Nov 26, 2014
It will also feature a global macro analysis and investment letter that has created quite a buzz in the industry. Stray Reflections is written by Jawad Mian, a former portfolio manager who lives in the UAE. Born in Pakistan and educated in Canada, Jawad managed $250 million in proprietary funds before turning his attention to his real passion: writing about the macro themes that should be on every investor’s mind, and constructing a theme-based global macro investment portfolio. His audience includes some of the most-respected portfolio managers in the world.
John Mauldin, Editor
Outside the Box
Stray Reflections (November 2014)
The US consumer stands to benefit from cheaper heating oil and materially lower gasoline prices. It is estimated that the average household consumes 1,200 gallons of gasoline a year, which translates to annual savings of $120 for every 10-cent drop in the price of gasoline. According to Ethan Harris of Bank of America Merrill Lynch: “Consumers will likely respond quickly to the saving in energy costs. Many families live “hand to mouth”, spending whatever income is available. The Survey of Consumer Finances found that 47% of families had no savings in 20 13, up from 44% in the more healthy 2004 economy. Over time, energy costs have become a much bigger part of budgets for low income families. In 2012, families with income below $50,000 spent an average of 21.4% of their income on energy. This is almost double the share in 2001, and it is almost triple the share for families with income above $50,000.” The “new oil normal” will see a wealth transfer from Middle East sovereigns (savers) to leveraged US consumers (spenders).
Even before the latest fall in oil prices, Shell said its capital spending would be about 20% lower this year than last; Hess will spend about 15% less; and Exxon Mobil and Chevron are making cuts of 5-6%.”
Source: Foreign Policy