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Hedge Connection is pleased to introduce another DAILY INTELLIGENCE BRIEFING provided by McAlinden Research Partners. A unique briefing is presented early each week as a way to quickly glean important current trends in the global news flow and economic data. This extremely comprehensive report provides a way to identify actionable investment themes early. A snapshot of this report is available to the public on The Edge and full reports can be accessed through Hedge Connection. Members of Hedge Connection can click here for the full and extensive report (You must be logged into Hedge Connection first). Not a member yet? Join Now.

 

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Daily Intelligence Briefing

In the US administration’s latest directive to circumvent Congress, unrefined oil will soon be exported for the first time since the 1970s. The amounts involved are small and limited to lightly processed condensate shipments rather than crude oil exports, which still requires Congressional action. But the door is now ajar much sooner than expected for North American oil production to rejoin global markets, adding impetus to a variety of investment opportunities.

The policy change will undoubtedly spur more companies to apply for licenses and build more mini-refineries in the Gulf that meet the export rules. It can also add a new sense of urgency to expanding pipelines and the rest of the energy transportation infrastructure that has been lagging well behind the oil and gas boom. More exports will also mean a lot more business for oil shipping companies, providing further lift to the oil tanker stocks.

BLOOMBERG OIL TANKER INDEX
Source: Bloomberg, McAlinden Research

 

Today’s Issue Cluster: Shale 

  • The US officially opens the door to oil exports, albeit small condensate shipments … only Congress can fully lift the ban
  • Without a full lifting of the export ban, surplus oil could push West Texas down as low as $80
  • Shale oil turns out to have even more volatile gasses across the country, not just North Dakota, complicating shipping
  • US cities are pushing to limit fracking and pipeline construction, particularly around water supplies
  • Producers are deploying new technologies to improve fracking safety, leakage, and waste
  • Shale drillers have doubled their debt in 4 years while boosting revenues just 5%
  • Sand for fracking is booming but producers are starting to buy their own mines
  • US production is still climbing but reserve estimates in Monterey have been cut 96%
  • Nato’s chief says Russia is secretly funding anti-fracking groups in Europe
  • Electricity costs in Germany are 4x the price in Louisiana … chemical companies are moving factories
  • Germany edges closer to lifting the ban on fracking
  • China needs to spend 4x as much as the US to develop fields … and it is
  • Mexico’s violence in the north is preventing companies from developing shale fields

Best of the Rest

EMs – The fragile five’s currencies are soft again as oil import prices perk up
Asia – Regional exporters are more gearing to China and so are getting less lift from the US recovery
Mining – Seaborne iron ore shipments are heading into a massive glut, thanks to an “Aussie-led supply surge”

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McAlinden Research Partners, a division of Catalpa Capital Advisors, provides daily, weekly, and other periodic reports that identify actionable investment themes early. As students of change, we specialize in the identification of critical inflection points for asset classes, industry groups, and other clusters of securities. MRP reports complement the individual investment styles of clients by guiding them to where they can find investment opportunities. MRP clients include pension funds, sovereign wealth funds, private banks, asset managers and wealth advisors from around the world. Disclaimer: The information provided in this presentation (the “Report”) is not to be reproduced or distributed to any other persons. This Report has been prepared solely for informational purposes and is not an offer to buy/sell/endorse or a solicitation of an offer to buy/sell/endorse Interests or any other security or instrument or to participate in any trading or investment strategy. No representation or warranty (express or implied) is made or can be given with respect to the sequence, accuracy, completeness, or timeliness of the information in this Report. Unless otherwise noted, sources for public data include Bloomberg, Trading Economics, and FRED (Federal Reserve Bank of St. Louis Economic Data). McAlinden Research publishes daily, weekly, and other periodic reports on the economy and the markets. Catalpa Capital Advisors, LLC (CCA) is a Registered Investment Advisor which manages client accounts. References to specific securities, asset classes and financial markets discussed herein by McAlinden Research are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Securities discussed in the Report may or may not be held in accounts managed by CCA and/or its associated persons, and changes in those accounts may be made at any time without notice to its subscribers. Neither McAlinden Research nor CCA is under an obligation to inform research recipients if any accounts managed by CCA subsequently purchase or sell securities discussed by McAlinden Research and they do not anticipate providing such information.

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