Three things you need to know today
|Oil Price recovery
Oil has seen a turbulent twelve months; the onset of the pandemic and the very ill-advised output increases early in 2020 saw the collapse of prices in futures markets. Considering how nasty it was last time I am sure the memory is still quite fresh and raw for many oil producers, who have been mostly compliant with oil cuts throughout the pandemic. Currently both brent and west Texas intermediate crude prices have recovered to near $60 per barrel a long stretch from the worst of the oil crash in 2020.
Another OPEC meeting is on its way, so expect them to measure for compliance of the current output agreements. I feel that we may be up for another bout of controversy surrounding oil in the near term; The relationship between OPEC+ and Russia is sketchy at best when I comes to oil cuts and pricing, and a slight disagreement could result in another run of output increases that flood the market and dilute value.
Yellen and life after stimulus
Former Federal Chair Now Treasury Secretary Janet Yellen has spoken very highly on Joe Bidens stimulus plan over the weekend. She again pushed the theory that if the US enacts a large enough stimulus package that ‘maximum employment' could be achieved by 2022, but a miss on the size of the package would ultimately leave the US economy struggling for longer.
I am inclined to agree with Former treasury Secretary Larry Summers who highlighted the issues of a large stimulus package in relation to inflation. As much as a gigantic stimulus package sounds nice, $30 trillion of debt is hardly appealing, and neither are the prospects for developing another asset bubble or runaway inflation.
Meme Stocks
It's the story that just wont die, the WallStreetBets saga it lives. Now while the likes of GME, AMC and even silver seem to have come back to reality, it has brought a behavioral change. Investors previously considered the pros have begun moving into other asset classes to avoid the potential pressures of retail traders. One such example is the increase of CDS and CDO volumes, those pesky instruments at the center of the GFC. Most retail traders are unable to get access to this market making a viable way of avoiding retail traders entirely while still conducting short side operations.
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