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EconMatters's Blog

EconMatters - Global Economic and Market Analysis That Matters

A Look at the EIA Report and Some General Market Commentary (Video)

May 12, 2016 by EconMatters   Comments (0)

By EconMatters

The API Report tried to over correct from their previous two misses for weekly forecasts, and caused oil traders to be wrong footed going into the EIA Inventory Report.  There was just massive volume following the report with no "fadeable" metrics for shorts to hang their hats on today.

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API Reports Another 3.5 Million Barrel Build in Oil Inventories (Video)

May 11, 2016 by EconMatters   Comments (0)

By EconMatters

The EIA Report is tomorrow, but under any interpretation of the API numbers the Bulls will still be waiting for their big Drawdown EIA Report. It looks like we just keep replacing US Production with OPEC Production, namely Saudi Arabia, Iraq and Iran excess production.

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Bill Ackman Let Massive Profits Slip into Losses 3 Times in Herbalife Short (Video)

May 9, 2016 by EconMatters   Comments (0)

By EconMatters


Bill Ackman needs a lesson in proper Trade Management for his miscues on managing his Herbalife Short Position. Double Bottom or Head and Shoulders Pattern on HLF Chart? There is still a substantial short interest percentage of the open float in Herbalife, and if the government gives them a relative slap on the wrist in regards to a manageable fine, then there is ample room here for additional squeezing of short positioning. Pershing Square is not so much trading against Herbalife but the general market and a substantial institution ownership of this stock on the street.

I think HLF is a dog myself, but shorting is a strategic business where even more so than normal you have to get the timing right. And Bill Ackman has a real problem with closing out a winning trade here. It is unacceptable to let this trade go against him this many times when he has had such massive gains in this short position. Remember Bill you can always get back in at a much better overall price, let the technical be your guide in regards to taking profits on the trade.

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Tesla and GM Will Probably Both Be Bankrupt in 10 Years (Video)

May 8, 2016 by EconMatters   Comments (0)

By EconMatters


I was originally looking at Tesla from a trading standpoint, but in comparing GM, both company`s Financial internals look bleak longer term. GM is a debt accumulating machine, and Tesla is the starter version of this model. The Automobile manufacturing Industry is a capital intensive business, but both these companies are laggards to best practices in the Industry at large. There is major trouble ahead for both companies at this level of financial mismanagement. Tesla is trying to grow too fast, and GM is a bloated Government style bureaucracy that requires major pruning to say the least.

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Are Electric Cars a Threat to the Oil Industry (Video)

May 7, 2016 by EconMatters   Comments (0)

By EconMatters


Paradigm Shifts happen throughout human evolution, are we experiencing just such a case in the automobile marketplace and Energy space? Additional Technological Breakthroughs necessary for knock out punch against the Oil Market.

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Favor Delivery: How Many Reckless Drivers Driving Without Insurance?

May 6, 2016 by EconMatters   Comments (0)

By EconMatters

No Parking Sign Means NO Parking

One of my friends in Houston Texas recently had a run-in with a driver of a company called NeighborFavor Inc. d/b/a Favor Delivery.  
It was actually a fairly minor fender bender type of auto incident where a Favor Delivery driver (or runner as Favor calls them) parked at a Fire Lane No Parking Zone directly behind my friend’s garage for a quick drop-off on the job.  My friend inevitably backed into the Favor Driver’s car. 
Driving without Insurance Is a Serious Matter

My friend complained to favor’s corporate office about its driver’s illegal parking causing the accident, and also filed a claim with the runner’s personal auto insurance co.  The initial communications by Favor seemed to think the driver’s insurance co. should cover this claim.  Then the driver’s insurance company noted an “exclusion paragraph” that the personal policy does not cover “liability arising out of operation of a vehicle while it is being used for a fee” which includes delivery for profit.  
This means that Favor driver was driving illegally without proper insurance.   
My friend immediately communicated this “exclusion” and how the driver was actually working for Favor without proper insurance, and if Favor has a corporate policy to cover its drivers on the job.  The subsequent communication from Favor simply denies any wrong doing, yet did not answer the very important question regarding its driver insurance coverage. 
Who Is Favor Delivery?

Based on Google search and emails between my friend and Favor, I understand Favor Delivery is one of those start-ups catering to the Millennial or Gen Y lifestyle of having everything delivered.  Favor’s business model is very similar to Uber that anyone can apply and become a runner making extra bucks delivering for Favor.  Favor Delivery has no company fleet, and each runner makes delivery on the job using their personal vehicle without any company sign or logo.  
   
