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Market Prefers Natural Gas Over Oil

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Market Prefers Natural Gas Over Oil

Markets reflect a preference to natural gas over oil futures and what is driving the trend.

All indicators point to another quarter of lackluster performance for the crude oil markets

However, there has been a positive optimism shown towards natural gas in the last six months. 

Clear indication for its preference over coal and oil is driven by a few factors.

Weather, Mexican demand and production shortfalls.

The markets are reflecting several factors that are influencing the figures. 

There is foreign demand for US gas coming from Mexico. 

The proximity of the resources keeps the prices accessible and is favored for consumption in southern countries.

The warmer weather expected in the US will inflate the need for power. 

EIA (Energy Information Administration) data shows that, even though total stocks are standing at 2.972 trillion cubic feet, which is 660 billion cubic feet more than 12 months ago, it is still 80 billion cubic feet below that which was predicted by analysts. 

Even while there is increased demand, production has failed to address that.

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Coal is not the new black.  Factors behind the flatline.

However, the demand for coal has remained stagnant. 

Coal has priced itself out of the competition. 

The choice to power the US homes this summer is natural gas, and this is expected to remain unchanged for the next three months. 

Whether US consumers continue to prefer natural gas over coal to power their heating systems and not just their air conditioners will be subject to production and prices in ensuing months.

The chart for coal consumption below shows the markets trend towards the mild usage. 

This is further reflected by the increase in natural gas.

J10.1

A clear picture is emerging for natural gas

With the production levels of natural gas remaining below the expected consumer driven demand, the prices will rise accordingly. 

But it is still priced cheaply enough to remain a desirable choice for the power sector natural gas consumption.

Energy suppliers for homes in the summer heat prefer natural gas. 

With summertime comes that threat of natural weather patterns that might disrupt the production and supply of natural gas.

Looking at the forecasts for both, it is necessary to gauge the chances of severe Gulf weather causing a disruption in the output and subsequent fall in supply. 

This is a precaution that is always needed when factoring in Gulf weather patterns.

Storms in the Atlantic have so far passed without disruption. 

The tropical weather systems expected during the hurricane season will continue to drive up the price of natural gas in expectation of possible disruption.

Stockpiles of crude oil are falling in the face of increased production.

It has not been announced yet if US producers will continue to produce more or follow the global trend of reduced outflow.

Reporting on this financial news – Myra. P. Saefong, Markets/Commodities Reporter with Biman Mukherji from Marketwatch – recently addressed this trend. 

It states in the article the reasons behind the continued rise in consumer demand and the reflected optimistic pricing of natural gas.

Comparing the chart below to the one above showing the indicators for coal consumption, the trend in the upward swing for natural gas is apparent.

J10.2

Outside of market influence, some independent thinkers are of the opinion that possibly turning to natural gas choices and options may be swayed by the inherent naturalness of gas as opposed to the emissions culminating from coal and oil.

Politically, natural gas may be fundamental in breaking the stranglehold that unreliable sources in foreign countries wield.

Predicting trends and analyzing alternative energy desirables is increasingly important as those markets are not sustainable for any long term forecasts.

This leads to the exchange being effected by weather, politics and demand.

Interlinked to the weather is the unpredictability of decisive forecasting. 

If the supply of any product (in this case natural gas) is already understocked in the face of increased demand, this will drive up the desirability of the commodity.

The oil markets have been hit by political unrest in Nigeria

This leads to several factors coming into focus that are linked to that market. 

The supply is effected so alternate energy sources will be focused on as a solution to the Western summertime demands. 

There is a growing reluctance to rely solely on oil, and this is reflected in the markets.

Globally, alternate energy sources are being embraced as a necessity, and this is showing in the consumption and price of coal and oil being brought into question. 

A cautious approach to sustainability for all energy supplies is strictly monitored by the EIA.

Taking all these factors into consideration complete the global picture for natural gas marketing trends. 

The general sway of opinion tends to back up the consensus that natural gas will continue on its current path for some months to come.

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US Federal Reserve Makes Emergency Interest Rate Cut

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US Federal Reserve Makes Emergency Interest Rate Cut

The US Federal Reserve has slashed interest rates in an emergency move to protect the world’s largest economy from the coronavirus outbreak, ramping up the global response as the disease spreads.

In a dramatic intervention as the G7 group of wealthy nations promised action around the world to protect jobs and growth amid the unfolding crisis, the US central bank said it was cutting interest rates by half a percentage point to a target range of 1% to 1.25%.

Launching the emergency measure as a pre-emptive strike to protect the US economy after pressure from Donald Trump to act, the Fed warned: “The fundamentals of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity.”

Jerome Powell, its chair, said: “Of course the ultimate solutions to this challenge will come from others, particularly health professionals. We can and will do our part, however, to keep the US economy strong as we meet this challenge.”

