- Crude gyrates… but it looks as if $45 is history for now
- How to collect $1,677 of income from the oil industry in one month
- Byron King on the Russians, the Saudis, ISIS… and crude
- Signs of wage pressures (for Americans who have jobs, anyway)
- A bad day to be working at SABMiller… why we have three Jim Rickards services… The 5 hears from a “millionaire next door”… and more!
Up huge on Friday, down nearly as huge on Monday — after a boring September, oil has been anything but during October…
Crude oscillated around $45 almost all of last month. Last week, it broke out past $50, only to retreat yesterday when the International Energy Agency issued a forecast that the global market will be oversupplied next year — slow global demand and increased supply from Iran.
As we check our screens this morning, it’s recovered to $48.03 — still solidly above September’s tight range.
Last Thursday, we shared Jim Rickards’ outlook — $50-60 crude from now until 2017, with occasional bursts to both the upside and downside. That’s the range and the time frame Saudi Arabia figures it’ll take to wreck the U.S. fracking industry.
This morning, we get the takes of two more Agora Financial editors, each approaching the question from his own specialty…
“Oil prices are finally moving higher and will not likely trade back to the lows we saw earlier this year,” says our income specialist Zach Scheidt.
“The Energy Information Administration noted last week that U.S. crude production fell 120,000 barrels a day in September. Meanwhile, there are rumors of discussions between Russia and Saudi Arabia to potentially reduce Middle East oil production, which would allow the price to move higher. (Russia’s economy is struggling because the country relies heavily on oil exports.)”
That’s been great news for readers of Zach’s entry-level advisory Lifetime Income Report. The share price of his most recent recommendation is up 10%… while previous oil-themed recommendations will be poised to raise their dividends.
Capital gains and income — a win-win.
It’s also possible to generate still larger income streams from energy companies — as Zach has been showing his premium subscribers.
“These payments,” he explains, “are thanks to a special loophole that I’ve found that allows you to collect instant income payments from stocks that you own or stocks that aren’t even in your account yet.
“For example, in just the past month, income investors were able to collect $232 from oil drilling equipment company National Oilwell Varco (NOV), an instant $520 from Vanguard Natural Resources (VNR), a payment of $408 from oil service company Halliburton (HAL) and an instant $517 from the iPath Crude ETN (OIL).”
That’s $1,677 of income payments in a month — Zach’s perpetual income strategy in action.
The strategy isn’t for everyone. To get the most out of it, you need a good $20,000 in capital to get started. But if you’re intrigued, you should know our publisher is backing up Zach’s performance with a one-of-a-kind guarantee — try one of Zach’s trades, and if it doesn’t work out, we’ll send you a check to cover the losses. You’ll find all the details of this offer right here.
“It’s time for oil prices to head back upward,” says Byron King — wearing both his oil field geology and military-affairs hats today.
While oil has broken above $45, it hasn’t moved in the way one might expect now that Russia is dropping bombs on the Middle East. Crude doesn’t respond to geopolitics the way it used to. But that won’t last, Byron suggests.
First, the essential background: “There are many political and military reasons for Russia to make a move in Syria. Syria is a longtime Russian ally, going back to Soviet Union days. Russia wants to counter what it perceives as NATO expansionism, especially from Turkey — and then there’s plenty of history between Russia and Turkey.
“Ideologically, Russia has no use whatsoever for Sunni-Wahhabi (aka Saudi-sponsored) militant Islam — aka ISIS. Meanwhile, we’re witness to an overall U.S. strategic policy collapse in the Middle East and North Africa (MENA).”
On that point, a brief follow-up to something we mentioned a month ago. The Pentagon spent $500 million training up “moderate” Syrian rebels — nearly all of whom were captured by hard-core jihadis like ISIS and al-Qaida. A few of them joined up with the jihadis.
Days later, the head of U.S. Central Command acknowledged to Congress the program succeeded in training “four or five” rebels.
Last week, the Pentagon abandoned the program.
“So what do we see now?” says Byron. “We see Russia coordinating military action with Iran and Iraq, as against ISIS in Syria — and there are those who believe (including me) that ISIS has much to do with Saudi Arabia and Gulf emirates backing, in one form or another.”
That is, in the centuries-old conflict between Sunni and Shia Islam, “Russia has allied with Shiite factions — Iran and Iraq — against Sunni religious factions.”
Also noteworthy: One week ago today, the Russian navy launched cruise missiles from the Caspian Sea. “These Russian weapons flew across Iran and Iraq and struck targets in Syria.
“By shooting missiles through the ‘back door’ into Syria, Russia has put the entire region — and the U.S., if anyone cares — on notice that there’s a new military consideration.
“Every fixed target in the region is now at risk of Russian attack. Every national capital and building therein. Every airport and runway (including ones that host U.S. jets). Every power station. Every oil production facility. Every pipeline and pumping station. Every oil loading terminal. Every shipyard and pier. If something has a lat-long, it’s a target.
“This is a war Saudi Arabia cannot win,” says Byron. “Saudi Arabia can’t fight Russia. Saudi Arabia’s longtime ally, the U.S., is proving feckless. Meanwhile, the U.S. military of the 1980s, 1990s and 2000s is wearing out and no longer a reliable ally — not for where this is all heading.
“Sooner or later — likely sooner — I suspect that Saudi Arabia will announce oil production cutbacks. Saudi Arabia will give some reason or another — maintenance of facilities, oil markets rebounding, ‘mission accomplished’ or some such.
