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Oil

We're in Uncharted Territory for Oil

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The meeting in Vienna last week among OPEC members and their non-OPEC allies, OPEC plus, was intended to help nations reach an agreement on production cuts to extend past the current end date of April 1.

The concern is the spread of the coronavirus will drive down the price further as global economic demand slows. But Russia was not on board. And the Saudis' response to Russia's stance was to cut its price to Chinese customers, and plan to increase production by as much as 2 million barrels per day. That fallout then led to oil's massive 30% nosedive. And on Monday, oil's decline was literal fuel to the stock market fire, causing it to fall 7.79% in one day. Since Monday's losses, both oil and the stock market have recovered a bit. Oil is sitting at around $33 a barrel and stocks rallied at open.

But unless there's a resolution, we will be retesting the market lows that we experienced in 2015 and 2016, when oil dipped below $30 per barrel and we'll see a ripple effect through the economy that's going to have a parallel impact to the COVID-19 problems we already have. Here's Kent with the details...

stocks

Why Oil Is Plunging (and 2 Ways to Profit)

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Oil prices were already down 50% year to date on Friday. They plunged another 25% yesterday.

Fears of the coronavirus spreading means that more people are staying home.

And as fewer people travel, there's less demand for oil – which causes the price to fall.

One way the leading oil-producing countries fight falling demand is by slowing production.

If they're able to decrease the supply of oil as much as the demand for it, the price should stabilize.

That's exactly why OPEC and Russia met last week. They planned to make the biggest oil production cut since 2008.

Unfortunately, the two sides couldn't come to an agreement.

Read more here...

Stocks

This High-Yield Dividend Stock Is Cashing In on Rising Oil Prices

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Since the great financial crisis in 2008, investors have had a hard time finding investments that throw off income.

The benchmark Treasury 10-year note offers a stingy 1.81%. Forget about keeping you cash in the bank – that's even worse.

That has investors turning to high-yield dividend stocks to make up for their lost income.

But not all dividend stocks are created equally.

That's why we'll also you one of the best dividend stocks on the market right now.

stocks

This MLP Is a "Must Buy" – and It Pays 7%

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The perfect stock is a combination of safety and growth. The MLP we're about to show you today is the perfect example of both.

Safety can be found with a dividend that will be likely paid no matter what the overall market is doing. We also want growth in terms of earnings acceleration that will be used to support and even increase the dividend.

It's a pretty simple formula. But where do we find stocks like that?

The answer is master limited partnerships (MLPs).

Read more here...

Trading Strategies

The Secret to This Put Option Trade Is a "Reality Gap"

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The law of averages says stocks will eventually find their "fair value."

But in the short term, you can find stocks trading far above or below their fair value.

And when perception and reality say different things, we can find opportunities.

That's especially true when it comes to options trades.

Right now, Money Morning Technical Trading Specialist D.R. Barton, Jr., sees a big opportunity in a stock that rallied on hope but just does not have the financial juice behind it to sustain its price gains.

We'll show you exactly what's happening and how you can use a specific options trade to cash in on the market's overreaction...

Trading Strategies

Why Today Is Like Nothing I've Seen in 33 Years of Trading

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Iran's missile attack last night sent the stock market on a roller coaster.

Dow futures plunged 400 points before rebounding this morning, and now the S&P 500 is trading at all-time highs after U.S. President Donald Trump's speech.

That sort of whipsaw in the markets is creating opportunities left and right.

In fact, Chris Johnson says this is like nothing he's seen in 33 years of trading.

To help you make sense of what's going on, Chris jumped in front of the camera and broke down the sectors and stocks he's paying closest attention to today.

Read more...

Trading Strategies

Turmoil in Middle East Makes This Reality Gap Trade in Oil Even Better

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The reality gap I'd like to explore today is one which the U.S. oil market already had the set-up to be a huge money maker. And then it got better.

The U.S. airstrike which killed top Iranian general, Qassim Suleimani, sent oil prices spiking higher in the Thursday to Friday overnight market, greatly improving our entry for this reality gap trade. I'll explain this profit-making opportunity in more detail, but here's a quick take on this morning's market-moving news and what we can expect.

