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Afternoon Note

Oil Plunging, Market Struggling
By Charles Payne, CEO & Principal Analyst
5/4/2017 1:34 PM

Crude oil continues to breakdown as selling begets selling and fear picks up.  There is lot of speculation as to what’s driving this, including US rigs coming on line too fast and OPEC cheating despite claiming restraint.  Dipping under $48 on West Texas Intermediate was a red flag, and now, there might be some support around $45.00, but the next key support level is $44.00.

https://s.tradingview.com/x/v1PeqQ77/

Beyond the fact that crude is crashing, and stocks are waffling, is the realization this could be the calm before a massive rally higher.  The one-two punch would come from a strong jobs report tomorrow and Macron winning the French Presidential election.

As for jobs, there more signs wages could be popping from the Bureau of Labor Statistics. 

The productivity miracle is gone in part to wages picking up across all key components.  I think we might see a huge jump in tomorrow’s jobs report, but I’ve felt that way for more than a year.

Productivity and Cost

Productivity

Hourly Compensation

Unit Labor Costs

Non-Farm

-0.6

2.4

3.0

Business

-1.5

1.8

3.4

Manufacturing

0.4

2.5

2.1

Durable

-1.1

1.4

2.5

Non-Durable

3.2

4.6

1.3

 
This rally at a short-term crossroads, but we’ll get more answers by Monday morning.  

Comments
I think the price of oil is dropping because of the perception of increased stability in the world. Trump is not going to nuke the North Koreans. Tankers are sailing peacefully through all of the world's choke points. Japan has restarted four of their nuclear reactors and will restart a few more shortly. The USA has started shipping LNG to international markets. Alaska and North Dakota oil is again moving. All is well.

[At the moment.]

Al M. on 5/4/2017 2:07:56 PM
 

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