infrastructure, meaning the US needs more end users (cars, busses, and trucks) and ubiquitous ways to distribute it to the end users (gas stations).
Currently, a good percentage of natural gas produced here in North America is exported to Europe, where it can fetch much higher prices. The reality is that the price will remain low until US demand goes up. So, no, I don’t see $6 or $7 per unit any time soon, but I do see natural gas becoming a major source of clean burning gas in the US, and I see that sometime in the next five years or so.
- Four years later, the oil and gas industry will return to work today knowing that it heavily backed the losing side and now have very little political capital with the re-elected Obama administration and the Democratic majority in the U.S. Senate.
The above speaks to the energy topic as well. Putting aside the issue of political payback, the oil and gas industry sees the handwriting on the wall – it will soon lose its ample subsidies, which will force them to raise prices in order to keep their substantial profits at record levels. Higher prices for oil and gas will spark a faster turn into alternative fuel sources, such as electric vehicles, higher fuel efficiency vehicles, and natural gas vehicles.
Below is something to consider for your investment portfolio and something to look at as a long-term trading opportunity. Take a look at the one-year chart for Emerson Electric (see below). Would you describe it as jagged? And what about that emerging market south of the US border, the same markets the US is reaching out to more and more with trade agreements?
Growing demand from emerging markets in South and Central America may be helping to overcome a slowdown in Europe and China that is hurting companies such as Emerson Electric Co. (EMR).
Get ready for a big holiday season. American consumers are gearing up and the payoff will be better economic data in the next two quarters.
At the same time, U.S. consumers are spending more as the job market stabilizes, boosting the inflow of goods made abroad as retailers restock in advance of the year-end holidays.
Trade in the day; Invest in your life …
