Dear Russet... zero percent financing and deep discounts were a huge factor in those numbers you posted. The gains weren't evenly shared among the manufacturers -- General Motors (most aggressive of the discounters) gained 24% this year with Ford squeaking out a 1.5% and Chrysler dropping 4% -- as for the percentage of GDP? I don't know number. I do know that the world automakers are geared up to produce 65 million units per year where demand has fallen to 50 million and continues to fall. I also know that G.M. is the biggest single user of base metals in the world. What’s good for GM is good for the United States of America…
Your read on the oilpatch is practically opposite of mine – “Iraq invasion within the year,” is poor excuse to hold energy – the strength we’ve been seeing this week could and will easily turn into boredom by next week. Boredom in the patch will prevail has shipments of crude from Russia become as common place as zero percent financing has for the already tapped out consumer.
Oil Trust?
It seems to me Oil Trusts were designed for folks who are trying to limit their exposure to the cyclical risks of the oilpatch, no? Aren’t they for lazy people who just want to plug a nickel in the ol’jukebox and mindlessly listen the dividend yield sing songs about capital preservation? The patch is cyclical, has always been cyclical and will always be cyclical – dividend yield or not.
Despite the reductions from OPEC to artificially create scarcity, non-OPEC producers have picked up the slack, hence the reduction in the OPEC imports. Just think, zero demand growth in a world recession will have producers’ shutting-in new production and refineries being mothballed. Not a great way to collect a dividend, not a great way to preserve capital.
Also note; that world demand has increased an average of 1% per year. The infrastructure is in place to handle that 1% demand, but anything more, like we see in boom years (2% demand growth) – causes brief supply shortages but in the last two years we’ve seen nothing but surpluses with natural gas storage at record highs. American Utilities have been getting killed, negative spark spreads have been ruinous – and electricity has remained dirt-cheap.
Diesel
The legislation goes into full force (I believe) next year on much tighter pollution standards for diesel engines here in North America. I believe Caterpillar will get it’s clocked cleaned on this one – it still doesn’t have a engine available yet – while it’s competitor like Cummins already have offerings. This might be worth looking at.
PGM
Investment demand will drive it like it will drive Gold and Silver – Anooraq? I think you’re wrong, but I’m too tired to chat about it at length.
BTW, nice post!
Regards,
Frank P. |
