Superheroes Marvel Needs To Start Using In Its Movies
Since
the Marvel Cinematic Universe kicked off in 2008, comic book fans and
moviegoers have watched as this shared world has given us an impressive
number of unique superheroes to see in action on the big screen. From
Iron Man and Captain America to Thor and the Guardians of the Galaxy,
Marvel has proven that they can take A-list or a D-list characters and
create an exciting adventures for them to partake in (seriously - four
years ago, who would have thought the Guardians would get a movie?!?!)
However, Marvel Comics has been around for decades, and with the MCU
showing no signs of stopping right now, there are many great heroes that
have yet to be introduced, and with comic book movies sitting pretty as
the latest big cinematic craze, it means that at some point Marvel is
going to have to give us new players.
Since
20th Century Fox still has the film rights to the X-Men and Fantastic
Four characters, Marvel doesn’t have full access to their own library of
characters, but fortunately the roster is still incredibly huge, and
there are still several individuals worthy of being translated to the
big screen. That in mind, here are the 10 superheroes that the MCU needs
to introduce at some point, whether it’s in Phase 3, Phase 4 or
beyond.
10. Wonder Man
In Marvel Comics, Simon Williams was initially given superpowers by Baron Zemoand
his Masters of Evil when he sought revenge against Tony Stark - the man
who he believed responsible for his company failing. While originally
sent in to infiltrate the Avengers and take them down, Williams, now
Wonder Man, had a change of heart and stopped Zemo’s plan before he was
seriously injured. While he seemingly died in his first issue, the
Avengers kept him in suspended animation for years until he was awakened
and restored to full health. Since then, he has been an on-and-off
members of Earth’s Mightiest Heroes, and while he may not always agree
with their methods, his abilities like super strength, flight and later
being able to manipulate ionic energy have made him a valuable ally.
There may not be any room to include him in any Phase 3 projects, but
Wonder Man would make a great character to introduce in Phase 4 as one
of the new heroes who has been recruited into another Avengers team.
Seeing his unique powers at work is reason enough to include him.
9. Beta Ray Bill
We’ve
seen a lot of weirdness in the MCU since 2008, but nothing quite as
bizarre as a bipedal horse-like alien fighting with a hammer. Despite
not hailing from Asgard, Bill is one of the few individuals in the
Marvel Universe who is worthy of wielding Thor’s power. After Bill and
the God of Thunder fought each other for control of Mjolnir (Bill needed
the weapon to defend his people), Odin created a copy of the hammer for
Bill called Stormbreaker, which has the same attributes as Mjolnir.
Since then Bill has been both an ally to Thor and Earth’s heroes, and
roams around the universe helping other alien species. We don’t know
what will happen with the Thor franchise after Thor: Ragnarok,
but it would be an interesting twist if a non-Norse alien were to
inherit Thor’s power in Phase 4 or somehow receive Stormbreaker from
Thor himself - who may end up being the only Asgardian who survives the
events of the apocalyptic Ragnarok. 
8. Ms. Marvel (Kamala Khan)
Despite
only existing for less than two years, Kamala Khan has become one of
Marvel’s popular characters recently. Kamala was just a normal Pakistani
teenager living in New Jersey until, like many around the world, she
was exposed to a Terrigen Mist bomb. This awakened her Inhuman cells and
gave her shapeshifting powers. Taking the identity her idol Carol Danvers once
used, she decided to become a superhero, and while she’s still learning
the ropes, she’s already had several team-ups with heroes like
Wolverine and Spider-Man. While the name Ms. Marvel can’t come to her
the same way in the MCU as it did in the comics (since Carol Danvers is
starting out with the moniker Captain Marvel), this shouldn’t stop the
creative forces from trying to incorporate her somehow. True, we have a teenage Spider-Man debuting
soon, but with Kamala’s popularity and the growing importance of the
Inhumans in this world, a younger superhero with visually-enticing
powers that is trying to navigate this new world would be an excellent
addition. 
7. Moon Knight
While the MCU doesn’t necessarily need a Batman-like
figure, it would be cool if they gave a non-powered vigilante a big
screen adventure. Enter Moon Knight, one of the more intriguing
crimefighters from the Marvel Universe. Although he originally had
powers in the comics that gave him superhuman strength and resistance to
psychic attacks, Moon Knight has since lost these powers and relies on
his fighting skills and variety of weapons to take down criminals. Moon
Knight is also unique for suffering from dissociative identity disorder.
