Economy: Falling Gas Prices, Rising Consumer Spending?

(Drivebycuriosity) - Oil prices have been on a tear recently (Brent Crude jumped about 30% since January 20 bloomberg), but gasoline prices at the pump are still falling. Today the average US gas price dropped below about $1.80 ($1.799) -  gas costs now 10% less than last month (fuelgaugereport).

The recent gasoline price drop is remarkable. Normally gas prices follow a seasonal cycle and start to climb in January because many refineries are using the weak winterly demand from January through March to shut down for their yearly maintenance. So, "in a typical year, prices at the pump are flat to modestly higher at this point", explains the research service Bespoke (bespoke).

Gasoline prices are still falling because gasoline is still expensive in comparison to crude oil, the unrefined commodity. WTI (US type oil) & Brent Crude (international type) are around 70% cheaper than midst 2014, but gas prices dropped "just" 50%. The gap between crude prices and distillate prices is still pulling on the gas price.

It is very likely that the seasonal cycle will kick in in the coming days and will lift gas prices again. In the recent years gas prices had risen seasonally 20% to 30% through the peak of the summer season.  If this pattern would repeat the gas price might climb to around $2,30, still cheaper than last year´s peak prices (around $2,70).

I think that crude oil - and so gasoline - will stay cheap in the foreseeable future, even with some occasional speculative price spikes. The global oil glut won`t go away, because the US frackers, the cause of the oil flood, will continue pumping, thanks to efficiency gains and falling costs. And the Iran is adding to the oil flood, since the sanctions have been lifted.

The recent drop (about 20% since begin of November) is a gift to the consumers. They have more money to spend for other goods & service, which should foster the whole global economy. The positive impulse wasn`t visible in the last year, because the price drop of crude oil needs time to work through the system (I explained that here driveby).

I think that the recent gas price drop could be the trigger to rekindle consumer spending and rekindle the global economy this year. The year 1986 had a similar oil price collapse that started a decade of cheap oil and economic prosperity which lasted till the year 2,000 (will-history-repeat-itself). Cheers to cheaper gasoline.

Contemporary Art: Surprise Bag @ Richard Taittinger, New York

 

(Drivebycuriosity) - Art galleries are often surprise bags - they are full of funny & strange things. One of them is the gallery Richard Taittinger in New York`s fast gentrifying Lower East Side (154 Ludlow Street richardtaittinger). The ambitious art dealer, heir of the same named French champagne empire, has now a show called "Ballett Me Canique" (through February 20, 2016).

 

Above you can see "D-11 Scale Model 2.0" by Wim Delvoye (2008. Laser-cut stainless steel,
38.25 x 87.75 x 48 in. (97.2 x 223 x 121 cm)).



Below are more pieces from the show:

Let the images speak for themselves. Enjoy!

Stock Market: Earnings Season - Refuting The Doom & Gloom

(Drivebycuriosity) - It seems that the current earnings season was the most feared in the recent years. Media and analysts predicted "dismal earnings reports" and claimed that the profits of the leading US companies (S&P 500) dropped in Q4. "Woeful earnings threaten to intensify stock-market bloodbath", claimed MarketWatch (marketwatch). Really?

The Bank M.M. Warburg counted last week that 78% of the S&P 500 companies who have reported so far beat the earnings expectation of the analysts. In the Dow Jones & Nasdaq their share was 90%. But the media don´t tell you that, these numbers don´t fit to their gloom & doom scenarios.

Anyway, I collected a list of notable companies who surprised positively so far:

All the big banks could disprove the gloomy predictions: JP Morgan, Citigroup,  Bank of America, Morgan Stanley, Goldman Sachs, Wells Fargo & PNC Financial, Bank of New York Mellon, Capital One.  They all beat the analysts`earnings expectations. JP Morgan declared that its fourth-quarter profits rose 9 percent from a year earlier, helped by a strong performance in its consumer banking division and lower legal expenses (finance.yahoo).  The banks managed the impacts of the steep drop in prices for oil and other commodities on their loan portfolios better than feared, helped by a solid consumer business.  Other financial companies also surprised positively: American Express beat expectations for earnings & revenue, the competitors MasterCard, Visa and the insurance holding companie Travelers delivered  earnings beats as well.


