New Video: John Carters Strategy for Trading Everything from Crude Oil to NFLX

Our trading partner John Carter of Simpler Options is back with another amazing new video. Join John as he walks us through his favorite strategies to utilize in today's volatile market. Get a sneak peak on how he has already grown his account by 48% in 2016.

Visit Here to Watch John's New Free Video

Learn John's favorite strategy for trading everything from Crude Oil to NFLX and why John believes that decades from now investors will look back at 2016 as the best trading ever. You will also get an insider look at.

•  The reasons why volatility can be your best friend even for newbies with small accounts

•  Why options are the best trading vehicle on the planet right now

•  Why down markets are better than up markets

•  How to make successful trades on your phone while you are at work

Watch John's free video then put his methods to work right away. Take advantage of his ability to help you find your own trading style and how to recognize your own psychological limits. In the process John will help you dispel all of your fear of this volatile market. In fact you will welcome it.

Don't wait any longer.....Just Click Here to Watch John's Free Video

See you in the markets,

Ray @ the Crude Oil Trader

P.S.  Get an even better understand of John's trading methods by downloading his free eBook "Understanding Options".....Get it Right Here

Mike Seery's Weekly Futures Recap - Crude Oil, Natural Gas, U.S. Dollar, Gold, Silver, Sugar

It's Saturday and that means it is time for a heads up from our trading partner Michael Seery. We've asked him to give our readers a recap of the this weeks futures markets and give us some insight on where he sees these markets headed. Mike has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets. 

Crude oil futures in the April contract settled last Friday at 31.91 a barrel while currently trading at 32.00 basically unchanged for the trading week with a possible double bottom being created around $29 the level occurring. Crude oil prices are still trading below their 20 and 100 day moving average telling you that the short term trend is to the downside as the long term trend is also to the downside despite the fact that several countries decided to freeze production this week, but that still leaves production at record levels as investors found that as another negative situation.

The volatility in crude oil is extremely high at the current time as I’m looking to possibly enter into a short position on any type of rally as the chart structure has improved tremendously, therefore, lowering monetary risk, but at this point I’m sitting on the sidelines waiting for an opportunity which could develop any day. The commodity markets in general still look weak as I still have many short positions in several different commodity sectors including natural gas which is hitting another contract low today as supplies are just too high across the board despite the fact that the U.S dollar may have topped out.
Trend: Lower
Chart Structure: Poor

Natural gas prices in the April contract settled last Friday in New York at 2.03 while currently trading at 1.89 trading lower 7 out of the last 8 trading sessions as the original recommendation was a short position in the March contract as we rolled over and if you took that trade continue to place your stop loss above the 10 day high which stands at 2.23 as the chart structure is very poor at the present time.

Natural gas prices continue to move lower on a weekly basis as this trade has gone straight down from the original recommendation so continue to place the proper stop loss as the chart structure will start to improve on a daily basis, as I still see lower prices ahead possibly retesting 1.75 and if that is broken I think we can test 1.50 as extremely warm weather in the Midwestern part of the United States continues to plague this commodity.

The fundamentals in natural gas are extremely bearish with all time high inventories as we were producing too many products especially in the energy sector including natural gas so continue to play this to the downside as I'm looking at adding more contracts once some type of price kickback develops, as I still see no reason to own natural gas especially as we enter the month of March, as springtime is upon us.
Trend: Lower
Chart Structure: Poor

The U.S dollar in the March contract settled last Friday at 95.98 while currently trading at 96.92 up around 100 points for the trading week as I’m currently recommending a short position from around the 96.90 level while placing my stop loss above the 10 day high at 97.50 risking around 60 points or $600 per contract plus slippage and commission.

The dollar is trading below its 20 and 100 day moving average telling you that the short term trend is to the downside as prices are near a 4 month low due to the fact that the interest rates in the United States have been dropping dramatically, as lower rates mean a lower U.S dollar generally. Volatility in the dollar certainly has increased because of the stock market which is on a roller coaster ride daily sending shockwaves into currency markets.

The next major level of support is around the 95.00 level and if that is broken I think we can retest the 93 level in the coming weeks as it certainly looks to me that interest rates are even going lower as worldwide rates have turned negative in certain countries which is an amazing situation in my opinion as the risk/reward is in your favor at the present time as I am still recommending this trade even if you did not take the original advice.
Trend: Lower
Chart Structure: Poor

Gold futures in the April contract settled last Friday in New York at 1,239 an ounce while currently trading at 1,231 down about $8 for the trading week trading in a highly volatile manner. Gold prices are trading above their 20 and 100 day moving average telling you that the short term trend is to the upside as prices have skyrocketed from the contract low around 1,050 and now have rallied over $200 in a matter of weeks as panic around the world is sending gold prices sharply higher.

At the current time, I am sitting on the sidelines as the risk is too much for me to tolerate as the only recommendation in the precious metals currently is the silver market as the gold chart structure is terrible. The S&P 500 has been extremely volatile in the year 2016 and that has supported gold prices however the S&P has rallied significantly over the last week, but it has not been a negative influence on gold as there is demand for gold at the current time and I’m certainly not recommending any type of bearish position as that would be counter trend and poor trading in my opinion so avoid this market at the present time.

Trading is all about risk as I see other opportunities in the commodity markets where the risk/reward is in your favor coupled with outstanding chart structure as gold does not meet any of my criteria to enter into a trade as sometimes you miss trades and that’s exactly what has occurred in this situation.
Trend: Higher
Chart Structure: Poor

Silver futures in the March contract settled last Friday in New York at 15.79 an ounce while currently trading at 15.47 down about $.30 in a highly volatile trading week with large swings on a daily basis as I have been recommending a bullish position from around 14.80 and if you took that trade continue to place your stop loss below the 10 day low which now stands at 14.90 a chart structure has improved tremendously over the last several days.

