Investment Insights are written by Angeles' CIO Michael Rosen
Michael has more than 30 years of experience as an institutional portfolio manager, investment strategist, and investment consultant.
DOUBLE LEVERAGE?Published: 10-29-2014
Oil prices are down about $30 from their highs; great news for consumers and the big oil importers (China, Korea, India). Not so good news for the big producers (Saudi, Russia, Venezuela).
Oil companies have been borrowing more, but most of the major multinationals have very strong balance sheets and generate a great deal of cash. But the biggest oil companies in the world are state-owned, and they have been especially thirsty for debt. The Latin American giants stand-out:
- Petrobras has $147 billion of sales and $123 billion of debt
- PDVSA has $127 billion of sales and $120 billion of debt
- Pemex has $127 billion of sales and $134 billion of debt
So not only are these companies levered to the price oil, they are levered to interest rates as well. Double down?
Some historical data from Credit Suisse below: MLPs are off 14% this month, pretty bad. Subsequent performance (no ...READ MORE
Not Deflation 02-26-2015
The Consumer Price Index dropped 0.7% in January, bringing the year-over-year change to negative 0.1%. With the ...READ MORE
Shades of 2007? 10-17-2014
Nice graphic in today's FT showing the spike in vol and sell-off in risk (Greek bond yields jumped from 5.5% to 9% in ...READ MORE
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