The Internet sector also delivered strong numbers: Facebook crushed expectations for earning & revenue and reported its first profit above $1 billion. The online payment service PayPal beat earnings & revenue expectations as well. Amazon’s profit more than doubled to $482 million in the fourth quarter and rose per share to $1,00 from 45 cents, but missed the expectations ($1,56).
The rest of the technology sector started also encouragingly: The bellwethers Microsoft, Intel & IBM, the wireless technology specialist Qualcom and the storage manufacturer SanDisk beat earnings & revenue expectations and  Netflix reported a profit of 7 cents per share, more than triple of the analyst´s expectation (just 2 cents.) The cable & mobile provider Verizon joined the club of companies which beat earnings & revenue expectations. Apple reported slowing revenues and iPhone sales, but earnings rose to $3.28 (plus 7%) - 5 cents more than expected. The chip producer Texas Instruments also beat the profit expectations

The consumer companies showed that they belong to the winners of collapsing oil and other commodity prices because the consumers worldwide have more money to spend. McDonald's beat earnings and revenue expecdations, the same with Under Armour (sports fashion).    Procter & Gamble, Colgate-Palmolive, Starbucks, Whirlpool  (home appliances) the homebuilder D.R.Horton and the pharmacy firm Johnson & Johnson also earned more than expected

Other industrial companies also convinced. Profit & revenue at the biotech company Biogen and at Boeing  beat expectations. Ford, Caterpillar (construction & mining machines), the chemical giant DuPont, the defense & aerospace company General Dynamics & the conglomerates 3M and  General Electric all earned more than expected as well.

There were already some reports from the battered commodities sector: The aluminum bellwether Alcoa delivered more profit than expected, even that the revenues dropped more than feared, thanks to the tumbling metal prices. The oilfield-services-companies Schlumperger & Halliburton lost less than feared. U.S. Steel reported a loss of 23 cents a share, topping estimates for a loss of 85 cents a share (barrons).



                                                 The Clear Winners

The earning season also showed the clear winner of the oil price collapse: The airlines. Delta Airlines boosted their earnings 51% from a year earlier, thanks to the falling costs of fuel (businessinsider). According to Business Insider the airline saved $5.1 billion fuel costs last year, thanks to the oil price crash. American Airlines also beat the earning expectations.

Many companies benefit from lower transport costs and from cheaper oil, steel, aluminum and other commodities which reduce their costs significantly. The pessimistic majority also underestimated how efficiency gains and technological progress enable companies to create rising earnings even in a sluggish economy. Companies are learning organisms. They are managed by humans who are getting better and better over time by continuously improving themselves and their companies.

I believe that the positive earnings surprises will continue in the coming days and may lift the sentiment and so the whole stock market.   

Movies: The Revenant

 

(Drivebycuriosity) - This week I saw my favorite for the "Oscars": "The Revenant" (imdb). This is one of the most impressive movies I have watched in the recent years. The film, set in the untamed wilderness of the Rocky Mountains around the year 1820, shows how the fur trapper Hugh Glass is fighting for his survival under extreme & vicious conditions (this is a spoiler free blog. You can find a synopsis here wikipedia).

The movie is about the indestructible will to survive, no matter how bad it gets, and about human perfidy and revenge. "The Revenant" also describes the brutality of the early pioneer phase in the history of America and shows how cruel the settlers fought the natives, whom they called "savages", even though they were not an inch better than the original inhabitants of the country. What makes "The Revenant" so special is that the plot is intermingled with the presentation of primal nature,  the sheer beauty,  power and the merciless of winter in the northern American mountains.  

Movies are teamwork, almost like industrial projects.  But "The Revenant" is shaped by a quartet: Director Alejandro G. Iñárritu ("Oscar" nominated for best director) coaxed his team into extreme situations to create an outstanding cinema experience. Some of the scenes testify his skills and his will to realize bold ideas for the screen - they will be film history. Cinematographer Emmanuel Lubezki, also "Oscar" nominated,  found images full of power & grace.

Leonardo DiCaprio (nominated for leading actor) delivered an awesome performance and showed a lot courage to weather through all the challenges the plot and director Iñárritu caused him. Tom Hardy`s (nominated for supporting artist) acting is another remarkable cornerstone of the film.

"The Revenant" will be part of the movie classics, Oscars or not.

Opec: A Rescue Mission For The Frackers?

(Drivebycuriosity) - Oil prices are on a tear again today. The price for Brent Crude jumped temporarily 7%. There are rumors that Opec & Russia might talk about cutting oil production together about 5% to raise the price of oil (reuters). Really?

