Gas prices - OPEC in price war with US producers

http://money.cnn.com/2014/11/28/investing/opec-oil-price-us-shale/index.html

OPEC's message to US shale: Drop dead

By Matt Egan   @mattmegan5 November 28, 2014: 2:35 PM ET

• 
  
• 
  
• 
  
• 
  
• 
  

• 555
  TOTAL SHARES
• 430
• 86
• 
  
• 39

NEW YORK (CNNMoney)

OPEC just fired a shot at the U.S. shale industry.

Despite tumbling prices -- the lowest since 2010 -- the cartel surprised the energy industry by deciding to keep pumping oil at current levels. One motivation is to squeeze higher-cost producers in North America, including the booming U.S. shale industry that has reshaped the global energy landscape.

It's a move Tony Soprano would be proud of. OPEC is betting lower oil prices will force U.S. producers to throw up the white flag and cut back on production because they won't be able to turn a profit.
"The gauntlet has been thrown down for Western Hemisphere producers like Brazil, Canada and the United States," Bespoke Investment Group wrote in a note to clients on Friday.
Related: Nightmare for oil stocks
Dot-com bust all over again? The fear is that OPEC's hard line could cause a pull back in the U.S. shale industry, sparking job losses and causing panic in the financial markets.
That's what Russian oil tycoon Leonid Fedun is predicting, although Russia isn't part of OPEC.
"The shale boom is on par with the dot-com boom. The strong players will remain, the weak ones will vanish," he told Bloomberg News on Thursday.
The OPEC move has clearly spooked investors, who sent energy stocks like Halliburton (HAL), Helmerich & Payne (HP) and Schlumberger (SLB) plummeting on Friday. (U.S. markets were closed for Thanksgiving Day on Thursday).

"I think there will be increased scrutiny of the balance sheets of the exploration and production companies. You'll see some of the weaker players fall out," said Tamar Essner, energy analyst at Nasdaq Advisory Services.
Related: The real Black Friday deal: cheap gas
Credit stress ahead: That scrutiny forced SeaDrill Limited (SDRL) to suspend its dividend earlier this week, causing the offshore drilling contractor's stock to plummet 23%.
Essner "absolutely" expects more drillers and oil servicing companies to cut or even suspend dividends. Bespoke's baseline scenario calls for dividend suspensions and bond defaults among more "marginal" named producers.
Many troubled shale companies will be able to avoid bankruptcy by selling acreage to boost cash flows though, said Per Magnus Nysveen, head of analysis at Rystad Energy.
No crash just yet: While financial stress could be looming for shale oil producers, experts aren't forecasting a complete meltdown.
"I don't think this will spell the death knell of the U.S. shale industry. Time and again this industry has proved very resilient," Essner said.
Nysveen said the breakeven crude oil price for U.S. shale producers is around $50 or $55. Despite the recent plunge, oil is still well above that at the $70 range.
Those crucial breakeven points have been trending lower and lower in recent years thanks to technological advances that have made oil producers dramatically more efficient.
"U.S. production is much more competitive than 30 years ago," Nysveen said.

First Published: November 28, 2014: 1:09 PM ET

American - US Airways merger, 2013

Controversy
http://www.cnn.com/2013/08/13/us/airline-merger-antitrust-lawsuit/index.html

Merged airline and settlement:
http://en.wikipedia.org/wiki/American_Airlines_Group

List of airline margers
http://en.wikipedia.org/wiki/List_of_airline_mergers_and_acquisitions

Industrial production

http://mam.econoday.com/byshoweventfull.asp?fid=461304&cust=mam&year=2014&lid=0&prev=/byweek.asp#top

Industrial Production

Released On 11/17/2014 9:15:00 AM For Oct, 2014 Prior Prior Revised Consensus Consensus Range Actual Production - M/M change 1.0 % 0.8 % 0.2 % -0.1 % to 0.4 % -0.1 % Capacity Utilization Rate - Level 79.3 % 79.2 % 79.3 % 79.0 % to 79.4 % 78.9 % Manufacturing - M/M 0.5 % 0.2 % 0.3 % 0.2 % to 0.4 % 0.2 %

