USTs and Bunds gapped up (with 10ys near their one year highs) without the sign of equity weakness, nor Eurozone periphery hikes which seems to indicate that the markets starts to price some growth where the risk free assets don`t provide enough return and start chasing yields. The Chinese equities outperformed which is a new phenomena lately and after a long period of pressure they might catch a breath.

“Due in large part to rapid urbanization, China is now the world’s top consumer of cement, metal ores, and biomass, among other materials.”

And energy is also on the rise. The whole trend makes the commodity markets more vulnerable because a fortuitous decline in the Chinese growth will hurt them the most. Also the Chinese will have to raise their presence all around the world if they want to prevent supply shocks from shaky areas – and it`s a huge geopolitical topic.

“opted for profit-sharing contracts to … help reverse an eight-year crude production decline”. That is what happens when there is no competition and the industry can`t adapt to the changing situation simply because it`s owned by one huge mammoth. The sentence “I`m from the government and I`m here to help.” is still terrifying.


3 thoughts on “

  1. Competition is one thing, to give away the control on reserves that belong to Mexico to US companies, a complete different matter!

    • Letting in foreign companies or increasing competition don`t mean giving away control. The government`s job is to make sure these resources won`t be exploited with the uneven distribution of benefits among the stakeholders. Failing to putting it into practice is not the failure of the concept.

      • I agree, I like the concept that you refer to in theory, as I don’t think monopolies are a good idea. But cannot help it to be skeptical about who will be having the control of the resource in practice for this particular case. Not only because having control over the resource is obviously of great interest for US companies, but also because officials in Mexico are not to be trusted. They hardly ever think of what is good for Mexico, and instead only think of what is good for them and the elite that pull the strings in Mexico.

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