The financial markets are experiencing significant turmoil after the airstrike that I mentioned above. Defensive investments, or places where money flows in a flight to safety, have jumped higher. These include the Japanese Yen, the Swiss Franc, gold, and U.S. and German bonds.

That's a typical response when uncertainty hits the market – and a military strike like this definitely qualifies. But by the time I started writing this update to the column at 7:00 a.m. EST on Friday morning, the market reaction was already changing.

The market's fear gauge – the CBOE Volatility Index ($VIX) – which had spiked higher on the news, was already falling, as were Oil prices. And the major market indexes like the S&P 500 had already found their lows of the morning.

In short, the market's reaction to the airstrike is acting as a test of how much geopolitical risk matters in the markets right now. Said another way, there's a very good chance that the market just absorbs this news as a temporary blip. And that will be very good news for today's trade in a struggling U.S. shale oil producer…

The U.S. shale oil industry has revolutionized the crude oil market. And it was a major – if somewhat behind the scenes – driver of the recovery in the U.S. economy since 2009. Take a look at this production chart:

The impact of this shale oil boom on global oil economics has been immense.

But like the retail resurgence of 2019, the story of U.S. shale oil emergence is littered with haves and have nots. And as we'll see, right now it's easier to make money on one of the players that has struggled – and will continue to do so.

There's a reality gap in the shale oil world. The widely held belief is that the rising tide of crude oil production that we see in the chart above is lifting all ships. The reality is that some companies could be in big trouble because of the way they have raised money to finance their wells. And we can make money with that information that almost no one is telling you about it.

Some in the financial news media are even saying that U.S. oil companies are the best stocks to buy for 2020.

That prognostication is just people talking their book (touting the stocks they own in an effort to drive up the price) and it's dangerous to your wealth.

Now, I'm not saying that the shale industry is going under. Far from it. The "haves" will thrive, much as they did in the retail industry.

The reality gap is happening between what you're being told about U.S. fracking, and what's really happening on the ground…

More and more, small companies are about to go under. And you can make money while they do.

Here's what's happening…

Here's what's happening...

Oil

Oil Prices Could Double if Soleimani’s Death Leads to War

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Oil prices spiked nearly 4% overnight after the United States killed Iran’s top general, Qasem Soleimani.

But that’s just the start if Soleimani’s death leads to a larger conflict between the United States and Iran.

We’re forecasting that oil prices could double.

But it won’t happen automatically.

You’ll need to keep an eye on one specific trigger…

Energy

The Easiest Way to Cash In on the Entire Energy Sector in 2020

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Energy abundance – from multiple sources – is about to unlock staggering gains for investors.

But if you just "play the majors," you may find yourself with less than your fair share.

With a few rare exceptions, the windfall profits in the months ahead will be reserved for a handful of small niche companies poised to become the biggest winners as energy truly goes global.

Make no mistake: You will make more money in energy investments over the next several years than in any other sector and during any other period in your lifetime.

And now you won't have to fret over what this new market means, what elements are driving it, or what to invest in.

Read more...

IPOs

Why the Aramco IPO Doesn't Impress Me… Yet

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Trade on the Tadawul, the local Saudi Stock Exchange, began today for the largest initial public offering (IPO) in history.

Following the initial trading, Saudi Arabia has touted the IPO in mega state oil company Aramco as a success.

And at a glance, this assessment appears to be on target.

The first major success is this: It happened. For the first time the Saudis have allowed private ownership of a state-run enterprise, although admittedly less than 2% of it.

Then, there is the valuation. Selling 3 billion shares at 32 riyals ($8.53) each amounts to $25.6 billion. That makes this IPO the largest IPO in history, eclipsing even the float of Alibaba back in 2014, which was valued at $21.8 billion.

It also puts an overall value on Aramco of $1.7 trillion, making it, once again, the largest ever seen and close to the $2 trillion initially projected by Crown Prince Mohammad bin Salman prior to the first abortive attempt at an IPO over two years ago.

In addition, global interest may well increase the number of shares available from the placement. Currently, the number of shares amounts to only about 1.5% of the company. That could increase to about 2% if an option to sell additional shares is exercised. And there is some evidence that the outside interest is growing.

However, despite all this positive success, the downside of this IPO didn't take long to emerge...

Today's Markets
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