The next major level of resistance in silver is around the $16 level as we will have to roll out of the March contract into the May contract early next week due to expiration as I will give the new stop loss in that blog as well. Silver prices are trading above their 20 and 100 day moving average telling you that the short term trend is to the upside as money flows continue to go back into the precious metals for the first time in several years as the precious metals have fallen tremendously from their highs just hit in the year 2011.

In my opinion, the U.S dollar has topped out which is bullish the precious metals so stay long this market while placing the proper stop loss as volatility has certainly come back into this market which is generally a bullish indicator.
Trend: Higher
Chart Structure: Improving

Sugar futures in the May contract settled last Friday in New York at 13.12 while currently trading at 12.64 a pound hitting a fresh 5 month low as I’ve been recommending a short position originally in the March contract as we rolled over into the May contract and if you took that trade place your stop loss above the 10 day high which stands at 13.50 as the chart structure is poor.

Sugar prices are trading lower for the 3rd consecutive day as I still think there’s a probability that prices will fill the gap at 11.80 which is still another 85 points away as prices are still trading far below their 20 and 100 day moving average telling you that the trend is getting stronger to the downside on a weekly basis so stay short in my opinion while placing the proper stop loss.

Sugar prices experienced a rounding top which I’ve talked about in many previous blogs over the last several weeks peeking out around 15.50 as being nimble is a major key to success in my opinion as waiting for the trade to develop is definitely beneficial in the long run so stay short as I’m looking to add more contracts once the chart structure and the risk/reward meet my criteria as lower prices are ahead in my opinion.
Trend: Lower
Chart Structure: Poor

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These Important Stocks are Trading Like a Financial Crisis Has Begun

By Justin Spittler

European bank stocks are crashing. Deutsche Bank (DB), Germany’s largest bank, has plunged 36% this year. Its stock is at an all time low. Credit Suisse (CS), a major Swiss bank, has plummeted 40% this year to its lowest level since 1991. As you can see in the chart below, the STOXX Europe 600 Banks Index, which tracks Europe’s biggest banks, is down 27% this year. It’s fallen six weeks in a row, its longest losing streak since the 2008 financial crisis.

These are huge drops in a short six week period. It’s the kind of price action you’d expect to see during a major financial crisis. The sell off in Europe’s banks has dragged down other European stocks. The STOXX Europe 600 Index, which tracks 600 large European stocks, is down 15% this year to its lowest level since October 2013.

European banks are struggling to make money…..
Deutsche Bank lost €2.12 billion for the fourth quarter… after making a €437 million profit the year before. Credit Suisse lost €5.83 billion last quarter… after making a €691 million profit the year before. Profits at BNP Paribas (BNP.PA), France’s largest bank, plunged 52% last quarter.

Europe’s crazy monetary policies are starving banks of income..…
Dispatch readers know the Federal Reserve has held interest rates at effectively zero since 2008. The European Central Bank (ECB), Europe’s version of the Fed, also cut rates after the global financial crisis. Unlike the Fed, the ECB didn’t stop at zero. The ECB dropped its key rate to -0.1% in June 2014. It was the first major central bank to introduce negative interest rates. Today, its key rate is -0.3%.

The ECB’s key rate of -0.3% sets the tone for all interest rates in Europe..…
It forces banks to charge a rock-bottom interest rate on loans. This has eaten away at bank profits, as The Wall Street Journal reports:

Very low interest rates hurt the profits banks make on loans, especially when investors believe loose monetary policy is here to stay. Long term rates at which banks lend then fall to be little more than short-term ones at which banks borrow.

The idea of negative interest rates likely sounds bizarre to you..…
After all, the whole purpose of lending money is to earn interest. With negative rates, the lender pays the borrower. So, if you lend $100,000 at -1%, you’ll only get back $99,000.  Negative interest rates are a scheme to get people to spend more money.

According to mainstream economists, spending drives the economy. By cutting its key interest rate to less than zero, the ECB is making it impossible for people to earn interest on their savings. This discourages saving and encourages spending.

But as Casey Research founder Doug Casey says, this isn’t just wrong, it’s the exact opposite of what’s true. Spending doesn’t drive the economy. Production and saving drive the economy. You have to save to build capital, and capital is necessary for everything.

Negative rates haven’t helped Europe’s economy…
Europe’s economy grew at just 0.3% during the third quarter. Europe’s unemployment rate is up to 9%, nearly double the U.S. unemployment rate. And the euro has also lost 17% of its value against the U.S. dollar since June 2014.

If you’ve been reading the Dispatch, you know negative interest rates are a new government scheme..…
Until recently, negative interest rates didn’t exist. Governments invented them to push us further into “Alice in Wonderland.” That’s our nickname for today’s economy, where eight years of extremely low interest rates have warped prices of stocks, bonds, real estate, and nearly everything else.  

For months, we’ve been warning that negative rates are dangerous. Last month, Japan, the world’s third-largest economy, joined the list of countries using negative rates. Sweden, Denmark, and Switzerland all have negative rates, too. According to The Wall Street Journal, countries that account for 23% of global output now have negative interest rates. 

This has set the stage for a huge economic disaster..…
To avoid big losses, we recommend owning physical gold. Unlike paper money, central bankers can’t destroy gold’s value with bad policies. Instead, gold’s value usually rises when governments devalue their currencies.

For example, Europe’s currency (the euro) has lost 17% of its value against the dollar since June 2014. But the price of gold measured in euros is up 14% in the same period. We recently put a short presentation together that explains the best ways to “crisis proof” your wealth.  We encourage you to watch this free video here.

Chart of the Day

Deutsche Bank’s stock has been destroyed. Today’s chart shows Deutsche Bank plummeting 46% over the past year. Yesterday, it hit an all time low. Today, Deutsche Bank jumped 10% after the company said it’s considering a bond buyback program. The company hopes this will ease investor concerns.