His different personalities include Marc Spector (who he was born as),
Jake Lockley and Steven Grant. If the MCU is looking to introduce a
superhero who powers through his mental issues to fight for good, Moon
Knight is their guy, and it would be great just to see his badass
costume come to life. 
6. Captain Marvel (Mar-Vell)
If
it wasn’t for the Kree named Mar-Vell, Carol Danvers wouldn’t be the
superhero we know today. Sent to Earth to spy on the humans, Mar-Vell
used his powers to protect those he was observing, and when he was later
found guilty of treason by the Kree Empire, he escaped their death
sentence and became a permanent superhero on Earth (at least until he
was killed off in the ’80). Perhaps most important, though, is the fact
that he rescues Carol (who knew his human identity Dr. Walter Lawson)
from being killed by an explosion emitted from an Kree device. This same
device eventually gave her superpowers and led to her becoming Ms.
Marvel. While there may not be room for him in the MCU to lead his own
movie, he should at least be a major supporting character in 2018’s Captain Marvel.
Have him be the one responsible for Carol gaining powers and
possibility even mentoring her throughout her solo adventure. Of course,
it wouldn’t hurt to possibly introduce him before the Captain Marvel movie and only have his Kree identity revealed in that film. 
5. Spider-Woman (Jessica Drew)
Aside
from the arachnid-centric moniker, Spider-Woman shares almost nothing
in common with Spider-Man. Jessica Drew gained her powers in utero when
she was struck by a beam of radiation that contained the DNA of several
types of spiders. After serving as a HYDRA-turned-S.H.I.E.L.D.
agent as an adult, Jessica became Spider-Woman to make up for her past
sins, and since then has served as an Avenger and agent of S.W.O.R.D. (a
counterintelligence agency focused on extraterrestrial threats). In
addition to her superhuman strength, flight, adherence to walls and
bio-electric energy blasts, Jessica also produces a pheromone that can
make men around her feel pleasure. While the general audience might be
confused why she doesn’t have any relation to Spider-Man, she still
needs to be included in the MCU as one of the Phase 4 superheroes,
whether in her own movie or as one of the new Avengers recruits. She has
connections with both the superhero world and the spy world, so if we
do eventually see her, we can expect a thrilling, action-packed
adventure. 
4. Adam Warlock
Despite popular belief, the cocoon seen in Guardians of the Galaxy did not haveAdam Warlock encased within, so the MCU still has yet to even reference the character. Fortunately, the Avengers: Infinity War movies are coming up, meaning that the next few years are the perfect time to introduce him. In the original Infinity War story,
Adam gathered up many of Marvel’s heroes (and even a few villains) to
help him combat Thanos, who had collected all six Infinity Stones and
achieved near-unlimited power. Adam can serve the same purpose in the
MCU, both from the big screen and small screen, to put up resistance
against the Mad Titan. Being one of Marvel’s most famous cosmic
characters, it might be a good idea to have Adam first show up in Guardians of the Galaxy 2,
but either way, he’s a must-have for Phase 3. It’s also important to
point out that the guy classically has one of the famed Infinity Stones –
specifically the Soul Stone – lodged in his forehead, so the character
may be key just in that respect. 
3. She-Hulk
We’ve seen a lot of Bruce Banner raged
out as The Hulk, so why not introduce his cousin, Jennifer Walters, to
the Marvel Cinematic Universe? In the comics, Bruce gave Jennifer a
blood transfusion when she was nearly killed by a crime boss. His blood,
combined with her own personal anger, transformed her into the
She-Hulk, and after defeating the criminals that tried to finish her
off, she became a superhero. When she is transformed as She-Hulk,
Jennifer retains her intellect and also has incredible strength - though
is not quite as powerful as her cousin. She has made a name for herself
as a strong (figuratively and literally), positive and humorous female
character, and has served on teams like the Avengers and Fantastic Four.
The blood transfusion angle of her origin might need to be altered to
make it more science-y, but She-Hulk is a super heroine that needs to be
adapted for live-action. The cinematic Hulk has
a lot of fans out there, so just imagine how they would react until
seeing her taking down bad guys and living cars and other heavy assorted
objects. It would be an amazing sight! 