Is Favor Delivery a Responsible Corporate Citizen?

The first question that comes to mind:  How can any legitimate company say it with a straight face that its driver was not at fault parking at a Fire Lane No Parking Zone and driving without insurance?  Is this an appropriate manner in which a responsible corporate enterprise which is community facing should behave?      
The second question:  Since Favor did not respond to the question regarding a corporate policy, does that mean Favor does not have a corporate insurance policy covering its runners?  From there, I can only conclude Favor’s operating model is to rely on each runner’s own personal policy to cover vehicle accident liability on the job so to save on a more expensive corporate policy.  (Is Uber also operating under this kind of business model?) 
  
A Huge Liability Issue for Uber-like Delivery Business

This means there are a whole lot of pseudo delivery drivers operating in the United States with a gap in their insurance coverage, i.e., they may think their employees have proper insurance coverage, when in fact these drivers are not covered at all for operating in their role as an employee for these Delivery Companies (For a Business) as opposed to covering normal driving activities of a personal nature. Once you cross the line of going “professional”, insurers have clauses to exclude their liability – so how many drivers are actually insured?
This sets up a huge liability for the delivery business, i.e., if they kill somebody while delivering and are found negligible and have no insurance, the trial lawyers are going to have a field day with these delivery firms.
Uber has already failed pretty poorly in the courts so far. I think ultimately these delivery companies that are springing up almost daily have underestimated the standard business practices and costs associated with running a fully insured, corporate enterprise and most are going to go bankrupt or litigated into bankruptcy from a liability standpoint.
Breaking Two Laws and No Fault?

Regardless who was at fault in this particular incident, one thing clear is that this Favor driver broke at least two laws - a Texas law requiring every driver to have at least liability insurance and failure to observe the Fire Lane No Parking sign.  It also shows Favor’s lack or disregard of proper safe driving training for its drivers.         
Reckless Favor Delivery in a City near You?

According to its web site, Favor Delivery is currently operating in 22 cities in the U.S.  From what I’ve seen based on my friend’s experience, Favor is operating a reckless nuisance business in communities all over the United States (and in Toronto, Canada).  I wonder just how many reckless Favor Delivery drivers are driving around your subdivisions without proper insurance coverage.         

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Natural Gas is Sexy Once Again from a Macro Fundamentals Standpoint (Video)

May 6, 2016 by EconMatters   Comments (0)

By EconMatters

The mild winter has Nat Gas stocks at record levels, but the last time this many natural gas rigs went offline in 2012, prices rebounded to the $5 level nicely on a long trending trade. Traders and Investors are trying to anticipate and evaluate the likelihood of this move in Natural Gas happening again.

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EIA Petroleum Weekly Report Analysis 5-4-2016 (Video)

May 4, 2016 by EconMatters   Comments (0)

By EconMatters

Some impressive internals for this report are blunted because of OPEC supply finding its way to the United States. The drop in US Oil Production was noteworthy in this report.

The United States should be thinking much more strategically with their energy policy right now. Again Politicians are dropping the ball at a crucial point from an economics standpoint in the energy industry. China is taking appropriate steps to monetize the current environment, while the United States continues to be the proverbial Deer in Headlights watching an excellent opportunity to add to the Strategic Petroleum Reserves at decade low prices in the oil market slip by the wayside.

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Declining Production Rates for many of the Top 30 Oil Producing Countries (Video)

May 4, 2016 by EconMatters   Comments (0)

By EconMatters

People don`t realize the magnitude of all the Oil Producing Countries with declining Production Rates, and trending the wrong direction compared with the consistent and steady rise in Global Oil Demand Growth.

The Oil Market is going to 'unbalance' in the opposite direction over the next 12 months, and start heading south fast over the next five years. The US probably needs to increase Oil Production to 12 Million Barrels per day in five years just to keep up with global oil demand, as the US is one of the few countries globally capable of increasing capacity given the resource requirements, political stability, and technological requirements necessary to invest in these capital intensive projects.

But it is going to take a much higher price for a sustained duration to get the US all the way to 12 Million Barrels per day, as much of the low hanging fruit has already been taken out of the ground so to speak.

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EIA Inventory Report Analysis and Key Levels to Watch in the Oil Market (Video)

May 3, 2016 by EconMatters   Comments (0)

By EconMatters

Last week we had a bearish EIA Report and Oil moved up $3 bucks due to Fund Flows getting ahead of the fundamentals.

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