As the economic costs mount in a pivotal US election year, Trump said the Fed had not cut rates enough and should go further. Powell insisted the emergency move was not in response to the president’s pressure. “We are never going to consider any political considerations whatsoever,” he said.

Financial markets around the world rallied after the worst week for stocks since the financial crisis, in anticipation of massive coordinated stimulus to protect the global economy. The FTSE 100 closed up around 1% at 6,718.20. However, Wall Street slumped after a rebound on Monday, and was down 600 points by mid-afternoon in New York.

On a day of rapid developments in response to the escalating health crisis:

  • The G7 issued a statement saying wealthy nations would use “ all appropriate policy tools ” to tackle the economic fallout.
  • The UK government outlined contingency plans, including limits on police and fire service callouts.
  • Growing numbers of companies announced profit warnings and told staff to work from home.

Speaking on Tuesday morning before the emergency move from his transatlantic counterpart, Mark Carney said the Bank of England stood ready to cut rates if the British economy required.

In his final hearing before MPs on the Treasury committee before standing down on 15 March, when he will be replaced by Andrew Bailey, the Bank’s outgoing governor said the fallout in Britain could include an “economic shock that could prove large but will ultimately be temporary”.

“The Bank will take all necessary steps to support the UK economy and the financial system,” he added.

Carney said that lines of communication were open with other central banks, that the Bank’s rate-setting monetary policy committee (MPC) met on Monday and that it was still “assessing the economic impacts and considering the policy implications of various different scenarios”.

The next MPC rate decision is due on 26 March, after Carney leaves. However, economists at the Japanese bank Nomura said they anticipated an emergency UK rate cut before the end of the week.

Threadneedle Street has limited room to cut borrowing costs with interest rates at 0.75%, among the lowest levels in its 325-year history. There are also growing expectations that the chancellor, Rishi Sunak, will use next week’s budget to announce financial support to try to lessen the impact of Covid-19.

The coronavirus outbreak is causing widespread alarm. The Paris-based Organisation for Economic Cooperation and Development has warned global growth could be cut in half.

UK banks are starting to offer emergency financing to businesses that are showing signs of strain. Barclays, RBS and Santander have sent messages to thousands of firms to check whether factory disruptions in China have put their supply chains and cash flow at risk.

Barclays has extended its first batch of overdrafts and short-term loans, while the Guardian understands RBS is contacting about 5,000 of its large and small business customers who may be exposed to disruption, offering them similar support.

Twitter told its staff to work from home in response to the outbreak. It has made remote working mandatory for employees in Hong Kong, Japan and South Korea and said it was “strongly encouraging” its global workforce of 5,000 employees to do the same.

In the UK, the impact of the outbreak was reflected in company statements and updates on consumer behaviour. Kantar, the data company, said consumers were stockpiling hand sanitiser, with sales up 225% in February.

The British insurer Direct Line said it had received £1m of travel insurance claims relating to the outbreak. It will pay out for cancellation or curtailment of trips to places such as China, South Korea and northern Italy, if they were booked before the government advised against travel.

The product-testing company Intertek warned that temporary disruption to the supply chains of its clients in China would hit its 2020 performance, while Greggs said the coronavirus added a cloud of uncertainty to its future sales forecasts if shoppers stayed away from high streets.

The tour operator Tui also said it had suffered weaker bookings and set out plans to cut costs with a hiring freeze and postponing non-essential projects. After a plunge in its share value amid the coronavirus outbreak, the travel business is likely to be ejected from the FTSE 100 on Wednesday in the quarterly reshuffle of the index of leading UK company shares.

Copyright © 2020 theguardian.com. All rights reserved.

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How To Teach Your Kids About Credit Cards

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If you have kids in college, this article is for you. Teaching kids about credit cards is one of the most important tools you can give them The world of credit cards can be confusing and giving your kids a little education might save them a lot of headache and debt.

Students need to learn credit card lessons

BY JULIE JASON

Do you have children in college? Have you talked with them about how to handle credit?
When I wrote about this topic in 2008, students were inundated with credit card offers. According to Benjamin Lawsky, who, as a special assistant to the New York state attorney general, testified before the U.S. House of Representatives’ Subcommittee of Financial Institutions and Consumer Credit, “marketers set up tables in high-traffic spots on campus, such as cafeterias, student unions, bookstores, and other campus buildings … [and at] campus events including freshman orientation, activity fairs, athletic events and graduation fairs.”

Then came the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the CARD Act).

Now, companies cannot sign up individuals under the age of 21 without a co-signer or proof of personal financial resources. Marketers offering incentives like pizza can no longer do so while at “an institution of higher education” or even within 1,000 feet of the school. They also may not make such offers “at an event sponsored by or related to” the school. Pre-approved offers of credit to individuals under the age of 21 also are prohibited.

