Week of Nov 16 2018 Weekly Recap & The Week Ahead
“We have to practice defensive investing, since many of the outcomes are likely to go against us. It’s more important to ensure survival under negative outcomes than it is to guarantee maximum returns under favorable ones.” ― Howard Marks
1. Gas to Top Coal as Energy Source by 2030 — natural gas is expected to overtake coal as the world’s second largest energy source after oil by 2030 due to a drive to cut air pollution and the rise of LNG. The estimates are based on the IEA’s “New Policies Scenario” that takes into account legislation and policies to reduce emissions and fight climate change. They also assume more energy efficiencies in fuel use and other factors.
2. California Wildfire Deadliest in State History — the death toll has reached 42 in California’s wildfire, making it the deadliest in state history, while an additional 228 people remain missing. Despite sharp criticism on Twitter, President Trump approved California’s request for federal disaster aid. Edison International (NYSE:EIX) and PG&E (NYSE:PCG), whose shares have plunged over the last two sessions, will likely face lawsuits blaming their faulty power lines for sparking the blazes.
3. OPEC and Its Partners Plan of Larger Output Cut — looking to avert an oversupply that has weakened prices, OPEC and its partners are reportedly discussing a proposal to cut crude output by up to 1.4M bpd for 2019, a larger figure than officials have previously mentioned. Oil prices are now experiencing the “normal volatility that comes in the run up to our conference [on Dec. 6]… it’s a period of anxiety for all stakeholders,” OPEC Secretary General Mohammed Barkindo told CNBC.
4. Thanksgiving Market Returns — courtesy of BIG, As shown in the table below, during years where the S&P 500 was positive but up less than 5% YTD heading into Thanksgiving week, the index’s average change during the week has been 0.00% with gains less than half of the time.
As we move past Thanksgiving, though, seasonal trends for the market based on this year’s performance so far improve. In those years where the S&P 500 was up less than 5% YTD heading into Thanksgiving week, the average gains the week after Thanksgiving was 0.41% with positive returns 55% of the time. For the remainder of the year, average returns were even stronger at +2.83%. Not bad for a period of just over five weeks!
The week ahead — Economic data from Econoday.com:
