If you might be concern about the
current financial turmoil, there are many questions for the reason for the recent
uncertainty.
I believe that one
reason in the price corrections is the slowing growth which triggered also the
oil price into new lows.
Saudi Arabia and
other oil producing countries are pumping oil at record levels. Now at 28 USD
per Barrel all market members make losses. That's a fact; just take a look at
this chart:
 |
| Source: Zerohedge 1/2015 and Aliance Bernstein, 10/2014 |
No one can sell
under production cost at a long time. This will cause also mainly pain,
especially in the oil and gas sector and emerging markets. A big wave of market
consolidation will come in the future if oil stays at these levels or fall.
Only the fittest stocks with the highest financial reserves will survive.
The good thing is
that the American economy is doing well. They have no expose to the energy market.
Refiners could also benefit a little from the decreasing oil prices.
The biggest risk
is the loan portfolio of major banks. According to Bloomberg, JPM has the
highest exposure to the energy sector with a 5% Portfolio share. That's a high
value compared to the equity.
The final question
is in my view how many of them will be writing down and could they cause a
financial crises?
I hope the leaders
will have learned from the financial crisis in 2008 and not let one bank go bankruptcy.
How do you evaluate the market? Do we see an end of the dark tunnel?