Highlights Industrial production for October slipped on comedowns in mining and utilities. Industrial production dipped 0.1 percent after jumping 0.8 percent in September. Analysts projected a 0.2 percent gain. Manufacturing gained 0.2 percent after rebounding 0.2 percent in September. Expectations for the manufacturing component were for an increase of 0.3 percent. Mining declined 0.9 percent in October, following a 1.6 percent boost the month before. Utilities slipped 0.7 percent after a monthly 4.2 percent surge in September. The production of nondurable goods rose 0.3 percent and the production of durable goods edged up 0.1 percent. Among durable goods industries, machinery posted the largest increase, 1.3 percent, while wood products, computers and electronic products, and furniture and related products all recorded gains of more than 1/2 percent. These gains were partially offset by declines of more than 1 percent in the indexes for nonmetallic mineral products and for motor vehicles and parts. The decline in motor vehicles and parts resulted from a decrease in vehicle assemblies, which fell 400,000 units to an annual rate of 11.1 million. Production increased for most nondurable goods industries, with the largest advances recorded by chemicals and by plastics and rubber products; only the paper industry registered a decline. Overall capacity utilization posted at 78.9 percent in October versus 79.2 percent in September. The notable detail in today's report is that manufacturing remains on a moderate uptrend.

Recent History Of This Indicator Industrial production jumped an outsized 1.0 percent in September after a decline of 0.2 percent in August. Forecasts were for 0.4 percent. Yes, utilities were the big mover, spiking a monthly 3.9 percent, following a 1.2 percent gain the prior month. But manufacturing was solid, rebounding 0.5 percent in September after a 0.5 percent decline the month before. Mining advanced 1.8 percent, following a 0.3 percent increase in August. Overall capacity utilization jumped to 79.3 percent from 78.7 percent in August. Manufacturing appears to have regained some steam for the U.S. economy. The third quarter still appears likely to post moderately healthy growth.

Definition The Federal Reserve's monthly index of industrial production and the related capacity indexes and capacity utilization rates cover manufacturing, mining, and electric and gas utilities. The industrial sector, together with construction, accounts for the bulk of the variation in national output over the course of the business cycle. The production index measures real output and is expressed as a percentage of real output in a base year, currently 2007. The capacity index, which is an estimate of sustainable potential output, is also expressed as a percentage of actual output in 2007. The rate of capacity utilization equals the seasonally adjusted output index expressed as a percentage of the related capacity index.  Why Investors Care

The industrial sector accounts for less than 20 percent of GDP. Yet, it creates much of the cyclical variability in the economy. Data Source: Haver Analytics

The capacity utilization rate reflects the limits to operating the nation's factories, mines and utilities. In the past, supply bottlenecks created inflationary pressures as the utilization rate hit 84 to 85 percent. Data Source: Haver Analytics

Beyond The Unemployment Rate: Look At These 5 Labor Indicators

http://www.npr.org/2014/11/07/362351935/forget-the-unemployment-rate-look-at-these-5-economic-indicators

Beyond The Unemployment Rate: Look At These 5 Labor Indicators

November 07, 2014 4:19 PM ET

SONARI GLINTON

Twitter Tumblr

Listen to the Story

All Things Considered

3 min 37 sec

• Playlist
• Download
• Transcript

Job hunters line up for interviews at an employment fair in New York City. The unemployment rate tells only a partial story about the U.S. labor market.

Mark Lennihan/AP

The unemployment rate has fallen to its lowest level since July 2008 — to 5.8 percent — the Labor Department said Friday. And October marks the ninth month in a row that job growth has exceeded 200,000.

But if you ask Americans about the economy, they're still mostly not impressed.

The headline unemployment rate and payroll numbers are just one piece of the labor picture. But if you add in other numbers, you can get a fuller view of the labor market.

Here are five key underlying numbers economists are closely watching for signs of improvement:

The first is wages. Linda Barrington, executive director of the Institute for Compensation Studies at Cornell University, says they've been inching up, barely.

"Wages and inflation are sort of going hand in hand and have been since the recession, so people aren't feeling like they're getting ahead, even if they have a job," she says.

Your Money

Five Reasons Why Your Financial Outlook Just Got Better

Part of the reason that wages aren't going up is that there are just so many underemployed people. As long as there are large numbers of applicants for each available job, employers won't feel the pressure to boost wages.

Barrington says the next key number — the long-term unemployment rate — is still high.

