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Water Cooler Wisdom: Fourth Quarter 2014

January 7, 2015 by admin

Water Cooler WisdomMajor events at the close of 2014, specifically the fourth quarter of 2014, included: the abnormally low prices of oil; the unique position of the Federal Reserve and the US dollar; US Treasury Rates poised (still) to rise; and American manufacturing ramped up to march on ahead of other world leaders, while an embroiled Europe awaits the coming year.

“Returns and Valuations by Style”

Significantly improved from the previous quarter, overall market growth was strong in the final quarter of 2014; though the annual return was less than half of the growth from 2013’s phenomenal success.

“Energy Price Impacts”

By a landslide, the most compelling story of the closing chapter of 2014 was the low oil prices brought upon by OPEC with ferocious Saudi leadership striving to re-establish control of global oil markets. Oil production outpaced consumption, therefore supply outpaced demand, and led to a build in inventories. The supply is not uniformly distributed, though, and the United States is responsible for the fastest supply growth since 2013; however, consumption in the US did not grow nearly as much, and China continues to contribute to the most global demand growth. Notably, Europe and Japan’s consumption declined.

The population most effected by gasoline prices, of course, is the lowest quintile of the population. If oil production declines, and global demand growth picks up, then oil prices could move higher, but if the demand trends persist, and supply growth remains robust with neither the US nor OPEC yielding any production, then oil prices could move further down. Economists overall are split either way, but most agree that the current low prices are abnormal. The Federal Reserve expects that any resulting deflationary pressure from current low oil market prices will be transitory, rather than permanent, and that the economy will achieve the 2% target inflation over time.

[Read more…] about Water Cooler Wisdom: Fourth Quarter 2014

Filed Under: Blog, Castle Rock Investment Company, Currency, Europe, Federal Reserve, Fixed Income Markets, Industry News, International Markets, Katherine Brown, Oil and Natural Gas, Reserve Currency, Russia, Uncategorized, US Dollar, US Treasury, Water Cooler Wisdom Tagged With: 10-year Treasury, Castle Rock, Castle Rock Investment Company, China, Economic Stability, Euro, Eurozone, Federal Reserve, Fixed Income, Floating Rate bond, Germany, Global Finance, Global Trade, Greece, Grexit, High-Yield, Janet Yellen, JPMorgan, Katherine Brown, Michele Suriano, monetary policy, Mortgage-Backed Securities, US Dollar

Much Ado About Fracking

September 24, 2014 by admin

On Tuesday, September 17th, I attended a luncheon with the Denver Association of Business Economists (DABE) to hear Garret Nülle, an expert in Oil and Gas Economics speak. Mr. Nülle presented us with a comprehensive overview of the field, including projections of where fracking will go in the future. A few days later, I met with David Tameron, Senior Analyst for Wells Fargo Securities, regarding the role of fracking in the economy. The following post is the product of these conversations. 

From slides of Mr. Nülle's presentation
From slides of Mr. Nülle’s presentation

The popular term for Shale Drilling or Hydraulic Fracturing, “Fracking”, polarizes as many groups of people as other hot-button topics. But, like it or not, the energy investment community sees shale drilling as a permanent part of our energy source. The US has actually used fracking since the 1940s; as a part of oil and natural gas resources for the last 60-odd years, about 35,000 wells use the hydraulic fracturing method. An estimated 80% of natural gas is estimated to require hydraulic fracturing for extraction in the next decade. So, the number of rigs currently involved in production and the US market should continue as the most established for the next two decades.

[Read more…] about Much Ado About Fracking

Filed Under: Blog, Castle Rock Investment Company, Denver Association of Business Economists, International Markets, Katherine Brown, Oil and Natural Gas, Presentations, Uncategorized Tagged With: Argentina, Australia, Brazil, Castle Rock Investment Company, China, Colorado School of Mintes, DABE, David Tameron, Denver Association of Business Economists, Discussions, economics, Fracking, Garret Nülle, Global Trade, Horizontal Drilling, Hydraulic Fracturing, Indonesia, infrastructure, International Markets, International Natural Gas Production, International Oil Production, Katherine Brown, Mexico, Natural Gas Production, oil and gas economics, Oil Production, Oil Rig, Poland, Russian Federation, Securities, Shale Drilling, South Africa, United States, Wells Fargo

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Castle Rock Investment Company, formed in 2006, is an independent woman-owned SEC-registered investment adviser located in Castle Rock, Colorado. We specialize in individual financial plans and qualified service plans.

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