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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Davy Crockett who wrote (17797)	2/25/2016 11:55:08 PM
From: John Pitera	7 Recommendations Read Replies (2) of 33421

Hi Davy, good to see you... Scott Sheffield, CEO of Pioneer Oil since 1997 gave a really good 6 1/2 minute interview on CNBC on Weds. Pioneer is a well run company .... we were studying the price performance of PWD against XOM and several other companies since 2002.... 2009 2011 etc. the stock is trading above 100 which in itself is something very rare for an energy company. Pioneer is the only energy company in the top 20 in the US to be growing it's earnings... pretty amazing. They have 12 Rigs running in the Permian Basin which have very low production cost. Sheffield is talking about Oil need to go to $15 or 20$ to get serious action from OPEC..... it's a good interview to watch. He says the Debt situation of the energy companies is as bad as the 1981-1986 Oil Bust.... however oversupply was 4 to 5 million barrels a day in the first half of the 1980's and this reminds him more of 1998-1999; when crude supplies were 1 to 2 million barrels in oversupply. video.cnbc.com We are seeing a significant pickup in currency volatility among the big 3 currencies... USD, JPY EUR and , of course, the British Pound was down 3% to a 7 year low a few days ago...on concerns of the U K leaving the European Union. Significant volatility accompanies instability. When we had the flash crash on May 6th 2011... the EUR/JPY cross rate moved 500 basis points each day for two consecutive days on May 4th and 5th from 125 to 115. *That was a big move. China's currency movement prompted the August 24th 2015 big down open and the very weak price discovery when the stock market opened that day for the first Since Asset prices are denominated in currencies.... the Currencies and the interest rate differentials are the drivers that then get other asset prices their direction. The Global Macro environment is very uncertain with unprecedented negative interest rates, global overcapacity in a number of areas.. and a pretty serious Global political vacuum. The US market has been acting well the past couple of weeks. the SPX is closed right at resistance at 1951. The G7 is meeting this weekend and there has been some talk of China taking about devaluing their currency to some extent. The yield curve is flattening.... bad for bank profits... and we need to see if we have some banking contagion in Europe or the Far East. The 10 year note differential above the 2 year note is down to 99 basis points and is the lowest since 2008. presumably reflecting weak growth. The issue this time is NOT US BANKS BEING OVERLEVERAGED. It is the ramification of Negative interest rates, Sovereign Debt being counted on European and other global banks at full value. The competive currency devaluations and lack of market makers in a number of global markets* due to Dodd Frank and other global developments has created new concentrations of Market making Entities. which are not completely known and understood. The US political cycle this year and the global geo political situation is almost an analogue on 1932. JJP

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