This would be a sharp u-turn. In the recent months we had learned that Saudi Arabia is pumping more oil to squeeze their competitors, especially the US frackers, out of the market. Reports that many frackers are in a deep mess - and some are already going bankrupt because oil prices below $30 don`t cover their costs any more - seemed to confirm this alleged strategy.

If Opec & Russia would indeed cooperate and hike the oil price together up to $40 and higher, this would be a rescue mission for the frackers. They would become profitable again and might even increase their oil production. China is already holding oil prices at $40 to protect their frackers and other oil producers (bloomberg). If Opec & Russia together would manage to hike the price of oil significantly this would be just a temporary success. Rising oil prices would just boost the oil production of non-Opec produces again and amplify the global oil glut.

Conclusion: The rumor makes no sense.

Contemporary Art: Outsider Art From France @ Thierry Goldberg Gallery, New York

 

(Drivebycuriosity) - Thierry Goldberg is a very active gallery on New York´s trendy Lower East Side (103 Norfolk Street thierrygoldberg). They have frequently new exhibtions with interesting art work. Now the art dealer has a show called "Hiding in the Bushes: Outsider Art from France" (through February 21, 2016).

The show is a nice mixture of paintings, drawings and sculptures. I display here my favorites, as usual a very subjective selection. On top of this post you can see a painting by Marilena Pelosi (cayons and colored pencil on paper). The mask is created by Paul Amar (seashells, wood and glitter).

These rugs are the work of Anais Eychenne (ink on cotton).

The scultptures above are the creation of Sylvain & Ghyslaine Staelen (mixed media).


Let the images speak for themselves. Enjoy!

Stock Market: The Earnings Season - Defying The Skeptics

(Drivebycuriosity) - It seems that the current earnings season was the most feared in the recent years. Companies are reporting their financial statements for Q4 2015. Media and analysts predicted "dismal earnings reports" and claimed that the profits of the leading US companies (S&P 500) dropped in Q4. "Woeful earnings threaten to intensify stock-market bloodbath", claimed MarketWatch (marketwatch).

The results so far are refuting the skeptics. All the big banks could disprove the gloomy predictions: JP Morgan, Citigroup,  Bank of America, Morgan Stanley, Goldman Sachs, Wells Fargo & PNC Financial, Bank of New York Mellon, Capital One.  They all beat the analysts`earnings expectations. JP Morgan declared that its fourth-quarter profits rose 9 percent from a year earlier, helped by a strong performance in its consumer banking division and lower legal expenses (finance.yahoo).  The banks  managed the impacts of the steep drop in prices for oil and other commodities on their loan portfolios better than feared, helped by a solid consumer business.  Other financial companies also surprised positively: American Express beat expectations for earnings & revenue and the insurance holding companies Traverlers delivered an earnings beat as well.

The technology sector started also encouragingly: The bellwethers Intel & IBM both beat earnings & revenue expectations and  Netflix reported a profit of 7 cents per share, more than triple of the analyst´s expectation (just 2 cents.) The cable & mobile provider Verizon joined the club of companies which beat earnings & revenue expectations. Apple reported slowing revenues and iPhone sales, but earnings rose to $3.28 (plus 7%) - 5 cents more than expected.

The consumer companies joined, they belong to the winners of collapsing oil and other commodity prices because the consumers worldwide have more moeny to spend. McDonald's beat earnings and revenue expecdations, Procter & Gamble, Starbucks, the homebuilder D.R.Horton and the pharmacy firm Johnson & Johnson also earned more than expected


Profit & revenue at the biotech company Biogen & and at Boeing  beat expectations. The chemical giant DuPont, the defence & aerospace company General Dynmics & the conglomerates 3M and  General Electric all  earned more than expected as well.

There were already some reports from the battered commodities sector: The aluminum bellwether Alcoa delivered more profit than expected, even that the revenues dropped more than feared, thanks to the tumbling metal prices. The oilfield-services-companies Schlumperger & Halliburton also earned more (lossed less) than expected (feared). U.S. Steel reported a loss of 23 cents a share, topping estimates for a loss of 85 cents a share (barrons).


The earning season showed also a clear winner of the oil price collapse. Delta Airlines boosted their earnings 51% from a year earlier, thanks to the falling costs of fuel (businessinsider). According to Business Insider the airline saved $5.1 billion fuel costs last year, thanks to the oil price crash.

Many companies benefit from lower transport costs and from cheaper oil, steel, aluminum and other commodities which reduce their costs significantly. The pessimistic majority also underestimates how efficiency gains and technological progress enable companies to create rising earnings even in a sluggish economy. Companies are learning organisms. They are managed by humans who are getting better and better over time by continuously improving themselves and their companies.