E.B. Tucker, editor of The Casey Report, doesn’t think the plan will work:

Deutsche Bank is in trouble. It barely survived the last crisis. In the aftermath, it took tremendous risks to make as much profit as possible. But its winning streak is coming to an end… and it still has to pay for all its obligations. Deutsche Bank also has problems beyond its control. Europe isn’t growing. It’s also dealing with negative interest rates. This is a double whammy for big banks, especially ones that took on too much risk.

The article These Important Stocks are Trading Like a Financial Crisis Has Begun was originally published at caseyresearch.com.

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Whoever Does Not Respect the Penny is Not Worthy of the Dollar

By Nick Giambruno

This definitive sign of a currency collapse is easy to see…When paper money literally becomes trash. Maybe you’ve seen images depicting hyperinflation in Germany after World War I. The German government had printed so much money that it became worthless. Technically, German merchants still accepted the currency, but it was impractical to use. It would have required wheelbarrows full of paper money just to buy a loaf of bread.

At the time, no one would bother to pick up money off the ground. It wasn’t worth any more than the other crumpled pieces of paper on the street. Today, there’s a similar situation in the U.S. When was the last time you saw someone make the effort to pick up a penny off the street? A nickel? A dime?

Walking around New York City recently, I saw pennies, nickels, and dimes just sitting there on busy sidewalks. This happened at least five times in one day. Even homeless people wouldn’t bother to bend over and pick up anything less than a quarter. The U.S. dollar has become so debased that these coins are essentially pieces of rubbish. They have little to no practical value.

Refusing to Acknowledge the Truth

It costs 1.7 cents to make a penny and 8 cents to make a nickel, according to the U.S. Government Accountability Office. The U.S. government loses tens of millions of dollars every year putting these coins into circulation. Why is it wasting money and time making coins almost no one uses? Because phasing out the penny and nickel would mean acknowledging currency debasement. And governments never like to do that. It would reveal their incompetence and theft from savers.

This isn’t new or unique to the U.S. For decades, governments around the world have refused to phase out worthless currency denominations. This helps them deny the problem even exists. They refuse to issue currency in higher denominations for the same reason. Take Argentina, for example. The country has some of the highest inflation in the world. In the last 12 months, the peso has lost over half its value.

I was just in Argentina, and the largest bill there is the 100 peso note, which is worth around $7. It’s not uncommon for Argentinians to pay with large wads of cash at restaurants and stores. The sight would unnerve many Americans, who’ve been trained by the government through the War on Cash to view it as suspicious and dangerous.

For many years, the Argentine government refused to issue larger notes. Fortunately, that’s changing under the recently elected pro market president Mauricio Macri. His government has promised to introduce 200, 500 and 1,000 peso notes in the near future.

This is the opposite of what’s happening in the U.S., where the $100 bill is the largest bill in circulation. That wasn’t always the case. At one point, the U.S. had $500, $1,000, $5,000, and even $10,000 bills. The government eliminated these large bills in 1969 under the pretext of fighting the War on Some Drugs. The $100 bill has been the largest ever since. But it has far less purchasing power than it did in 1969.

Decades of rampant money printing have debased the dollar. Today, a $100 note buys less than a $20 note did in 1969. Even though the Federal Reserve has devalued the dollar over 80% since 1969, it still refuses to issue notes larger than $100.

Pennies and Nickels Under Sound Money

For perspective, consider what a penny and a nickel would be worth under a sound money system backed by gold. From 1792 to 1934, the price of gold was around $20 per ounce. Under this system, it took around 2,000 pennies to make an ounce of gold. At today’s gold price, a “sound money penny” would be worth about 55 modern pennies. A “sound money nickel” would be worth about $3. I don’t pick up pennies off the sidewalk. But I would if pennies were backed by gold. If that were to happen, I doubt there would be many pennies sitting on busy New York sidewalks.

Ron Paul said it best when he discussed this issue…

“There is an old German saying that goes, ‘Whoever does not respect the penny is not worthy of the dollar.’ It expresses the sense that those who neglect or ignore the small things cannot be trusted with larger things, and fittingly describes the problems facing both the dollar and our nation today.

Unless Congress puts an end to the Fed’s loose monetary policy and returns to a sound and stable dollar, the issue of U.S. coin composition will be revisited every few years until inflation finally forces coins out of circulation altogether and we are left with only worthless paper.”

There’s an important lesson here.

Politicians and bureaucrats are the biggest threats to your financial security. For years, they’ve been quietly debasing the country’s currency… and inviting a currency catastrophe. Most people have no idea how bad things can get when a currency collapses….let alone how to prepare.

How will you protect your savings in the event of a currency crisis? This just released video will show you exactly how. Click here to watch it now.

The article Whoever Does Not Respect the Penny is Not Worthy of the Dollar was originally published at caseyresearch.com.

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Mike Seery's Weekly Futures Recap - Crude Oil, Natural Gas, Gold, U.S. Dollar, Coffee, Sugar

Today it is time for a heads up from our trading partner Michael Seery. We've asked him to give our readers a recap of the last weeks futures markets and give us some insight on where he sees these markets headed. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Crude oil futures in the March contract are trading below their 20 and 100 day moving average hitting a contract and multi year low in Thursday’s trade before rallying this Friday currently trading at 28.10 a barrel up nearly $2 on massive short covering ending the week. Crude oil futures traded as low as 26.05 in Thursday’s trade only to rally, but this market certainly remains weak, but at the current time on sitting on the sidelines as the risk does not meet my criteria as the chart structure is very poor presently. As a trader you must think about probabilities of success and at the current time I’m only focused on the soft commodities as they have very tight chart structure with solid trends to the downside as crude oil remains choppy down these levels as the easy money to the downside has already been made in my opinion. The problem with crude oil is the fact that we have huge worldwide supplies as there is a possibility that the United States might be entering a recession due to the fact that the world has slowed down tremendously as global growth is a thing of the past in the short term.
Trend: Lower
Chart Structure: Poor