2. Nova (Richard Rider)
Guardians of the Galaxy introduced the Nova Corps,
so it stands to reason that eventually Earth’s representative should be
introduced. Although teenager Sam Alexander is wearing the helmet these
days in the comics, it should be Richard Rider who is named as the
MCU’s first Nova. Chosen by a dying Corpsman, Richard was given the
helmet without any instructions on how to use it. Eventually he
discovered that it allowed him to connect to the Nova Force, which lets
gives him super strength, flight and energy manipulation. He then made a
name for himself not only as an Earth superhero, but as an
intergalactic defender. Director James Gun has said he won’t include Richard in Guardians of the Galaxy 2,
but if the MCU is looking to expand the cosmic side of this universe
even more, giving Nova a solo film is one of the best ways to do this.
We’ve already met several of the Nova Corps members, so why not let them
recruit someone from Earth? 
1. Namor The Sub-Mariner
If it helps, just think of Namor the Sub-Mariner as Marvel’s Aquaman.
Debuting in 1939, Namor is essentially Marvel’s first superpowered
character. The son of a human sea captain and an Atllantean princess,
Namor was born with abilities like super-strength, the ability to
breathe underwater and wings on his ankles that allow him to fly. As an
adult he eventually became the ruler of Atlantis, and while he fought
alongside Captain America and other heroes against the Axis powers
during World War II, his duty is towards the underwater nation. Although
Namor has a sense of honor and usually fights for justice, his
short-fuse and anger towards the surface has often put him at odds with
Marvel heroes, so it’s probably better to classify him as an anti-hero. There are many complications with Namor’s film rights due to contracts and paperwork left over from when Universal Pictures had the character. That being said, when all that eventually gets sorted out, give the aquatic monarch his own movie. Whether it’s because he’s a character, who must deal with the weight of being a ruler while also using his powers for good (mostly) or simply because Marvel simply to give some competition to DC in the underwater hero department, Namor needs to make his live-action debut at some point.
Religious Freedom Firestorm: Arkansas House Appro
On the heels of Indiana's controversial religious freedom law, Arkansas lawmakers on Tuesday gave final approval to a similar measure — and the governor says he'll sign it.
The Arkansas House voted
67-21 to pass the Religious Freedom Restoration Act, which follows the
state senate's approval of the bill Friday. Gov. Asa Hutchinson's office
did not immediately respond to the bill's passing, but has previously
said he would sign it into law when it reaches his desk. His spokesman
said the governor would make a statement Wednesday.
Protesters gathered outside the governor's mansion in Little Rock on Tuesday morning in anticipation of the House vote.
Arkansas-based mega-retailer Walmart also came out against the bill, and urged the governor to veto it.
"Today's passage of
HB1228 threatens to undermine the spirit of inclusion present throughout
the state of Arkansas and does not reflect the values we proudly
uphold," Walmart CEO Doug McMillon said in a statement Tuesday
afternoon.
The Indiana law,
enacted last week, and the proposed Arkansas law were presented as ways
to keep government from infringing on religion. But opponents say they
could be used as cover for discrimination, allowing businesses to refuse
to serve gay and lesbian customers.
Tim Cook, the openly gay CEO of Apple, led widespread corporate opposition to the law in Indiana, and the NCAA, which is staging the Final Four in Indianapolis this week, hinted that it would think twice about bringing future events there.
The governors of New York, Connecticut and Washington suspended some government travel from their states to Indiana.
"They knew what they
were doing. They were going to make it legal to refuse to serve gay men
and women," Connecticut Gov. Dannel Malloy told MSNBC on Tuesday.
"Somebody has to call them on it."
The CEO of Acxiom, a data services company with headquarters in Little Rock, wrote in an open letter to Gov. Hutchinson that the bill "inflicts pain on some of our citizens and disgrace upon us all."
And protesters at the
Capitol on Monday held signs saying "Discrimination is not a Christian
Value" and "Discrimination is a Disease."
Hutchinson, a Republican, told NBC affiliate KARK
that the bill in his state is meant to strike a balance between
religious freedom and equal protection of the law. "This bill tries to
do that, and it's not that complicated," he said.
Sexual orientation is not covered by anti-discrimination laws in either state.
After the Arkansas bill
passed, Arkansas Attorney General Leslie Rutledge on Tuesday approved
the title language of a ballot proposal that would add sexual
orientation and gender identity to the state's civil rights act,
clearing the way for supporters to start gathering signatures.
Nineteen other states
and the federal government have religious freedom laws. The federal law
was signed in 1993 by President Bill Clinton.
But legal experts have said
that the Indiana and Arkansas laws could open a wider berth for
discrimination because they allow businesses to use the religious claim
to fight lawsuits brought by people — would-be customers, for example —
and not just government action.
