Let’s take a look at some market-impacting headlines from the morning of November 19, including volatile oil prices, pressure in the housing market, and the sustained decline in Bitcoin.
By Kris Rosemann
Speculation in the global crude oil market (USO) that Saudi Arabia would be able to lead OPEC and Russia to cut supply appears to have taken a hit as Russian Energy Minister Alexander Novak stated his views that producers need to monitor supply and demand levels in the coming weeks before deciding on a course of action. Saudi-led OPEC is looking to strike a similar production cap agreement to those seen in recent years with the goal of reducing output by 1 million barrels per day to 1.4 million, but Russia appears set to take a “wait and see” approach.
The US-China trade dispute continues to raise concerns over the pace of global oil demand growth, while production from the US, Russia, and Saudi Arabia has ramped. The granting of waivers by the US to some of Iran’s larger customers has also played a meaningful role in the developments, as a notable amount of output that was anticipated by many, including Saudi Arabia, to be taken off the market has remained available to some buyers for the time being.
The NAHB Housing Market Survey, which is designed to take the pulse of the single family housing market via a survey of National Association of Home Builders members (ITB), dropped unexpectedly in its November release as the index fell to 60 in November from 68 in October compared to expectations for a drop to 67. Higher prices and higher interest rates are impacting the housing market, and if notable headwinds continue to impact the housing market, sentiment surrounding the Fed’s pace of rate hikes has the potential to be impacted.
One-time alternative investment darling Bitcoin (GBTC) and other cryptocurrencies have fallen from significant relevancy, as Bitcoin hit its lowest price in more than a year the morning of November 19. After nearly hitting the $20,000 mark prior to Christmas 2017, the cryptocurrency fell below $5,000 for the first time since October 2017. General interest in cryptocurrency has collapsed as well, according to Google Trends, as the term “Bitcoin” hit peak popularity in Google Searches in the week of December 17-23, 2017 but the index value has since fallen to 10 as of the week November 11-17, 2018, meaning the term is 10% as popular as it was at its peak. As Bitcoin investors may be reliant on the “Greater Fool Theory” with no true intrinsic value present, the number of potential “Greater Fools” has dropped precipitously.
—–
Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a member? Subscribe today. The first 14 days are free.
Kris Rosemann does not own shares in any of the securities mentioned above. Some of the companies written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.