Oil Producing Sovereign Wealth Funds (Source: Wikipedia)
| Country | $Billions |
| UAE | 1078 |
| Norway | 893 |
| Saudi Arabia | 762 |
| Kuwait | 548 |
| Qatar | 256 |
| Russia | 181 |
| Khzakhstan | 156 |
| Algeria | 77 |
| Libya | 66 |
| Iran | 62 |
| Brunei | 40 |
| Azeraijan | 37 |
| Iraq | 18 |
| Bahrain | 11 |
| Mexico | 6 |
| Total | $4,191 |
The oil bust has stranded high yield debt, slashed capex budgets and will cause major layoffs. One third of all capex in the S&P 500 over the last 5 years has come from the energy shale boom. The negative multiplier effects in our economy will be many.
In addition to economic headwinds we also have financial flow headwinds. Food for thought: The oil producing countries which were running a surplus and buying our financial assets and recycling their petro-dollars will likely be running deficits. At $40-50 oil they will be net sellers of financial assets. What was once a tailwind for the bull market is now a head wind. These countries have a combined asset value of $4.2 Trillion. After Dodd-Frank the ability of Wall Street to handle size like this is greatly impaired. Clearly not all $4.2 trillion will be for sale but it is about the flow and direction. I expect increased volatility over the next several years as a result.
Technical and fundamental analyses are increasingly lining up to generate a significant swoon in financial markets. Negative Reflexivity is on the cusp of taking hold of the situation.
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Love the analysis.
I notice Canada is shamefully absent from the list of countries that saves oil wealth for its citizens, but we clearly don’t need that up here.
(which is why we don’t have a budget, because for some reason these idiots get away year after year assuming no oil price shocks when you would be fired for that in the private sector)
Definitely some timely ‘where the puck’s going’ analysis!
PS
rewatched Predator over the wkend. Classic from America’s heyday.
Can’t believe mainstream press misses
great insight like that.Good news is the top 5 on you list ain’t selling anything anytime soon.The rest are always
short dough,so headwinds should be
mild, but for sure present.
Does it mean better sell financial stocks now ? or market in general ? I have WFC for long time hold. Should I get out from financials? Thanks.
rouge wave,
I love predator. Two future governors in that movie.
Gorby,
Mainstream is not paid to analyze.
Tom,
WFC is the best of the bunch. It depends how big a position it is for you.
Global Shockwaves To Come From Swiss Currency Bombshell – Mike Maloney
16 mins
https://www.youtube.com/watch?v=BnRX4LOORkQ
You mentioned Dodd-Frank and the ability of Wall Street to handle $4.2 trillion. Are you referring to the section of Dodd-Frank regarding the banks limited to using 3% of their capital or is it about something else ?
hynullshit,
he’s referring to the regulation that limits banks from taking on inventory (securities) in order to make directional bets, hedge against clients, take on proprietary trades etc. In the past, bulge bracket firms could use the firm’s balance sheet as a backstop and make major trades in all asset classes in both directions as market makers and also as prop traders. This was a major source of liquidity, so when it dried up, both due to the GFC, and later due to Dodd-Frank, much of that risk has been shifted to other much smaller players, so net liquidity in the market is lower. This is an issue for less liquid markets, especially markets such as structured credit or elsewhere in fixed income land where issues get priced between dealers/customers and not on exchanges. Therein lies the opportunity, as you’ve seen a few of the top performing hedge funds over the last few years make a killing off this, essentially taking the risk from the banks who were force selling these assets to anyone who would take them off their hands. Wouldn’t be surprised to see something similar happen in the energy hy market over the next year or so.
hybullshit,
What forgetalpha said is dead spot on. Increases the volatility, opportunity and risks.
One was a halfway decent governor, the other was a pompous, half witted waste of skin elected by Ole’ und Sven, AKA brain dead twits trying to be progressive in Minnesota…..
$EPV trades like it is Eurotrash banks 2x short. Has had a nice measured dump since the ECB QE miracle has been masturbated throughout the financial news. After the effects of the show if there is one. Could be worth a look.
Blue, bonds don’t seem to be reacting to crazily to the news from the ECB, and markets are up – but not much really.
How long before we fade this news?
disclosure: I have been long this market all month long and finally +ve and beating the index
It looks like WTI may take out Jan 13th low.
Completely off topic, while driving to Whitefish and on to Calgary listened to Audio Book: “Company We Keep” – Robert and Dayna Baer. The authors narrate. It is outstanding.
Think I got the pebble today Blue.
The pebble gorby?
alpha
https://www.youtube.com/watch?v=j1wjvP-raOI
ironbird,
Thanks
jimmy_two_times,
we should know soon. if we go to news highs then i am wrong. about this set up. however they are coming quicker and quicker. This chop is killing bears and bulls alike.
gorby,
if your time frame is three days you have grabbed the pebble. if it is longer I may still have the pebble.
IW40,
It looks like oil wants to go onto the 30’s but we shall see.
http://peterlbrandt.com/major-eruption-ready-occur-global-stock-markets/
Have a look Blue .. his charts speak
Juice,
Thanks. I have seen those. I am not religious. If we have a clean breakout I will flip bullish. However everything else I track says no way.
Mom can I please keep the peeble.
No son, give it back the nice man.
But mom……
rick rule ?’s
http://www.sprottglobal.com/media/67878/rick_rule_q_a_and_commentary_-_1-21-15.mp3
I didn’t know Mexico was so rich. 6 billion whole dollars?
Dr. Fly,
Theft is legend there. They just killed 43 college students who protested a mayor of a town.
“Theft is legend there. They just killed 43 college students who protested a mayor of a town.”
Dude, that’s not theft, I’m pretty sure that’s murder.
ryan,
yes murder and theft. point is they are corrupt and evil beyond belief. Thanks for pointing out my lack of clarity
bitcoin trading 25 mins
https://www.youtube.com/watch?x-yt-ts=1421914688&v=wTNUEbzYYrc&feature=player_embedded&x-yt-cl=84503534