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Natural gas futures in the March contract continue to head lower despite the fact of very cold temperatures in the Midwestern part of the United States currently trading at 1.98 as I’ve been recommending a short position from around the 2.14 level and if you took that trade continue place your stop loss at the 10 day high which now stands at 2.17 as the chart structure is outstanding at the present time. Natural gas prices are trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside as the long term now trend line is also intact so I remain short as I think there’s a possibility that we can retest the December 18th contract low around 191 as winter is almost behind us, therefore, demand could weaken even more. If you did not take the original trade wait for some type of price rally before entering, therefore, lowering risk as the 10 day high will not be lowered for another 9 days, so you’re going to have to be patient with the risk tolerance at this point. Natural gas prices are trending stronger on a weekly basis in my opinion as who knows how low prices could actually go.
Trend: Lower
Chart Structure: Outstanding

Gold prices experienced a wild trading week settling last Friday in New York at 1,157 an ounce while currently trading at 1,233 up around $75 for the trading week hitting a 1 year high as panic has struck the financial markets sending huge money flows into the interest rate market and precious metals. At the current time, I’m sitting on the sidelines in gold as the chart structure is terrible as the risk is huge at this point, but I’m certainly not recommending any type of bearish position as that would be counter trend so avoid this market at the present time. The S&P 500 has certainly propped up gold prices here in the short-term as gold prices are trading far above their 20 and 100 day moving average telling you that the trend is to the upside as my only recommendation in the precious metals is silver. Gold is in overbought territory in my opinion as volatility is huge at the current time as we had over a $50 rally in Thursday’s trade as I think volatility will continue to remain high as there is so much uncertainty worldwide at the present time. The U.S dollar has also entered into a bearish trend topping out around the 100 level which is a fundamental bullish indicator towards gold prices.
Trend: Higher
Chart Structure: Poor

The U.S dollar in the March contract settled last Friday at 97.05 while currently trading at 96.12 continuing its bearish momentum as I missed this trade to the downside as I’m currently on sitting on the sidelines remaining bearish, but the chart structure and the risk/reward did not meet my criteria to enter into a short position. The dollar is trading below its 20 and 100 day moving average telling you that the short term trend is to the downside as prices are right at a 4 month low due to the fact that the interest rates in the United States have been dropping dramatically, as lower rates mean a lower U.S dollar generally. Volatility in the dollar certainly has increased because of the stock market which is on a roller coaster ride daily sending shockwaves into currency markets as I’m looking to enter into a short position once the risk/reward is in my favor which could happen sometime next week so keep a close eye on this market as we could be entering into a new trade soon. The next major level of support is around 95.00 level and if that is broken, I think we can retest the 93 level in the coming weeks as it certainly looks to me that interest rates are even going lower as worldwide rates have turned negative in certain countries which is an amazing situation in my opinion.
Trend: Lower
Chart Structure: Poor

Coffee futures in the March contract are trading below their 20 and 100 day moving average telling you that the short term trend is to the downside as this market remains extremely choppy and has been over the last 6 months as I’m sitting on the sidelines waiting for something to develop. Coffee settled last Friday in New York at 123.20 a pound while currently trading at 115.40 down about 800 points for the trading week as the commodity markets and especially the soft commodities remain weak in my opinion. However, a breakout has not occurred at the present time. Recently there has been very little fresh fundamental news to dictate short term price action as this is basically a technical trade, but keep an eye on this market as a breakout will occur in my opinion, so you are going to have to be patient as I do like trading the coffee market, but have not been involved for many months. As a trader you must be diversified for example sometimes the grain market or any other market might go sideways for a long period of time, so it’s tough to go to make money, however that’s why you must be diversified and look at all markets, as something is always developing, therefore, giving you a better chance of success in my opinion so keep a close eye on this market as I’m very hopeful one day we will be involved.
Trend: Lower
Chart Structure: Solid

Sugar futures in the May contract settled last Friday in New York at 13.14 a pound while currently trading at 13.12 basically unchanged for the trading week as I have been recommending a short position for several weeks and if you took the original trade we were short the March contract and now we have rolled over into the May contract while now placing your stop loss above the 10 day high which stands around 13.50 as chart structure is outstanding at the present time. Sugar prices are right near a 4 month low as one of my main reasons for selling this market was the fact of a rounding top on the daily chart taking about 3 months to occur, but as a trader, you must have patience as this paid off here in the short-term. The chart structure at the current time is outstanding as the 10 day low will not be lowered for another 7 days, so you’re going to have to be patient with the risk situation, as the next major level of support is around 12.75 and if that is broken I think we could test the contract low around 11.50 so remain short in my opinion as I still see no reason to own many of the commodities as currently I’m short cocoa, cotton, and, of course, the sugar market.
Trend: Lower
Chart Structure: Excellant

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Here’s Why Crude Oil Stocks Haven’t Bottomed Yet

By Justin Spittler

Oil companies are hemorrhaging money. The oil market is in its worst downturn in decades. The price of oil has plummeted 72% since June 2014. Oil is trading below $30 a barrel for the first time since 2003.
If you’ve been reading the Dispatch, you know the world has too much oil. In recent years, technologies like “fracking” have unlocked billions of barrels of oil that were once impossible to extract from shale regions.
Global oil production has climbed 20% since 2000. Last year, global output hit an all time high. Yesterday, The Wall Street Journal reported the global oil market is oversupplied by 1.5 million barrels a day.
Because oil is leaving the ground faster than it’s being consumed, oil storage tanks are overflowing. 