“Deep down, though, Saudi leadership knows how to read a map. Now that Putin and Russia have displayed their latest weaponry, and willingness to use it — oh, and considering their Shiite alliance — it’s time for oil prices to head back upward.”
You have to look very hard to see the movement in the major U.S. stock indexes this morning. They’re all in the green, but by only a tenth of a percent. The S&P 500 rests at 2,018.
The Street buzz is about the done deal between the world’s top two beer producers: After holding out for more than a month, SABMiller finally got an offer from Anheuser-Busch InBev that it liked. Together, they’ll command 30% of global beer market share.
The middle managers at SABMiller better update their resumes. Back in March, our Chris Mayer described the MO of 3G Capital — the Brazilian outfit that bought Anheuser-Busch in 2008.
“They pulled down executive walls,” said Chris. “They cut the number of BlackBerrys in executives’ hands from 1,200 to 720. They put the brewer’s fleet of corporate jets up for sale. Everyone would travel economy class henceforth. No more free beer. No more free Cardinals tickets. No cash bonuses.”
The Brazilian trio behind 3G are as ruthless as cost-cutters come, but the results were undeniable: AB InBev shares tripled within five years.
Gold won’t give up its latest rally without a fight. The bid slipped overnight but recovered this morning and at last check was $1,166.
The $1,165-1,170 level has proven to be fierce resistance ever since gold collapsed through that level in mid-July. We shall see…
For the lucky Americans who want and have jobs, a pay increase might be on the way.
Or so we surmise from this morning’s Small Business Optimism Index put out by the National Federation of Independent Business. The headline number was nearly unchanged — up 0.2, at 96.1 — but what stood out was the “single most important problem” part of the survey.
Taxes and regulations remain atop the list… but look what checks in at No. 3…
Says NFIB chief economist Bill Dunkelberg: “The percent of owners citing the difficulty of finding qualified workers as their Most Important Business Problem increased and is now third on the list behind taxes and regulations. This is the highest reading since 2007 and suggests that employers will continue to face wage pressure in order to attract and keep good employees.”
“As a subscriber, I agree with the earlier subscriber who questions the third Rickards product,” reads an entry in our virtual mailbag.
“It seems to more than one of us that someone is trying to ‘milk us.’ Being required to pay for three separate services is both an insult and appears that all you are interested in is selling products, not your subscribers. I was in business for myself for over 40 years, so I feel like I have some understanding of servicing customers versus selling additional products.”
“I call BS!” reads a concurring entry. “When I bought a Jim Rickards advisement service, I expected his best advice. Not having to buy three services and having to interpret them and decide where my limited resources should be allocated.
“I too feel milked and taken advantage of, not the least because I keep being sent sensational 25-page infomercials about ‘mystery’ government-repressed insider info that I have to pay huge fees for just to see what the hell it’s talking about.”
The 5: Umm… No one is “required” to buy all three of Jim Rickards’ services.
In fact, you can sign up for his entry-level letter Strategic Intelligence and learn everything Jim has to say about preserving your wealth during the collapse of the global monetary system.
The other two services aim to grow your wealth — aggressively. They feature higher-risk, higher-reward plays that aim to multiply your money in a matter of six-12 months. They’re not for everyone. Each plays off a distinctive aspect of Jim’s analysis — the global currency wars and the “indications and warnings” of the sort used by the U.S. intelligence community.
Frankly, if you want to take advantage of both his high-end services, you need a substantial net worth. And we charge for them accordingly. If your portfolio is such that you can take advantage of only one at this time, you can’t go wrong with either — choose the one whose message resonates with you more, either Currency Wars Alert or our brand-new entry, Rickards’ Intelligence Triggers.
With any luck, you’ll make enough money using one of them that you’ll sign up for the other. At least that’s our fervent hope — that way, you’re happy and we’re happy.
“I have picked up some sense of controversy about the addition of David Stockman to your very sharp quiver of arrows,” reads an astute reader — also reacting to our mailbag of late.
“I have been reading his Contra Corner commentary for over a year and would only like to compliment you on adding one of the most incisive minds to your ‘agora’ that it has been my privilege to read. Great addition. Thanks so much.”
“Oh, please, have the ‘reader’ get a copy of The Millionaire Next Door,” writes a reader who takes exception to a reader comment here yesterday: “Show me the millionaire that doesn’t have direct knowledge of bankruptcy in this country and I’ll show you a trust fund baby.”
“Trust fund baby, my a$$!” counters our reader today.
“I was one of 10 kids born to a dentist in a mill town. I started a business, and run it conservatively. I have no debt. Zero! I’ve never known bankruptcy, and never will.
“Stick it, dear ‘reader.’ There are probably another 100,000 of us.”
The 5: We have no idea about the numbers… but we’re a little skeptical that starting a small business and living frugally is the key to riches, your own experience notwithstanding.
In his book Fooled by Randomness, Nassim Nicholas Taleb points out a glaring oversight in The Millionaire Next Door: If small-business owners have common character traits that lead to financial success, how does that account for the fact most small businesses don’t succeed? “This tells me,” writes Taleb, “the unique trait that the millionaires had in common was mostly luck.”
Or, at the very least, a decision-making acumen lacking in their peers.
Meanwhile, we’re all for frugality, but it seems the authors had trouble following their own advice. Co-author Thomas Stanley died earlier this year in a car crash. He was driving a Corvette…
Best regards
Dave Gonigam
The 5 Min. Forecast
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