Due to experiences in the past, especially in the 1970s, many investors have been conditioned to expect the worst when oil supplies are threatened. While trends in oil demand tend to be far more persistent, and are largely affected by slower-moving events such as the demographics or recessions, oil supply can be disrupted instantaneously, so…
As expected, the Federal Reserve Open Market Committee lowered the fed funds rate a second time by 0.25%, to a new range of 1.75-2.00%. There were a few dissents, strangely in opposite directions, with one member wanting a larger 0.50% cut and two others voting for no cut. The formal statement was minimally changed, upgrading…
On August 14, 2019, the Dow Jones Industrial Avenue plunged 800 points, losing 3% of its value in its biggest drop of the year. The Nasdaq Composite also lost 3%, while the S&P 500 lost 2.9%.1 The slide started with bad economic news from Germany and China, which triggered a flight to the relative safety…
Conflict in the Persian Gulf has spurred modest oil price volatility in recent weeks, but prices didn’t spike to high levels seen during some past conflicts. That’s partly because rising U.S. oil production has shaken up the global oil market since 2010. Crude oil prices still react to geopolitical events and other unplanned supply disruptions.…
Today, the U.S. equity markets experienced their worst day of the year, with the Dow, S&P and Nasdaq all falling roughly -3%. While such days are historically common and not necessarily noteworthy, the lack of volatility experienced over the past several years makes these days seem far worse than we remember them being. What happened?…
The July FOMC meeting resulted in a 0.25% reduction in the federal funds rate, to a new range of 2.00-2.25%. The policy vote was far from unanimous, with eight members supporting the change, and the Fed presidents from Kansas City and Boston each dissenting. This reflects the varied commentary from members in recent weeks as…
Happy Summer! The longest and warmest days of the year are here. The gardens all around town are beautiful, with riots of color against a backdrop of verdant green. In sitting down to write this, we thought about simply changing the date on last quarter’s letter and sending it out again. While a lot has…
On May 13, 2019, escalating trade tensions between the United States and China sparked a worldwide stock sell-off that wiped out more than $1 trillion in global equity values.1 The markets recovered over the next three days, but tensions between the economic giants continued to drive volatility with no resolution in sight.2 Investors sometimes overreact…
Following their June meeting yesterday, the Federal Open Market Committee (FOMC) made no change to the 2.25-2.50% range for the fed funds rate. However, member appeared split on the outlook, with one member voting for a cut today, while others expect cuts towards the end of the year. This does seem to raise the probability…
It may not be as dramatic as laid out in several worst-case scenarios, but intensification of tensions doesn’t appear to be a positive. (On a historical basis generally, restricting trade typically doesn’t enhance prospects for either side, long-term.) While the U.S. feels that taking a stand against trade infractions (mostly on the intellectual property side)…