Companies are now storing oil on tankers floating at sea, according to Bloomberg Business.

Low oil prices have slammed oil stocks..…
Since June 2014, Exxon Mobil (XOM), the world’s largest oil company, has dropped 27%. Chevron (CVX), the second biggest oil company, has plunged 38%. European oil giants Royal Dutch Shell (RDS-A), BP (BP), and Total S.A. (TOT) have plummeted 46%, on average, over the last 18 months. Together, these giant companies are known as the oil “supermajors.”

BP had a $3.3 billion net loss last quarter..…
And it lost $6.5 billion for the year, its worst annual loss in at least 30 years. Exxon sales fell 28% last quarter. Its profits plunged 58% to $2.78 billion, the company’s lowest quarterly profit since 2002. Chevron also booked its worst quarterly profit since 2002. Shell expects to report a 42% decline in profits for their fourth quarter.

Oil and gas companies slashed spending by 22% last year..…
Analysts expect another 12% cut this year to $522 billion, according to Reuters. The industry hasn’t spent that little since 2009…when the U.S. economy was going through its worst downturn in almost a century. More spending cuts are coming this year. Chevron plans to cut spending by 24% this year. The company laid off 10% of its employees in October. Exxon plans to cut spending by 25% in 2016. And BP plans to eliminate 9% of its jobs over the next two years.

The supermajors have not cut dividends yet..…
Regular readers know these oil giants pay some of the steadiest income streams on the planet. Shell hasn’t cut its dividend since World War II. Exxon and Chevron have both increased their annual dividends for at least the past 25 years, which earns them a spot in the “Dividend Aristocrats” club. Investors view these dividends as sacred. Some have even passed along their original shares to children and grandchildren, like grandma’s ring or the family farm. These giant oil companies have been paying regular dividends for decades, even through the 2001 dot com crash and 2008 financial crisis. Cutting their dividends would be a last resort.

The world’s oil giants may have to do the “unthinkable” if oil prices stay low..…
Financial Times reported in December,

…(J)ust weeks ago, BP and France’s Total each pledged to balance their books at $60 a barrel oil, saying they aimed to cover their dividends from “organic” cash flow by 2017.

…(E)ven at $60, the three biggest European majors will need to take further cost-cutting action to cover investor payouts…Total’s $6.8bn dividend would exceed its projected organic free cash flow by $800m two years from now. For BP, the cash shortfall is put at $500m…

These oil companies cut costs to be profitable at $60 oil. But with oil now at $30, they need to make even more drastic cuts.
BP is running out of places to cut spending according to Bloomberg Business.

While Chief Executive Officer Bob Dudley has trimmed billions of dollars of spending, cut thousands of jobs and deferred projects in response to the plunge in crude prices, BP’s cash flow still doesn’t cover investments and dividends…

BP has already cut “a lot” from capital expenditure, Chief Financial Officer Brian Gilvary said Tuesday at a press briefing in London. When asked how much room it has to reduce spending further before cutting into the bone, Gilvary said “we are around that zone.”

Standard & Poor’s (S&P) downgraded Chevron and Shell this week..…
Ratings agencies downgrade a company’s credit rating when they think the company’s financial health is getting worse. Like a person having a bad credit score, a downgrade can make it harder and more expensive for a company to borrow money. S&P cut Shell’s credit rating to the lowest level since 1990. S&P also put the debt of BP, Total, and Exxon on watch for downgrades.

S&P doesn’t think oil companies have cut spending enough. Bloomberg Business reported:

S&P’s moves come after the ratings company lowered its 2016 oil-price assumption Jan. 12, reducing Brent crude by $15 a barrel to $40. The 52 percent average price decline in 2015 won’t be matched by most companies’ cost and spending reductions, S&P said.

As regular readers know, the oil market is cyclical. It goes through big booms and busts. Eventually we’ll get an amazing opportunity to buy world-class oil companies at absurdly cheap prices. But with dividend cuts looming, the bottom likely isn’t in yet. We recommend avoiding oil stocks for now.

Louis James, editor of International Speculator, sees an opportunity to profit from cheap oil..…
Louis is our resource guru. He specializes in finding small miners with huge upside. Louis is an expert in the cyclical nature of commodities. He knows how to make money during booms and busts. And now, Louis sees opportunity in airlines. Jet fuel, which is made from oil, is a major operating expense for airlines. So, airline stocks often move up when oil drops. Last year, jet fuel prices fell by more than one-third. Major airlines are now raking in cash. The U.S. airline industry made $22 billion in profits during the first nine months of 2015, according to the Department of Transportation. That’s more than any entire year in its history.

In December, Louis recommended his favorite airline stock in International Speculator.....
The company has doubled its profits during the third quarter of 2015. On Monday, Louis said the company doubled its profits again last quarter.

The company just announced more-than-solid financial results for last quarter, doubling its quarterly profit. The company says it’s on track to hit the high end of its operational goals for the fiscal year. All great, but even better is that the stock rebounded from its recent slide on the news. That’s “proof of concept” that this stock can buck the market by delivering to the bottom line when other businesses are hurting, which was one of the main reasons we bought this stock.

The stock surged 4% with the quarterly news…and Louis thinks the stock will continue higher. You can learn more about Louis’ favorite airline by signing up for a risk-free trial to International Speculator.

Chart of the Day

BP just had its worst year in at least three decades. Today’s chart shows BP’s profits since 1985. Since then, the oil giant has made money in 27 years and lost money in 3. Last year, BP lost a record amount of money. It lost more than it did in 2010 when one of the company's oil rigs exploded in the Gulf of Mexico. BP has cut billions of dollars in spending. It’s laid off thousands of workers. Yet, it’s still bleeding cash. The company may soon have to do the unthinkable and cut its dividend.

