Empire State
Manufacturing Survey

The December 2014 Empire State Manufacturing Survey indicates that business activity declined for New York  manufacturers. The headline general business conditions index dropped fourteen points to -3.6, its first negative reading in nearly two years.

DYI Comments:  Why are oil prices dropping?

BIG REASON #1
 

No doubt America is on a tear for producing oil and natural gas as well.

Big Reason #2
The world economy is slowing down with many countries in outright recession.  China is slowing along with Central Europe with the exception of Spain and Italy who are in recession.  Greece continues to be in an on going depression.  Canada is in the mist of a real estate boom that will soon go bust bringing an American style deflationary smash.

Big Reason #3a. 3b. & 3c.
a.) OPEC and all of their member nations are pumping oil as they all cheat on their quota's.
b.) U.S. State Department is encouraging Saudi Arabia to produce to punish Putin.  The State Department didn't engineer the downturn they are only taking advantage.
c.)  Iranian embargo on exporting oil lifted to further punish Russian economy is possible.

Big Reason #4
North American and European trucks/autos have increased their fuel economy.

Junk Bond Selloff Is a Warning for Retirees Who Reached for Yield

Risky assets have paid off well the past few years. But tremors in the junk bond market signal time for a gut check.

The junk bond selloff began in the energy sector, where oil prices recently hitting a five-year low set off alarms about the future profits—and ability to make bond payments—of some energy companies. In the past month, the selling has spread throughout the junk-bond universe, as mutual fund managers have had to sell to meet redemptions and as worries about further losses in a possibly stalling global economy have gathered steam. 

Retirees have been reaching for yield in junk bonds and other relatively risky assets since the financial crisis, which presumably is partly what prompted Yellen’s warning last summer. It’s hard to place blame with retirees. The 10-year Treasury bond yield fell below 2% for a while and remains deeply depressed by historical standards. By stepping up to the higher risks of junk bonds, retirees could get 5% or more and live like it was 10 years ago. Many also flocked to dividend-paying stocks.

Is This The Start Of The Next Major Financial Crisis?

Is this the start of the next major financial risk?  The nightmarish collapse of the price of oil is creating panic in financial markets all over the planet.  On June 16th, U.S. oil was trading at a price of $107.52.  Since then, it has fallen by almost 50 dollars in less than 6 months.  This has only happened one other time in our history.  In the summer of 2008, the price of oil utterly collapsed and we all remember what happened after that.  Well, the same patterns that we witnessed back in 2008 are happening again.  As the price of oil crashed in 2008, so did prices for a whole host of other commodities.  That is happening again.  Once commodities started crashing, the market for junk bonds started to implode.  That is also happening again.  Finally, toward the end of 2008, we witnessed a horrifying stock market crash.  Could we be on the verge of another major one?  Last week was the worst week for the Dow in more than three years, and stock markets all over the world are crashing right now.  Bad financial news continues to roll in from the four corners of the globe on an almost hourly basis.  Have we finally reached the “tipping point” that so many have been warning about?

DYI