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The Best of What They Said and I Read Week Ending 1/21/2018

Short excerpts from articles I found interesting.

I may not agree with the author and the following material is not intended as investment advice.

The Economist – January 13, 2018 – The world this week – A Kodak moment

“In what is a good snapshot of the mania for crypto-currencies, Kodak’s share price soared by 300% after it announced a new service based on blockchain technology to give photographers more control over the rights for their pictures.  The once-storied company fell on hard times when it misjudged the shift from photographic film to digital imagery.  It now hopes to get a boost from digital currencies by issuing a KODAK-Coin that photographers can be paid in.”

Barron’s – January 20, 2018 – Stock Records Galore but Bond Yields Cast Shadow – by Ben Levisohn

“…Not that you’d know anything serious happened last week simply by looking at the benchmark returns. The Dow Jones Industrial Average gained 268.53 points, or 1.04%, to 26,071.72—just another all-time high—while the Standard & Poor’s 500 index rose 0.9%, to a record 2810.30. And the Nasdaq Composite climbed 1%, to 7336.38, also an all-time high. The S&P 500 has now closed at a record level 10 times this month, just one short of the record of 11 set in January 1964—with eight trading days to go.”

“Do you know what else rose to a new high, though not a record one? The 10-year Treasury yield, which closed at 2.639% Friday, its highest since July 2014…Jim Paulsen, Leuthold Group’s chief investment strategist, notes that bond yields have been trending lower for the past 38 years, and have remained within one standard deviation—a measure of the dispersion of readings from the average—for 72% of that time. Why is this important? The 10-year’s 2.64% yield is now above the current one-standard-deviation mark of around 2.44%, he says. That’s occurred just 12.6% of the time since 1980, but when it did, equity returns were markedly lower than when yields were in the range: The S&P 500 has advanced an average of 2.7% during the 12 months following such an instance, versus an average of more than 10% when yields remain contained within the bands…”

The Wall Street Journal – January 20 - 21, 2018 –  U.S. to Topple Saudis in Oil Output– by Christopher Alessi and Alison Sider

“U.S. oil production is expected this year to surpass Saudi Arabia’s output, upending a global pecking order that has been a basis for U.S.-Middle Eastern policy for decades. Crude output in the U.S. will likely climb above 10 million barrels a day in 2018, which would top the high set in 1970, the International Energy Agency said Friday.  The IEA, a Paris-based organization that advises governments and companies, raised its outlook for U.S. crude supply this year by 260,000 barrels a day, to a record 10.4 million barrels a day, largely a result of the recent rally in crude prices.”

“Saudi Arabia produces just under 10 million barrels a day, under an agreement with the Organization of the Petroleum Exporting Countries. The kingdom said it has the capacity to produce 12 million barrels a day. But it has never pumped more than 10.5 million daily and has pledged to limit output this year.”

“…U.S. crude exports were mostly banned until 2015, when a law designed to protect U.S. consumers from sudden losses of supply was lifted to allow the shale boom to be shipped across the world. Crude exports surged as high as 2 million barrels a day at one point last year…U.S. oil production stagnated until about a decade ago as a handful of companies mastered the act of forcing oil out of shale formations with hydraulic fracturing and horizontal drilling techniques, known as fracking. U.S. output has roughly doubled since 2008, while Saudi output has been stable.”

“…Some analysts said that booming shale production also moves the U.S. closer to energy independence, though it still imports 7 million barrels a day in crude imports from countries like Iraq and Kuwait. During the first 10 months of last year, the U.S. imported crude from Saudi Arabia at a rate of 988,000 barrels a day. Imports from Saudi Arabia haven’t been that low on an annual basis since 2009…”


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