Economic Outlook

Bank of America announced a 4 percent drop in net income for the final quarter of 2019, while that of Goldman Sachs fell by 24 percent.

Investors, meanwhile, are eyeing numbers closely as the financial reporting season comes into full swing and income growth of firms listed on the S&P 500 in previous quarters has remained flat.

Stock markets have performed well despite near-zero corporate earnings growth, with many investors anticipating a turnaround in profits in 2020 as global growth stabilizes and trade tensions diffuse.

“The market rally indicates that investors expect higher earnings growth again in 2020,” Alexander Voigt, Founder and CEO at daytradingz.com, told The Epoch Times in an email. “The China trade deal and presidential elections are the main influential factors. I expect a stronger outlook during the current earnings release period and a subsequent higher earnings growth for 1Q20 and 2Q20,” he added.

Others expect lackluster figures…CLICK for complete article

It’s Time to Pay Attention to Commercial & Industrial Loans

Commercial and industrial loans (C&I loans) at all commercial banks fell to $2.33 trillion as of January 1, the lowest since March 2019, according to Federal Reserve data on commercial banks, released on Friday. C&I loans peaked in August last year at $2.38 trillion and have since fallen 1.7%. This has occurred despite three rate cuts by the Fed over the period.

C&I loans are used by businesses for working capital or to finance capital expenditures. Working capital loans are usually collateralized by receivables and inventories. Capital expenditure loans are collateralized by equipment and the like.

These loans are often credit lines with floating interest rates – which are very low and very appealing for borrowers. And banks are eager to extend these loans and are offering them aggressively, even to my little company. So there is no issue at this side of the equation…CLICK for complete article

How The Trade War Ceasefire Will Impact The Energy Industry

Although the focus of those in the oil markets has been focused on the tensions between Iran and the U.S. in recent days, with many now thinking that the worst of this impasse has now passed (it has not), primary focus is now set to return to the previous major market driver: the U.S.-China trade war. As U.S. President Donald Trump noted recently in a conversation with China’s Vice Premier, Liu He: “Every time there’s a little bad [trade war] news, the market would go down incredibly. Every time there was a little bit of good news, the market would go up incredibly. And yet, other news that was also very big, the market just didn’t really care. They just seemed to care about the deal with [the] USA and China, and that’s okay with me.” This Wednesday, the U.S. and China are set to sign a ‘Phase 1’ deal that theoretically brings to an end 18 months of trade warfare but the reality may be somewhat different. CLICK for complete article

Can Six Myths Keep The Market Going?

Piper Jaffray forecasts by year end 2020, the S&P 500 (SPX) will hit 3600, a 12.8 % increase. Of eighteen analysts interviewed by Marketwatch only three forecasters expect a decline for the SPX. Will the SPX reach 3600?  The SPX has soared over 400 % from a low of 666 in 2009 to over 3200 at the close of 2019. Mapping the SPX ten year history onto a psychology market cycle map of growth and decline phases poses interesting questions. As the market has zoomed over 400% upwards over ten years, it is clearly in the Mania Phase. Yet, the US economy is growing at the slowest rate of any economic recovery since WWII at 2.2 % GDP per year, why the disconnect? CLICK for complete article

Why Pirates Are Giving Up On Oil

Piracy in some of the world’s most critical oil chokepoints is on the rise–but now, pirates are resorting back to another method of income generation better suited to times of lower oil prices: taking human captives.

Sometimes, black market oil prices just aren’t lucrative enough. In the days of $100 oil, oil theft was a hot commodity. Today, pirates are supplementing their stolen oil income with ransomed sailors, creating a whole new set of problems for the oil industry to tackle.

Where Piracy is Hot, and Where It’s Not

Piracy is being dealt with fairly successfully in certain regions of the world. In others, efforts to shore up maritime security have failed. But the threat of pirates taking human captives is alive and well in all regions.

East Africa – Once a piracy hotspot, piracy off Somalia’s coast has fallen in recent years as the international community–including Iran–stepped up to tackle this pressing problem that disrupted the flow of goods, including oil, through the critical oil route. Somalia, too, has stepped up its ability to prosecute pirates. The East Africa area includes the Bab-el-Mandeb between Yemen and Djibouti, as well as the Gulf of Aden. Piracy incidents here hit a high of 54 in 2017, before falling back to just 9 in 2018, according to One Earth Future’s annual report The State of Maritime Piracy 2018….CLICK for complete article

Druckenmiller on 2020 Outlook, Monetary Policy, U.S. Election

Watch Billionaire investor Stanley Druckenmiller as he discusses his economic and market outlook for 2020, the direction of monetary policy, and the upcoming U.S. election. He speaks exclusively with Bloomberg’s Erik Schatzker in New York.