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Call Today: Oil & Natural Gas - Supply, Demand, Prices and Trends

Call Today: Oil & Natural Gas - Supply, Demand, Prices and Trends - oildialin

 

"I often wonder how far I'd go for love. I guess it all depends on the price of gas." 

 -Jarod Kintz 

 

We will be hosting an Expert Call featuring Tancred Lidderdale from the Energy Information Administration (EIA) for an in-depth discussion on the outlook of oil and natural gas.

 

The call titled "Oil & Natural Gas: Supply, Demand, Prices and Trends" will be held TODAY, November 26th at 11:00am EST

CALL DETAILS

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 658898#
  • MaterialsCLICK HERE 

KEY TOPICS OF DISCUSSION WILL INCLUDE:

  • Oil
    • Key variables that drive the price of oil
    • Expectations for 2014 supply and demand
    • OPEC's ability to impact price
    • Why OPEC's surplus capacity is growing
    • Declining U.S. oil demand
  • Natural Gas
    • Intermediate supply outlook for natural gas
    • Current natural gas supply versus historical level
    • Drilling and drilling productivity
    • Outlook for the renaissance in U.S. natural gas
    • Current and future natural gas demand
  • Gasoline
    • Expectations heading into 2014 for demand and supply
    • Longer term trends
    • Price set versus the price of crude
    • Price implications from the spread on WTI/Brent

ABOUT TANCRED LIDDERDALE

Tancred Lidderdale is the supervisor of the team that produces the Short-Term Energy Outlook for the Energy Information Administration (EIA). Before joining the EIA in 1991, he worked for 12 years with Atlantic Richfield Company in their petrochemical and refinery operations, and foreign crude oil trading. He received his B.S. degree in Chemical Engineering from Georgia Tech, his MBA from the University of Houston, and his Ph.D. in Economics from George Mason University.

 

 

For more information please email .


Underneath the Hood

Client Talking Points

EURO

The European Central Bank (ECB) bureaucrats have to be miffed. In spite of the rate cut, and French and Italian jawboning, the EURO just won’t go down. Why? It's primarily because the US DOLLAR won’t go up! Meanwhile, Janet Yellen is the more incremental dove here. The ECB’s balance sheet doesn’t look like the Fed.

RUSSIA

"Putin Power" (or lack thereof) is turning into an interesting story yet again as the price of Oil makes a series of lower-highs and Ukrainians go after the pro-Russia central planning thing. The Russian stock market leads the losers this morning down -0.8%. Old Putin's market is down over -3% year-to-date. Live by oil, die by oil...

UST 10YR

The 10-year yield is down 4 basis points to 2.72% in the last 24 hours. Gold goes up $20/ounce on that. Getting #RatesRising right had you get Gold (down) right. The question now is does Gold stabilize as yields make lower-highs?More to be revealed.

Asset Allocation

CASH 44% US EQUITIES 8%
INTL EQUITIES 8% COMMODITIES 8%
FIXED INCOME 8% INTL CURRENCIES 24%

Top Long Ideas

Company Ticker Sector Duration
FXB

Our bullish call on the British Pound was borne out of our Q4 Macro themes call. We believe the health of a nation’s economy is reflected in its currency. We remain bullish on the regime change at the BOE, replacing Governor Mervyn King with Mark Carney. In its October meeting, the Bank of England voted unanimously (9-0) to keep rates on hold and the asset purchase program unchanged.  If we look at the GBP/USD cross, we believe the UK’s hawkish monetary and fiscal policy should appreciate the GBP, as Bernanke/Yellen continue to burn the USD via delaying the call to taper.

WWW

WWW is one of the best managed and most consistent companies in retail. We’re rarely fans of acquisitions, but the recent addition of Sperry, Saucony, Keds and Stride Rite (known as PLG) gives WWW a multi-year platform from which to grow. We think that the prevailing bearish view is very backward looking and leaves out a big piece of the WWW story, which is that integration of these brands into the WWW portfolio will allow the former PLG group to achieve what it could not under its former owner (most notably – international growth, and leverage a more diverse selling infrastructure in the US). Furthermore it will grow without needing to add the capital we’d otherwise expect as a stand-alone company – especially given WWW’s consolidation from four divisions into three -- which improves asset turns and financial returns.

TROW

Financials sector senior analyst Jonathan Casteleyn continues to carry T. Rowe Price as his highest-conviction long call, based on the long-range reallocation out of bonds with investors continuing to move into stocks.  T Rowe is one of the fastest growing equity asset managers and has consistently had the best performing stock funds over the past ten years.

Three for the Road

TWEET OF THE DAY

I have never seen so many market geniuses be bearish on a market they can't time @KeithMcCullough

QUOTE OF THE DAY

"To think is easy. To act is hard. But the hardest thing in the world is to act in accordance with your thinking." - Johann von Goethe

STAT OF THE DAY

About 1 in 6 unemployed workers are addicted to alcohol or drugs -- almost twice the rate for full-time workers, according to the government's National Survey on Drug Use and Health. The survey shows that 17% of unemployed workers had a substance abuse disorder last year, whereas 9% of full-time workers did so. The numbers are self-reported, and therefore, could be even higher in reality.