The article Here’s Why Oil Stocks Haven’t Bottomed Yet was originally published at caseyresearch.com.

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Why Now Is the Best Time to Buy Gold in a While

By Justin Spittler

Bank stocks are slumping. Wells Fargo (WFC), the largest U.S. bank, has fallen 11% this year. JPMorgan Chase (JPM), the second largest, has fallen 14%. Bank of America (BAC), the third largest, has plunged 21%. And those are just the household names.

The Standard & Poor’s 500 Financials Index, which tracks 87 large U.S. financial stocks, has dropped 12% this year. For comparison, the S&P 500 has dropped 8%. On Monday, Bloomberg Business reported that financial stocks are off to their worst start in years.

The Standard & Poor’s 500 Financials Index has tumbled 11 percent in 2016, putting it on track for its worst month in more than four years. More than $360 billion of market value has been wiped out of financial companies in January, more than all but one month since data began in 1990.

The performance of banks says a lot about the health of an economy..…

Banks make money by loaning money to businesses and real estate buyers. The more good loans a bank makes, the more interest paid to the bank. But when an economy is doing badly, demand for loans falls. Also, when an economy is doing badly, some borrowers don’t pay loans back in full. This increases the cost of bad loans…which is one of a bank’s biggest expenses. This eats away profits from the bottom line.

When the economy slows, people cut back on extra expenses like vacations. People shop less. There are fewer dollars around at the end of each month, so less money ends up in the bank…giving the bank less money to loan out. Since banks “touch” almost every aspect of the economy, bad performance by banks is often an early sign that the economy is turning down.

While bank stocks are down big, bank profits are still solid..…

JPMorgan Chase’s profits jumped 10% from the prior year...Bank of America’s rose 9%...and Wells Fargo’s were flat. You’d expect to see much worse results in an industry where stocks are breaking down. This likely means investors are expecting bank profits to shrink soon. Markets tend to “price-in” things before they happen.

Bloomberg Business reports:

Commercial and industrial loans have flat lined in recent weeks after steadily climbing throughout 2015…Growth in such loans offers investors an idea of potential interest income, as C&I loans typically produce more revenue for banks than parking funds in cash or Treasuries.

Bloomberg Business also explained that banks are bracing for losses on oil loans.

Bigger picture uncertainties are weighing on the group, not least of which is how wounds at energy companies will bleed into this sector. Bank of America, Citigroup Inc., JPMorgan and Wells Fargo have set aside more than $2.5 billion to cover souring energy loans and will add to that if oil prices remain low.

If you’ve been reading the Dispatch, you know the oil industry is in crisis mode..…

The price of oil has plunged 70% since June 2014. Yesterday, oil closed at $32. Energy consulting company Wood Mackenzie estimates $1.5 trillion worth of oil projects in North America can’t make money even at $50 oil. With oil at $32 today, the value of money-losing projects has likely climbed above $2 trillion.

Many oil companies are struggling to pay back loans. Credit rating agency Fitch expects 11% of U.S. energy bonds to default this year. That would be the highest default rate for the energy sector since 1999. This is bad news for banks that have loaned money to oil companies.

Moving along, if you’ve been reading Crisis Investing, you know the “opening up” of Cuba is a huge investment opportunity..…

Nick Giambruno, editor of Crisis Investing, expects to make a lot of money investing in Cuba. Nick specializes in buying high-quality assets made cheap by crisis. According to Nick, a crisis is the only time you can be sure to get assets at bargain prices.

Cuba has been in a slow-motion crisis for decades. In short, its Communist government has wrecked the economy. And the United States’ ban on trade with Cuba killed any chance at economic growth. However, after decades of isolating Cuba, the U.S. government recently changed its policy. It reopened an embassy in Cuba in August. And last week, the U.S. took another promising step toward Cuba.

Here’s the New York Times:

The Obama administration announced Tuesday that it was removing major impediments to contact between the United States and Cuba by lifting restrictions on American financing of exports to the island nation and relaxing limits on the shipping of an array of products, from tractors to art supplies.

The revised rules that will take effect on Wednesday will allow United States banks to provide direct financing for the export of any product other than agricultural commodities, still walled off under the trade embargo.

Nick notes that American companies are pushing to do business in Cuba. He says the “cat’s out of the bag,” and Cuba will soon open up.

Cuba has over 2,000 miles of pristine coastline and the potential to be a top tourist destination. When the embargo ends, the U.S. government estimates 12 million Americans will visit Cuba within the first year.

There’s no denying it. If Cuba ever opens up, there’s potential to make a fortune. Doug Casey has long been interested in the investment potential of Cuba, and I couldn’t agree more that there is huge opportunity there.

You can learn how Nick is playing the “opening up” of Cuba by taking a risk-free trial of Crisis Investing. It’s an investment Americans can easily buy with a standard brokerage account…and it yields 9.3%.

Our friend Tom Dyson just came back from a trip to Cuba..…

If you don’t know Tom, he's founder of Palm Beach Research Group, a publishing company dedicated to helping readers get a little bit richer every day. Since he launched The Palm Beach Letter in 2011, it has built a reputation as one of the world’s most respected investment advisories. You can check it out here.

Tom was in Cuba looking for investment opportunities. Here’s his take…

There are billions of dollars just waiting to flood into Cuba the moment their economy opens. There’s a whole industry poised to invest in Cuba: Cuban people living in Florida and other parts of America...the big hotel chains...the big real estate companies.

Tom says it’s not easy for Americans to invest in Cuba yet…but the potential is huge.

It’s a beautiful island with amazing beaches. Cuba could also be a huge cruise ship destination. It could end up looking like Cancun.

