Wake Me Up When The Recession Is Over

Wake me up when the recession is over. Wait, did I sleep through it? What happened to the inverted yield curve fears and all of the recession talk? The stock market is coming back and maybe, just maybe, fears of a recession may be off a bit because of record-low unemployment and the fact that the yield curve inversion is being driven by U.S. economic strength rather than weakness. With negative rates and dimming economic prospects overseas, the rush to park money in the U.S. says more about concerns in Europe and Asia than it does about the U.S. Yes, the trade war may be taking its toll, but you also have Brexit as well as bad economic policies in the EU that may be exasperating the slowdown. Oil demand that is at record highs in the U.S. are more questioning of the recession talk and might actually start pricing in a shortage. U.S. futures are in contango, signaling a tight market.

At the same time, the geo-political risk is still out there. The Wall Street Journal reported that Yemen’s Houthi rebels struck Saudi Arabia’s Shaybah oil field, one of the kingdom’s largest, Saudi officials and the Houthis said, deepening tensions between Iran and its rivals that have engulfed the region’s energy facilities. The Houthis said in a statement Saturday that they had targeted Shaybah with 10 drones. The Iran-aligned rebels said the attack was their largest of its kind in Saudi Arabia, which they have been fighting for control in Yemen since 2014. The Saudi oil ministry confirmed what it called a terrorist attack on Shaybah, which is owned by Saudi Arabian Oil Co., or Aramco, and holds about 14 billion barrels of oil reserves. A military spokesman for the Saudi-led coalition in Yemen didn’t respond to a request for comment. In a statement, Aramco said it had controlled fire at a natural gas production facility at Shaybah. The company said there were no injuries and no disruption to the field’s production of about 1 million barrels a day. A Saudi oil official and an Aramco executive said the Houthis were exaggerating its size. Saudi energy minister Khalid al-Falih said, “the attack was part of a series launched against the kingdom’s oil infrastructure, including sabotaged oil vessels in the Gulf of Oman and damaged pipelines.”

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