I believe that the positive earnings surprises will continue in the coming days and may lift the sentiment and so the whole stock market.   

Street Art New York: A Documentary - January 2016 Edition

(Drivebycuriosity) - It´s cold outside, but New York`s street art doesn`t hibernate. Since my latest street art report (December 2015 driveby) I spotted more interesting new murals, stickers & graffiti @ Lower East Side, East Village, Soho and other Manhattan neighborhoods. As usual I document the newest street art in this area.

On the top of this post you can see the newest mural @ Rag & Bone, a fashion shop on East Houston Street. For years the Lower East Side shop has been showing ambitious art works on its Elizabeth Street wall. This mural above could easily compete with the ambitious art works you can find in art galleries.

On Kenmare Street, that combines Delancey with Lafayette Street, I spotted a tribute to the late David Bowey. The mural seems to be influenced by pop art and album covers.

I spotted the mural above on Orchard Street, where you can find many ambitious art galleries. The art work is apparently an advertisment for the fashion company Tictail Market.

This mural is beautifying a back yard somewhere in the East Village.

The culture of artful decorated shutter doors continued.

....and the spreaders of stencils & stickers also stayed active.

To be continued.

Books: The Invention Of Nature By Andrea Wulf

   (Drivebycuriosity) - If we believe the New York Times a book about Alexander von Humboldt belonged to the best publications of 2015: "The Invention of Nature" by Andrea Wulf (nytimes). Von Humboldt was one of the most influential scientists of the early 19th century and was maybe the last polymath (in German: Universalgelehrter). The descendant of a very wealthy aristocratic German family was driven by an enormous scientific curiosity. In order to satisfy his thirst for knowledge he put his health & safety on risk and spend over the course of his life all his money for his research & publication projects. Von Humboldt made science accessible & popular and was one of the first who warned that humans are destroying the environment - maybe he was the first environmentalist. The scientist was enormous popular - a kind of 19th century super star - but he also influenced Charles Darwin and other great thinkers.

The book describes Humboldt´s life and scientific influence (amazon). Andrea Wulf lets the reader follow the scientist´s famous five-year expedition through large parts of South America where no other European had set his foot before. Von Huboldt adventured dangerous rides on tropical rivers, walked through dense jungles and climbed on mountains to altitudes nobody went before - all with the aim to accumulate knowledge which he later spread & popularized with a vast volume of publications, that often became bestsellers. During his exploration he discovered & categorized a huge amount of animals and plants and collected a vast sum of other scientific observations. Later in his life followed another dangerous exploration: A trip through Russia, which was even wilder than today, which led him to the Chinese border.

"The Invention .." is full of interesting facts, but unfortunately rather dryly written. I don´t share the New York Time`s enthusiasm because the book appears to me rather as an enormous diligence work and lacks the elegance & literary ambitions that distinguish strong biographies.

New York City: Digging Out After Blizzard 2016

(Drivebycuriosity) - Today New York City is digging out after Yesterday´s blizzard (my report from Yesterday driveby). The winter storm accumulated a lot of snow. Central Park got 26.8 inches and JFK airport piled 30.5. inches.

Now we have sunshine and blue sky and New Yorkers are enjoying a Sunday in the fresh snow. It seems that the squirrels in Tompkins Square Park found shelter on a friendly tree.

I used the occasion to walk around in my neighborhood and to take some pictures with my iPhone 6s Plus.

Enjoy!

Contemporary Art: Kiyoshi Nakagami @ Galerie Richard, New York

 

(Drivebycuriosity) - Do you like monochrome abstracts? You might enjoy a show at Galerie Richard on New York´s  Lower East Side (121 Orchard Street galerierichard ). The American branch of the Parisian art dealer has now an exhibition with paintings by the Japanese artist Kiyoshi Nakagami, called "Epiphany II" (through January 26, 2016). This exhibition is part II of his solo show in their Paris gallery in 2014.

The press release claims that  "his ability to beautifully reproduce the diffusion of light in a painting is unrivalled" (presse). It also reports "because he considers that human being does not rule the Nature, he allows natural processes to develop in his paintings. These perfectly detailed paintings are made without the use of a paintbrush."



                        Natural Processes

I indulge in the beauty of the abstract compositions. I show here my favorites from the exhibition, as usual a very subjective selection. Let the pictures speak for themselves.

Enjoy!