November 26, 2013

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BULLISH TRENDS

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BEARISH TRENDS

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This indispensable trading tool is based on a risk management signaling process Hedgeye CEO Keith McCullough developed during his years as a hedge fund manager and continues to refine. Nearly every trading day, you’ll receive Keith’s latest signals - buy, sell, short or cover.


New Ideas

“Should we care about how new ideas begin?”

-Jon Gertner

 

That’s a very basic question Jon Gertner asks at the beginning of a book I’ve been grinding through as of late – The Idea Factory: Bell Labs and the Great Age of American Innovation.

 

The story of innovation at Bell Labs is better than the book. It’s a uniquely American story that most entrepreneurs, innovators, and patriots can associate with. It’s all about the struggle, the wins, and the losses. The boys at Bell Labs (yes, they were all boys) shared a culture of learning and evolution. They weren’t afraid to make mistakes.

 

There was a little bit of everyone in their ranks. “Kelly, Fisk, Shockley, Shannon, Pierce, and Baker. Some of these names are notorious – Shockley won the Nobel Prize in Physics in 1956… in Shannon’s case, it was mathematics and artificial intelligence, while remaining largely unknown by the public…” (Gertner). A multi-factor approach perpetuated their growth.

 

Back to the Global Macro Grind

 

We’re trying to build that culture of learning both internally (working as a team) and externally (collaborating with clients). We don’t have any Nobel laureates on staff, but we do allow the lowest level IQs (hockey players like me) to contribute.

 

Do we care how new ideas begin? Nope. Not at all. Mr. Macro Market decides that for us. Our research process is grounded in the uncertainty of it all. That’s what makes it so exciting. We are humble observers of time and space.

 

This, as I pointed out earlier, isn’t a new style of thinking. Per Gertner, to a degree Thomas Edison made it cool at Bell Labs too. On ideas, “…how they worked was to Edison less important… he read compulsively… he scorned talk about scientific theory…” (pg 12). Imagine Edison had to deal with Keynesian “economists”!

 

Moving along…

 

A few weeks ago (November 14th) I wrote an Early Look titled “A New Idea”, so I’m going to go back to milking that cow this morning (plural title) with my “everyone’s a winner” position at Mr. Macro Market’s centrally-infected casino.

 

To review, I have my market bets spread across the macro table:

 

1. CASH = 44% (need lots of cash in case this sucker implodes)

2. FX = 24% (lots of alpha to be generated on the other side of the USA Burning The Buck)

3. INTERNATIONAL EQUITIES = 8% (some of these markets love Down Dollar)

4. US EQUITIES = 8% (the variance of US Sector Returns is testing all-time lows)

5. COMMODITIES = 8% (we’re still rolling the bones on Gold)

6. FIXED INCOME = 8% (no-taper in DEC is a big Bond Bull Lobby @PIMCO wants)

 

Crazy Eights!

 

And, again… to be clear, I realize that in some cases I am buying-the-damn-bubble #BTDB (both former ones like Gold and Bonds, and news ones like US stocks) here. But what do I care about the “why” on these new ideas anyway?

 

The #OldWall idea of trying to call tops has rendered itself useless. They are processes, not points.

 

Looking at the all-time-bubble-highs in US stocks, what is signaling caution?

 

1. VOLUME – vs its TREND, US Equity volumes have tracked down -11% and -14%, respectively, at the last 2 closing highs

2. VOLATILITY - front month VIX has been making higher-lows as SPX tracks higher-highs on falling volume

3. BREADTH – at the closing high (Russell2000 = 1124) yesterday’s breadth was negative (more decliners than gainers)

 

Does that mean we can all jump up and down @Hedgeye headquarters today and call “the top”? Nope. It means what it means. With “it” usually meaning something new.

 

On the other side of the caution signs, there are plenty green lights:

 

1. EQUITY FLOWS – US Equity fund INFLOWS are trending at fresh YTD highs

2. BOND FLOWS – US Bond Fund OUTFLOWS are trending at fresh YTD highs

3. TRADE and TREND SIGNALS – for SPX, RUT and NASDAQ remain bullish

 

So what matters more, internal market signals or external flows? I don’t know, yet. But I am certain that Mr. Macro Market will decide, and not me. That’s not a new idea either.

 

Neither is buying on red and selling on green. So in between now and whenever whatever this is ends, within our immediate-term risk ranges for stocks, bonds, commodities, and currencies, we’ll just keep doing more of that. Keep moving out there.

 

Our immediate-term Global Macro Risk Ranges are now as follows:

 

UST 10yr Yield 2.69-2.81%

SPX 1

VIX 11.85-13.62

USD 80.61-81.29

Brent 108.81-111.63

Gold 1

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

New Ideas - Chart of the Day

 

New Ideas - Virtual Portfolio


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – November 26, 2013


As we look at today's setup for the S&P 500, the range is 17 points or 0.58% downside to 1792 and 0.36% upside to 1809.                           

