Oil Nears $100 per Barrel

Happy Valentine’s Day.

The market is down again today after a poor day on Friday. Today is a little unusual in that it’s a down day but Low Vol is down more than High Beta. That’s not unheard of, but it against the typical script.

The S&P 500 may go back to “test” its recent low. That often happens as traders like to see how far they can push the market in either direction. On January 24, the intra-day low was 4,222.62. Today we’ve been as low as 4,385.52.

The Energy Sector is down especially hard today. Many of the major oil companies are down over 3% today. The price for oil is getting close to $100 per barrel. All eyes are on the latest developments in Ukraine. There appears to be some talk of a resolution. We’ll see.

I noticed that shares of 3M (MMM) are down again today. The stock is at a new 52-week low. 3M is now going for about 14 times next year’s earnings. The dividend currently yields about 3.8%. Of course, there’s a reason the stock is going for such a generous valuation. 3M has found itself in a heap of legal trouble.

I’m not recommending 3M but I will add two notes. The first is that value investing often boils down to buying dented merchandise. The question is, how serious are the problems? The other point is that 3M is a large and diversified company. At some point, these issues will go away.

Several Fed folks are talking today. St. Louis Fed President James Bullard is in the hawkish camp. He said the Fed’s credibility is on the line. Personally, I think the Fed shot its credibility a while ago, but it may repair some of the damage. In the futures market, the odds of a 0.5% cut in March are at 65%.

Posted by on February 14th, 2022 at 11:17 am


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