Still, card offers are being made, and students need to know whether to act on them. You can expect that student credit cards will have less favorable terms than those offered to people who have a credit history; students are higher-risk borrowers.
Further, students, even those over age 21, may not understand that missing a payment or making a late payment not only increases the cost of credit, but also creates a negative credit history, something everyone should work to avoid.

“A bad credit history can make it harder for you to get mortgages, car loans and credit cards in the future,” explained Matt Schulz, a senior industry analyst at CreditCards.com, a credit card comparison website.

“If you do get them, crummy credit can also cost you a fortune over the years in the form of higher interest rates and fees. It can also stand in the way of getting a job,” explained Schulz.

What can a parent do?
Since going away to college is the first step toward independence, you want to be sure that you respect your child’s need for self-sufficiency. But that doesn’t mean he or she has to go it alone. There are simply too many serious, long-lasting repercussions.

Communication and planning are key.

First, before your child leaves for school, talk to him or her about the benefits and the detriments of getting a student card. Establishing a credit history is a benefit. So is learning the discipline of paying bills on time to avoid a negative history.

Second, research options together with your child. Look online at CreditCards.com (search for “student cards”), WalletHub.com (click on “Credit Cards,” then “College Student”) or creditkarma.com (go to “Credit Cards,” then “Student”). Consider the fees, rates and penalties of different cards, and make a joint decision on the type of card that might make sense. For example, you might consider prepaid cards or secured cards. Prepaid cards work like debit cards. No credit is extended. You prepay the card, and when the balance is low, you fund it. Secured cards require a cash deposit that acts as the credit line for the account. This allows a credit limit to be established, without risk to the bank.

Third, decide on an acceptable monthly budget and what to do if it isn’t followed.  Talk about how you would like your child to communicate with you if that happens.

Fourth, determine whether you and your child agree that he or she should not accept credit card offers before reviewing them with you.

Fifth, agree on how the two of you should check in with each other. Will you talk each month about finances, perhaps setting a date in advance? Will you encourage your child to let you know about challenges before they become problems?

In the beginning, your child will benefit from some gentle guidance. You don’t want him or her to be adrift in a financial morass that could have been avoided with a little planning and care. Financial literacy calls for learning a new skill, and it is not reasonable to expect a child to go on this financial journey alone.

For information on the impact of the CARD Act, read the Consumer Financial Protection Bureau’s report (the Card Act Report), which you can find at https://www.consumerfinance.gov.

* * *
Julie Jason, JD, LLM, a personal money manager (Jackson, Grant of Stamford, Conn.) and award-winning author, welcomes your questions/comments ([email protected]). To hear Julie speak, visit www.juliejason.com/events.

(c) 2018 Julie Jason.
Distributed by King Features Syndicate Inc.

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JPMorgan Chase’s China License a Huge Win

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The financial sector seems to be alive and well under Donald Trump’s new administration. For all his talk of demonizing Wall Street, Trump seems to have taken a shine to banks and their executives. And even though President Trump has a rocky relationship with China, one of his closest banks just did something no bank has ever done before – receive a license to underwrite corporate bonds in China’s interbank bond market. Will other banks be far behind?

Is the JPMorgan Chase’s Relationship With the President the Reason for the Historic License?

JPMorgan Chase is living large. The bank’s CEO, Jamie Dimon, has a particularly close relationship with our new president, and was in fact Trump’s first pick for Treasury Secretary. The bank is up about 24% since the election. Last week, President Trump signed an executive order to loosen regulatory restrictions on banks and lenders by targeting the Dodd-Frank act, essentially giving JPMorgan the opportunity to double its lending, which is already near an all time high. Now, the largest U.S. lender just got entry into China’s $6.4 trillion bond market – the third largest in the world. Is it all connected? Is Dimon’s relationship with Trump to credit for its good fortune?

Yes and no.

Dimon is a close advisor and friend to Trump, meaning that for all his promises to clean up Wall Street, Trump’s actions are all currently focused to help the financial sector. But though Dimon can advise Trump, it’s ultimately up to the bank itself to chart its own course. And JPMorgan has done a stellar job of that.

The bank was granted a business license in September of 2016 to operate a fully owned fund management business in China thanks to the Chinese Central Bank’s decision to loosen entry restrictions. That license led to its approval to underwrite corporate debt in the China market, which is JPMorgan’s bread and butter. The bank earned about half of its investment banking fees from debt-underwriting last year, meaning that it now has the ability to double its revenue with one new market.

Watch this news clip from CNBC where JPMorgan Chase’s CEO, Jamie Dimon talks about President Trump’s reforms:

Thanks to China loosening entry restrictions, JPMorgan won’t be the only U.S. headquartered bank in town for long. But between that time and today, the lender should see ample profits and develop some competitive barriers to entry for other banks. Between the China license and the repeal of Dodd-Frank, expect shares of JPMorgan Chase & Co. (JPM) to rise UP.

 

The executive order for the repeal of Dodd-Frank Act has been signed, see the whole story here!

 

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