OPEC producers continue to be squeezed by their fiscal breakeven levels, which on average is between $90 and $100 per barrel of Brent Crude. In other words, this is not their breakeven price to produce a barrel of oil. Rather, this is the price per barrel of Brent Crude, in U.S. dollars, these countries need in order to balance their budgets, most of which include large social programs which are very difficult to reduce or cut.
Jim Brilliant, CFA® and Scott Van Den Berg, CFP® provide an update on our investments in the energy sector and what we see in the years ahead. We believe that the case for oil and energy markets is bullish.
You’ve probably read recent headlines telling you to stay away from bonds because interest rates are rising. But such conventional wisdom might not make sense if you are looking for income and have the patience to stick with a long-term strategy...
Until recently, the Fed has been the only game in town providing stimulus to the economy. Now, we believe members of the Federal Reserve have to contemplate the potential effects of President Trump’s pro-growth fiscal policy:
- We think the Fed has to be careful in this new environment, and that they will stick with modest, gradual rate hikes until they see growth in real GDP getting closer to 3%.
- In our opinion, the Fed wants to get out of this "lower-for-longer" environment.
We’ve seen low interest rates rencourage people to stretch for yield by purchasing stocks that pay high dividends like consumer staples and utilities. As a result we believe those sectors are not cheap. Bonds provide an alternative for those seeking income.