Making Hay Monday - April 1st, 2024
High-level macro-market insights, actionable economic forecasts, and plenty of friendly candor to give you a fighting chance in the day's financial fray.
Charts of the Week
Bears on the oil market have become less strident as prices have been vigorously rallying this year. However, whenever crude corrects, they tend to come out of the woodwork, often focusing on high levels of oil inventories. In reality, however, those are at exceedingly low levels, especially relative to demand. The Biden administration’s release of approximately 200 million barrels from the Strategic Petroleum Reserve (SPR) obscured the ultra-tight inventory situation for over a year. At this point, though, it is no longer able to use this ploy to create an illusion of ample supplies.
(OECD refers to the largest developed countries.)
The homebuilding stocks continue to be on fire. There are several oddities about this situation. One of them is the low level of residential construction workweeks. This is despite a fairly high level of payrolls, implying very poor productivity in this industry, as some pundits have noted. That should mean profit margins are under pressure, particularly as new home prices have been falling, especially including buyer subsidies (like interest rate buy-downs) that often don’t show in official pricing data.
“The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts.” -Bertrand Russell
April IEA Fools’ Day
Champions
Yes, it’s that day again when you need to be on alert for practical jokes that are usually followed by “April Fools!”. It’s simply human nature to want to be on the administering, rather than receiving, end of these gags. But what if the fooling goes on 365 days a year… and for decades? Further, what if it comes from one of the most (unjustifiably) important sources of energy information in the world?