Is Trump The Real Hope And Change Administration?

Confidence is building the global economies are accelerating. Data from both France and Germany was greater than expected. Statistics at home are also stronger than projected. Oil rose again as OPEC all but approved an extension of production cuts for another nine months.

I ask what happens to oil prices if the global economies continue to accelerate at current levels and oil production declines as thought? Many believe OPEC will cheat on production quotas. Thirty-five years ago, everyone believed OPEC would continue to curtail production for political purposes.

Wow, how the psychology has changed.

There are a growing number of analysts suggesting the reason why OPEC is reducing production is because this group lacks funds for infrastructure investment. Transfer payments and military budgets are straining budgets. Sunni banks are around 110% loan to deposit ratios, thus suggesting there are liquidity issues. Many theocracies have entered the international debt market for the first time.

I believe today is analogous to 1998-2001. The final leg of that cycle was oil prices again doubled because of stronger than expected growth and reduced production.

Commenting about other markets, equities and Treasuries were quiet. The political headlines were non-sensational with all wondering what to believe.

Speaking of headlines, according to Bloomberg and based upon the Michigan Consumer Sentiment Survey, in a series that tracks responses on news heard about government economic policy, since December, an average of 23% of respondents have a “favorable light” about NEWS of government economic policy. This is up from an average of just 2% between January 1978 and November 2016. Prior to this period, the highest level recorded was 9% in February and March 1981.

Conversely, the unfavorable comments about government economic policies are 18%, rising from an average of 15% in the months immediately after the election. This is considerably lower than the record high level of 40% reached in October 2013. It averaged about 25% during the last four years of the previous administration

Wow! Talk about Hope and Change!!

What will happen today?

Last night the foreign markets were mixed. London was up 0.26%, Paris was down .12% and Frankfurt was down 0.19%. China was up 0.07%, Japan was up 0.66% and Hang Sang was up 0.10%.