Monday, April 25, 2016

Random thoughts coming into spring 2016

The world is awash with oil and will remain so for the foreseeable future. Major producers like Saudi Arabia and Russia will keep pumping as much as possible for one very simple reason, They need the money. Putin is trying to distract the Russian consumer from the disastrous domestic economy with his military based foreign policy, but invading countries is expensive. The Saudi's have been living fat dumb and happy on oil but now they are caught with no plan B for their economy. Look for the oil rally to fade soon.

Bob Dudley the CEO of BP received a raise last year from 16 million to 19 million. According to Bloomberg News "The bumper payout came despite an annual loss of $5.2 billion, a collapse in the group's share price, and plans to shed 7,000 jobs by the end of 2017." Since making 16 million per year should see you through the winter, an additional 3 million can't matter all that much. Isn't there one person at the company or on the board who might have suggested to Bob maybe a raise is a bad look this year since business sucks? If this CEO accepts a raise of this magnitude during a time the company is struggling, is he the kind of leader that puts himself or the company first?

Goldman Sachs is now offering saving accounts on line to individuals for as little as $1.00. What is wrong with this picture? Goldman who became a bank during the financial crises of 2008 is now trying to get funding directly from small investors. A year ago I doubt Goldman even knew there were people in the world with less than a million in ready cash is now reaching out for the "little guy". Do you think this is to help the "little guy" or Goldman? Let the buyer (depositor) beware!

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