"You know, when you see the longer-term unemployment numbers, those are people who have not given up, who continue to look for work, who want to work," she says. "But for some reason an employer isn't seeing what they're bringing as valuable enough to hire them."

Those are the people who are hanging in there. Then there are the people who've just given up. They aren't even a part of the jobs picture. That brings up the labor force participation rate,which Juli Niemann, an analyst with Smith Moore & Co. in St. Louis, says is also a problem.

"A lot of people are giving up," she says. "They're not even in the numbers; they're not in the count. They've been looking for jobs for so long and can't find the jobs that they're simply not even trying anymore. And that is why you see this [unemployment rate] number below 6 percent looking better than it really is."

Niemann says there have also been structural changes in the economy — especially in manufacturing. Many people have been replaced by technology, and workers are a lot more productive.

"We do more, better for less, so they can't go back to jobs similar to what they had previously nor can they find them out there," Niemann says.

Another important number gets at why people aren't feeling so great about the economy despite the solid job growth. It's what's called the quit rate, which is essentially the rate at which people are quitting their jobs.

The quit rate is still relatively low. Economist Tara Sinclair, with the jobs website Indeed, says we actually want more people quitting their jobs.

"The reason it's a good thing for people to be quitting their job is because that suggests that they're optimistic about their labor market choices," she says.

Economy

Drop In Unemployment Raises Debate On Optimal Rate

And there's the number of people who have part-time jobs but would rather be working full time.

"That number is still very elevated, which suggests that even though the employment numbers look pretty good, if people aren't getting the type of job that they want there's still room for improvement," Sinclair says.

Nevertheless, economists consider the headline number good news.

Beth Ann Bovino, chief economist at Standard and Poor's, says we sometimes forget that 9 million people lost their jobs in the recession and it took a long time to get them back.

"I know we've still got further to go," she says. "I'd love to open that bottle of champagne, but I don't want to do it too quick. But I have to say every time I see 200,000-plus job gains, I feel like we're making one step ahead."

When these underlying numbers get significantly better, that's when people finally start to feel better about the economy.

Productivity

http://mam.econoday.com/byshoweventfull.asp?fid=461239&cust=mam&year=2014&lid=0&prev=/byweek.asp#top

Productivity and Costs

Released On 11/6/2014 8:30:00 AM For Q3:14 Prior Prior Revised Consensus Consensus Range Actual Nonfarm productivity - Q/Q change - SAAR 2.3 % 2.9 % 1.5 % 0.3 % to 1.9 % 2.0 % Unit labor costs - Q/Q change - SAAR -0.1 % -0.5 % 0.8 % 0.0 % to 2.2 % 0.3 %

Highlights Nonfarm productivity growth for the third quarter advanced an annualized 2.0 percent, following a 2.9 percent boost in the second quarter. Unit labor costs nudged up 0.3 percent after falling an annualized 0.5 percent in the second quarter. Output growth slowed to 4.4 percent in the second quarter, following a 5.5 percent jump the prior quarter. Compensation growth held steady at a pace of 2.3 percent. Year-on-year, productivity was up 0.9 percent in the third quarter, down from 1.3 percent in the second quarter. Year-ago unit labor costs were up 2.4 percent, compared to up 1.5 percent in the second quarter.

Recent History Of This Indicator Nonfarm business productivity for the second quarter was nudged down to a 2.3 percent annualized gain after falling 4.5 percent in the first quarter. But unit labor costs also were bumped down to minus 0.1 percent, following an 11.6 percent annualized surge in the first quarter. First quarter numbers were heavily affected by atypically harsh winter weather. Output rebounded 5.0 percent after dipping 2.4 percent in the first quarter. Compensation growth decelerated to 2.3 percent from 6.6 percent in the first quarter. Based on deceleration in third quarter GDP growth from the second quarter weather rebound, third quarter productivity is likely to ease and labor costs firm from the second quarter.

Definition Productivity measures the growth of labor efficiency in producing the economy's goods and services. Unit labor costs reflect the labor costs of producing each unit of output. Both are followed as indicators of future inflationary trends.  Why Investors Care

Nonfarm productivity growth has remained healthy during this expansion, but it has prevented employment from growing very fast and this hurt income growth to some extent. Unit labor costs tend to fall when productivity growth accelerates and then rises as productivity growth abates. Data Source: Haver Analytics