Raymond Kanyo, CFA
MarketBites: Is Oil At Max Production?
Portfolio Manager Commentary:
Stocks rose in a volatile session as Q2 earnings continue to deliver "not as poor as expected" results. Technology stocks led the market higher, while defensive sectors such as utilities and health care lagged.
It seems that the market is getting used to the current conditions. It survived the crypto crash, the growth stock crash, the war in Ukraine, and rising interest rates. Investor sentiment also got a boost from the odds of a 1% rate hike next week looking unlikely. However, we are not out of this bear market just yet. Europe remains in crisis mode. The Italian government is on the brink of collapse, and the continent is preparing for gas rationing in the event that Russia decides to shut down the pipelines to Europe.
Elsewhere, the U.S. housing market continues to cool with mortgage applications dropping 6.3% in July and existing home sales plunging 5.4% in June. Price cuts are happening in multiple metro areas, but we haven't seen a significant correction in the housing market just yet. This is most likely due to the high level of fixed-rate mortgages sold in the U.S. In Canada, where variable rate mortgages are the standard, the housing market is turning over a lot faster.
Chart of the Day:
Saudi Arabia has indicated that 13 million barrels of oil a day might be their maximum capacity. While this can change in the future, this suggests that the largest oil producer in the world is reaching its theoretical maximum oil production. This can be concerning for various Western nations. Multiple countries are in the middle of multi-decade energy infrastructure plans that transition public consumption to renewable energy.
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