Oct 10, 2014
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The success of the shale revolution is a key factor in this week’s large declines in oil prices as well as wholesale gasoline. Royalty trusts were hit this week as oil process declined near 18 month lows. The prior warning on exploration and production master limited partnerships was based upon excessive debt. The royalty trusts with generally less debt and less in capital expenditure commitments could be, at some point, a bargain replacement for oil based master limited partnerships. The question is how low can oil and share prices go?
WTI Crude (CLX4) - 2 Year Chart
Yorkville Royalty Trust Universe Index (YRTUX) - 2 Year
The premise that inflation must rise and the dollar must fall has been rendered at least temporarily false. The impact of deflation appears to correspond to lower interest rates. The pain experienced by many investors seeking a “commodity” strategy is one of the most important lessons of the decade.
Grid of Commodities
Commodity Returns
30 year US Treasury Rates Make a 52 Week Low: 30 Year T (TYX) - Bond Index - 2 Year
This week’s featured research with definitions: Understanding Duration from Nuveen Asset Management
16 countries now have lower yields than the United States. Has inflation been negated by global free flow of capital and goods?
Global Government Bond Yields
Global Inflation
The impact of oil’s technical breakdown? How low can the royalty trusts go?