Chart of the Day

Gold has climbed to a three month high. Yesterday, the price of gold closed at $1,125 an ounce, its highest level since November. Gold is also up 6.1% since the start of the year. U.S. stocks are down 8% in the same period.
Today’s chart shows that gold is “carving out a bottom”.  On Monday, we explained why “carved out bottoms” are important. An asset carves out a bottom when it stops falling…forms a bottom for a period of time…then starts climbing higher. A stock that’s carving out a bottom should hold above a certain price for a period of time. This is a key signal that buyers are stepping in at this price, giving it a floor.

Buying an asset that has carved out a bottom is much less risky than buying an asset that’s trending down. As you likely know, gold has been in a downtrend since 2011. However, since November, gold has stopped going down. It has held above $1,050. This is a clue that gold prices are heading higher.

Casey readers know we own gold because it preserves wealth over the long term. We try not to get caught up in its daily price movements. However, gold is at a potential “turning point” today. If you’ve been meaning to buy gold, now’s a good time.

The article Why Now Is the Best Time to Buy Gold in a While was originally published at caseyresearch.com.

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Technical Evidence Indicates Major Price Movement Just Getting Started!

Stocks around the globe were pummeled again last week. This is no surprise to our subscribers as our predictive trend analytics model gave us clear technical evidence that important multi year highs had completed back in the middle of 2015. I continue to remain steadfastly bearish in my outlook for stocks.

Last Friday, January 15, 2016, the SPX broke below its Aug. 24, 2015 low, which is equivalent to a major sell signal if price closes the month below that level.

Last week, The Dow Jones Industrial Average slumped 511 points, or 3.1%, to 15,866, while the S&P 500 slid 64 points, or 3.4%, to 1,856.34, led by the financials, technology and energy sectors. The Nasdaq Composite tumbled 190 points, or 4.1%, to 4,424.35. Subscribers and I managed to catch a 33% quick intra-week bounce trading the SSO ETF and then got out of harm’s way as volatility took hold once again.

European stocks were unable to escape the downward trend from other markets, and the Stoxx Europe 600 index lost 2.8%. The dollar fell to a one-year low vs. the yen. Gold rose $22.40, or 2.1%, to $1,096.20 an ounce.

The SPX is currently testing major support. This is consistent with a “cycle low” that arrived over the weekend. Even though we are in a bear market, we should expect a “Bear Market Rally” sucking every last investor into long positions, before dropping much lower through previous support areas. This will be a very “short term bottom” this week.

We are in a long term downtrend now; it is not a “hiccup” as we experienced back in 2012.

If the stock market is going to stage a rally from here, this is a good time to start, right when everyone is jumping off the ship and the sentiment is so extremely negative. Just to give you a feel for the level of panic selling on Friday, my panic selling indicator which tells us when short term bottoms are likely to happen as everyone is running for the door, this contrarian indicator spiked to 50. Now any reading over 3 is panic in the market, and a reading of 9-18 is typically a multi week low. So you can see how 50 is VERY extreme.

Because we are entering a bear market and institutions will be unloading shares area record pace going forward, I feel this extreme level of panic selling (50) is only going to trigger a bounce lasting a week or so, then more distribution selling will take hold.

A slew of disappointing U.S. data shows that manufacturing and consumer spending are in trouble. Empire State factory index declined sharply this month to its lowest level since the recession. Retail sales declined by 0.1% in December 2015 and a report on industrial production compiled showed that activity declined for the third straight month.

The New Year is not off to good start. In fact, it may be the worst start ever of a New Year in many world stock indices. Instead off irrational exuberance that had previously been so evident, investors of world equity markets are clearly starting to panic. We all know things are not right. We know it hasn’t been okay since the 2008 financial crisis. The effort by the central banks to get over the hump has fueled an “Asset Bubble” in the stock markets.

This in turn should start to fuel safe haven buying in gold. Gold’s day in the sun is soon approaching. I believe this new year will prove to be a pivotal year for gold, silver and miners.

The “talking heads” tell us that the stock market is falling because energy prices are falling. We need higher energy (gasoline) prices. Really? They claim that energy companies are going out of business and that tens of thousands of people will lose jobs and unemployment will rise. Really? Didn’t the jobs numbers show hundreds of thousands of people getting new jobs – in fields outside of energy? Who are you going to believe?

Later this week I will be posting an exciting video show you how to make a fortune during this pending bear market and exactly how I did this in 2008 – 2012 to become financially free before I turned 30 years of age. Stay tuned and be sure to opt into my free email list if you want to see this exciting, inspiring and educational video!

Visit Here > www.Gold & Oil Guy.com 
Chris Vermeulen

A Stunning Move by the World’s Largest Oil Company

By Justin Spittler

Oil still can’t find a bottom. As Dispatch readers know, the oil market is in crisis. Since June 2014, oil has plunged 69%. It dropped 31% in 2015 alone. So far, 2016 has been even worse. The price of oil has fallen every day this year. On Friday, it closed at $32.88 a barrel, its lowest price since February 2004. Oil is already down 11% this year.

In October, Doug Casey predicted lower oil prices at the Casey Research Summit in Tucson, Arizona. I don't know how long [oil prices] will stay low. But they're going lower for the time being. Production is stable to up, but consumption is headed down with a slowing economy.…I'm still short oil at the moment.

The world has too much oil…..
As you likely know, new technologies like “fracking” have unlocked billions of barrels of oil that were impossible to extract before. U.S. oil production has nearly doubled since 2008. In June, U.S. oil production hit its highest level since the 1970s. Global oil output hit an all time high in 2014.

Falling oil prices have slammed the world’s largest oil companies…..
The world’s five largest publicly traded oil companies – Exxon Mobil (XOM), Chevron (CVX), Royal Dutch Shell (RDS-A), BP (BP), and Total S.A. (TOT) – lost $205 billion in value last year, according to The Wall Street Journal. Shell, the worst performer of the five, dropped 24% in 2015. Total, the best performer, dropped 3%.

Oil services companies, which sell “picks and shovels” to the oil industry, have also tanked. The Market Vectors Oil Services ETF (OIH), which holds 26 oil service companies, has plunged 59% over the past 18 months. Schlumberger (SLB) and Halliburton (HAL), the two largest oil services companies, are down 39% and 44% in the same period.

Eventually, this cycle will end with absurdly low prices for oil stocks. We’ll get an amazing opportunity to buy oil stocks at fire sale prices. But, for now, we recommend staying away until the world works through some of its oversupply of oil.

Saudi Arabia is in crisis…..
Saudi Arabia depends more on oil revenues than any other country. Oil makes up 83% of its exports. And about 80% of the country’s government revenue come from oil sales. Last year, the Saudi government spent $98 billion more than it took in…its first budget deficit since 2009.

The International Monetary Fund (IMF) expects the Saudi government to post a budget deficit as high as -19% of GDP in 2016. For comparison, the U.S. government has not posted a deficit higher than -9.8% since World War II. The IMF says Saudi Arabia could burn through its $650 billion cash reserve by 2020 if oil prices stay low. Since oil crashed in the summer of 2014, the country has already withdrawn at least $70 billion from its cash reserve.

To raise cash, the Saudi government may sell its crown jewel…..
Saudi Aramco is Saudi Arabia’s government owned oil company. As the world’s largest oil company, it owns the biggest oil fields in the world, and produces 13% of the world’s oil. The Saudi government has controlled the country’s oil industry since the 1970s. Last week, Financial Times reported that Saudi Arabia is considering an initial public offering (IPO) for Aramco. An IPO is when a company sells shares to the public.

According to Financial Times, an IPO would likely value the company “in the trillions of dollars.” To put that in perspective, Apple (AAPL), the world’s largest publicly traded company, is worth just $538 billion. Some estimates put the value of Saudi Aramco at more than 10 times that of Exxon Mobil – the world’s largest publicly traded oil company.

Switching gears, the U.S. automobile industry is setting record highs..…
U.S. automakers sold an all time record 17.5 million vehicles in 2015. The industry sold 5.7% more vehicles last year than it did 2014. Auto sales have now grown six years in a row. Despite record sales, U.S. automaker stocks are struggling. Ford (F) was down 9.1% in 2015, and has only gained 17% since the beginning of 2012.

General Motors (GM) was down 2.6% in 2015, and has gained 46% since the beginning of 2012. Both stocks have performed worse than the S&P 500, which has gained 53% since the beginning of 2012. Companies that sell parts and services in the auto industry have done much better. Tire maker Goodyear (GT) has climbed 99% over the past four years. Repair and parts shop AutoZone (AZO) is up 119%.

Cheap credit has fueled the boom in the auto industry…..
Forbes reported last month: During the third quarter of 2015, Experian determined the average amount financed for a new vehicle was $28,936, which is up $1,137 from the same period in 2014. What’s more, 44 % of buyers are now taking out loans for between 61 and 72 months, with 27.5% extending their new-vehicle indebtedness to between 73 and 84 months, with the latter representing an increase of 17.1 percent over the past year.

As Casey readers know, the Federal Reserve has made it incredibly cheap to borrow money. In 2008, the Fed cut its key interest rate to effectively zero to fight the financial crisis. It has held its key rate at extremely low levels ever since. Today, its key rate is just 0.25%...far below the historical average of 5%. The average interest rate on a car loan is just 4.3% today. In 2007, the average car loan rate was 7.7%.

E.B. Tucker, editor of The Casey Report, isn’t surprised by the auto industry’s record year..…
Here’s E.B.: Of course the auto industry had a record year…how could it not? I've seen auto rates as low as 0% for 84 months. When money is free, people buy now and think later. The U.S. auto loan market has grown 18 quarters in a row. Last year, it topped $1 trillion for the first time ever. There is now 47% more auto debt outstanding than credit card debt in the U.S.

E.B. says this will end badly. The auto leasing market is also booming because of easy money. Leasing made up 27% of car sales during the first quarter of 2015. Those leases will expire 40 months from now. And someone has to buy those vehicles. This year, over 3 million leased cars will hit the market. Even more will hit the market next year and the year after. All these used cars will create a huge glut. If the free money dries up at the same time, things will get ugly fast. That’s how booms built on easy money come to an end.

Chart of the Day

Oil has plunged to its lowest level in 12 years. Today’s chart shows the price of oil going back to 2004. As you can see, oil has sunk to its lowest level since February 2004. It’s now down 77% from the all time high it set in 2008. As we’ve explained, the world simply has too much oil. Oil is now cheaper than it was during the worst of the global financial crisis in 2008-9.

The article A Stunning Move by the World’s Largest Oil Company was originally published at caseyresearch.com.

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Steve Swanson Shows Us How to Trade This Volatile Market

Steve Swanson's 4D technology [which you'll read about in a minute] predicted everything about January's sell off and subsequent rally way back in December. If you want to know the future too, just click on the video link below. An up to date chart of the S&P 500 Price/Time Continuum is posted below the video. See for yourself the precise day the next big rally will begin then use the profit magnifier detailed in this free eBook to earn 3 times more profits.

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Steve Swanson actually invented a program that plots every intermediate market high and low. Past, present, and future on what’s called the “Price Time Continuum”. That’s how he’s been able to predict and profit from every market turning point for more than 2 decades. Some are calling Swanson’s 4^th Dimension breakthrough the “Discovery of the Century”.  

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See you in the markets,

Ray C. Parrish
aka the Crude Oil Trader

P.S. As with most free things, Steve Swanson’s generous offer is limited.  So, even if you don’t have time to delve into anything new right now, I’d encourage you to grab your free ebook while you can.  That way you’ll have it to look through whenever you like. Click Here Now.