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The Red Hot Energy Sector
Monday, March 07 2011 | 02:06 PM
|I acquired the shares of Encana, Suncor and Precision Drilling six months ago when the TSX Energy Index was in mid 2010 one of the worst performing sectors. At that time the “hot” sectors were Gold, Heath Care and Telecom. There were no investment sheep in the energy complex last summer and so I helped myself to the all-you-can-eat energy buffet. How the energy sector is enjoying a bullish stampede thanks to the crude risk premium due to the uncertain outlook for the larger crude producing Arab states.
I have always believed that when the sheep are hungry you should feed them. Now so far I see no reason to sell all of my energy positions but, I am reducing and moving the proceeds into another sector that the investment sheep are avoiding – the TSX Financial Sector. The sheep are avoiding the obvious crude risk losers like the airlines, transport companies, non-essential retail stores and travel to include fast food, hotels, theme parks and gaming. I think the Canadian Banks are winners either way if the crude risk trade either ON or OFF. Either way I like the Baa, Baa, Banks.
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Jobless Claims Fall As Oil Prices Rise
Thursday, February 24 2011 | 04:02 PM
|Today's weekly update on new jobless claims offers a fresh reason for hope, but the crowd isn't likely to take the bait. The back and forth in this series in recent months has given rise to false hopes several times in the last few months that job growth is poised for better days. Is it different this time? Last week's tally of new filings for unemployment benefits dipped to 391,000 on a seasonally adjusted basis, the Labor Department reports. That's the lowest since the summer of 2008. But just when things are starting to perk up (maybe) for the labor market, it's all a moot point suddenly, thanks to the upheaval in Libya and the resulting spike in oil prices.
Yes, one could argue that the rise in jobless claims in previous weeks was a temporary blip. Maybe it was related to harsh winter weather. But as our chart below suggests, the rough patch seems to be passing.
“The labor market has been on the upswing,” opines Millan Mulraine, a senior U.S. strategist at TD Securities Inc. “As the pace of layoffs continues to decline, it is an indication that not only are businesses not firing as fast they used to, but they may in fact begin hiring.”
But just when the data may have been poised for a round of improvement, Middle East turmoil intervenes and throws a sizable wrench in the revival machine. Oil prices in New York are trading just over $100 a barrel this morning, the first visit to the land of triple digits since September 2008. The Libya mess may or may not have legs, but for the moment there's a lot more uncertainty in the world. Last week's news on jobs is a touch dated.
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