                                                                                                    

SECTOR PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2A

 

EQUITY SENTIMENT:

 

THE HEDGEYE DAILY OUTLOOK - 10                                                                                                                                                                  

 

CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 2.43 from 2.45
  • VIX closed at 12.79 1 day percent change of 4.32%

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:45am/8:55am: ICSC/Redbook weekly retail sales
  • 8:30am: Sept., Oct. building permits; Oct. est. 930k
  • NOTE: Oct. housing starts delayed until Dec. 18
  • 9am: S&P/Case-Shiller 20-City m/m, Sept., est. 0.9%
  • 9am: S&P/CS Home Price Index, Sept., est. 165 (prior 164.53)
  • 9am: FHFA House Price Index m/m, Sept., est. 0.4% (pr 0.3%)
  • 10am: Conference Bd Consumer Conf Index, Nov., est. 72.5
  • 10am: Richmond Fed Manuf. Index, Nov., est. 4 (prior 1)
  • 10am FDIC announces 3Q bank, thrift industry earnings
  • 4:30pm: API weekly oil inventories

GOVERNMENT:

    • House, Senate aren’t in session
    • Obama to discuss economy during California visit; to meet with film studio chiefs, says Hollywood Reporter
    • Supreme Court to issue list of cases it plans to take up
    • Washington State genetically modified food labeling vote count expected to be completed
    • Obama seeks Iran deal support; Reid says Senate my act

WHAT TO WATCH:

  • FDIC’s Hoenig to weigh easing bank leverage rule he championed
  • Berkshire said to cut Energy Future bond stake by a third
  • Bayer in talks to buy cancer partner Algeta for $2.4b
  • Samsung bid to put Apple patent case on hold rejected by judge
  • Einhorn’s Greenlight Capital has $402m stake in Micron
  • Silver Lake technology unit said to plan new $1b fund
  • Intel said to seek $500m in sale of web-based TV startup
  • Bain said in talks to sell Applied Systems for $1b+: Reuters
  • Citi loses bid to block Abu Dhabi investment arbitration
  • Sony says entertainment target conservative amid cost cut push
  • China said to plan crackdown on banks’ loan limit evasion
  • Prologis to lift Japan rents, build warehouses on Abenomics
  • SpaceX delays rocket launch as Musk cites being “careful”
  • Online gambling begins today in NJ

AM EARNS:

    • Alimentation Couche Tard (ATD/B CN) 8:37am, $1.23
    • Barnes & Noble (BKS) 8:30am, ($0.03)
    • Beacon Roofing Supply (BECN) 8am, $0.62
    • Brown Shoe (BWS) 7am, $0.59
    • Chico’s FAS (CHS) 7:15am, $0.25
    • Children’s Place (PLCE)  6am, $1.85
    • Cracker Barrel (CBRL) 7am, $1.15
    • DSW (DSW US) 7am, $0.58
    • Eaton Vance (EV) 8:35am, $0.60
    • Hormel Foods (HRL) 6:30am, $0.54
    • Laclede Group (LG) 8am, ($0.07)
    • Movado Group (MOV) 7am, $0.87
    • Pall (PLL) 7am, $0.68
    • Signet Jewelers (SIG) 6:30am, $0.42
    • Tiffany & Co. (TIF) 6:59am, $0.58

PM EARNS:

    • Analog Devices (ADI) 4pm , $0.58
    • Hewlett-Packard (HPQ) 4:04pm, $1.00 -- Preview
    • Infoblox (BLOX) 4:05pm, $0.09
    • TiVo (TIVO) 4:01pm, $0.06

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Gold Fix Drawing Scrutiny Amid Knowledge Tied to Daily Eruption
  • Frozen-Turkey Pileup Signals Thanksgiving Discount: Commodities
  • WTI-Brent Crude Oil Spread Narrows for First Time in Five Days
  • Soybeans Drop From Two-Month High on South American Crop Outlook
  • Japan Dismantles Rice Output Policy as Abe Targets Farming
  • Gold Swings Above Four-Month Low as Investors Weigh Fed Stimulus
  • Copper Swings as Investors Weigh Demand View Against Drop Bets
  • Sugar Drops to 11-Week Low in New York on Ample Supply Outlook
  • Iron Ore Seen Dropping From Westpac to Goldman as Supply Expands
  • Canada Grain Exports From Vancouver Seen Rising to All-Time High
  • Brazil Ethanol Losing Competitiveness to U.S.: Chart of the Day
  • Marcellus Goliath Transforms Region to Gas Trade: Energy Markets
  • Copper Market Tightens in 3Q on Demand Rise, Output Decline
  • Tate & Lyle Urges EU to Abolish a Sugar Duty as Bloc Quotas End

THE HEDGEYE DAILY OUTLOOK - 5

 

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - 6

 

GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 3

 

THE HEDGEYE DAILY OUTLOOK - 4

 

EUROPEAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 7

 

ASIAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 8

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - 9

 

 

The Hedgeye Macro Team

 

 

 

 

 

 

 

 

 

 

 

 

 


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