In North Carolina, Gov. Pat McCrory, a Republican, said on Monday that he would not sign a religious freedom bill working through the Legislature.
"What is the problem they're trying to solve?" he asked during a radio interview, according to The News & Observer newspaper of Raleigh. "I haven't seen it at this point in time."
A religious freedom bill has stalled in Georgia.
IN-DEPTH
- Indiana Religious Freedom Bill: What You Need to Know
- Where the 2016 Contenders Stand
- Pence Blames Obamacare for Indiana Religious Freedom Law
SOCIAL
Iraqi Troops in Center of Tikrit, Prime Minister Says
Iraqi forces battled ISIS militants
holed up in downtown Tikrit, going house to house Tuesday in search of
snipers and booby traps, and the prime minister said security forces had
reached the heart of the city.
In a statement on
Twitter, Prime Minister Haider al-Abadi announced the "liberation of
Tikrit" and congratulated Iraqi security forces on their "historic
milestone." But an official statement from his office said the troops
"hoisted the Iraqi flag" over the Salahuddin provincial headquarters in
Tikrit and are moving to control the entire city.
Abdul-Wahab al-Saadi,
the commander of the Salahuddin operation, said his forces fighting from
the west were still 325 yards from the center of Tikrit.
ISIS fighters seized
Saddam Hussein's hometown last summer during its lightning advance
across northern and western Iraq. The battle for Tikrit is seen as a key
step toward eventually driving the militants out of Mosul, Iraq's
second-largest city that is farther north.
Street-by-street
fighting raged into the afternoon, and estimates differed widely on how
much of this strategic city on the banks of the Tigris River that Iraqi
forces held. Army Lt. Gen. Talib Shaghati said at least 75 percent of
Tikrit had been recaptured. Ammar Hikmat, deputy governor of Salahuddin
province, said more than 40 percent was under Iraqi control.
U.S. warplanes on March
25 began conducting airstrikes in an around Tikrit to support the
offensive. The military said a latest round or airstrikes in Iraq Monday
and Tuesday struck "multiple ISIL buildings," referring to another name
by which ISIS is known.
How Long Have You Been in This Country?" NYPD Investigating Video of Cop's Degrading Tirade Against Uber Driver
The NYPD says the Civilian Complaint
Review Board has taken over the investigation into a video that appears
to show a police officer verbally abusing an Uber driver in an at-times
xenophobic roadside tirade in the West Village Monday.
Police confirmed late Tuesday afternoon that the plain-clothed man seen screaming in the now viral video
is a member of the NYPD, but they did not identify him. A spokesman
said the department is "aware of the incident and video and it is under
review."
The NYPD later said that the CCRB, an independent city agency with subpoena power, has taken over the investigation.
The
video was posted to YouTube by Sanjay Seth, one of the passengers in
the Uber car. According to Seth's YouTube post, his Uber driver honked
his car horn at the officer later seen screaming in the video because
the officer was trying to park on a Sixth Precinct street in the middle
of the afternoon without using any blinkers or hazard lights, and the
Uber driver's path to a green light was blocked.
Top News Photos of the Week
![[NATL-2015] Top News Photos of the Week](http://media.nbcnewyork.com/images/620*349/AP151984867465_Nigeria.jpg)
The
officer, seen wearing a green tie and blue shirt at points in the
passenger video, got out of his unmarked car, which had flashing blue
and red lights on the dashboard, and flagged down the Uber driver.
The
three-minute video begins as the officer approaches the Uber driver's
window and starts yelling at the driver, raising his voice over the Uber
driver's muted apologies and efforts to interject.
"Stop
it with your mouth, stop it with your, 'For what, sir,'" the officer is
heard saying in the video as he curses. "Stop it with that ... and
realize the three vehicle and traffic law violations you committed."
"You
understand me? I don't know what [epithet] planet you think you're on
right now," the officer yells, making fun of the Uber driver's accent.
The
officer then slams the hood of the Uber car and walks away; the Uber
driver tries to apologize to his passengers, who tell him it was not his
fault and inform him a video of the exchange was recorded. One of the
passengers said it appeared the officer was on a "power trip;" the other
called the man's behavior "really inappropriate."
The
officer returns to the Uber car about 90 seconds after slamming the
hood and storming off, the video shows, and continues to curse at and
belittle the driver. The driver keeps trying to dissolve the situation
with respectful apologies. Then the officer goes off on him.
"I
don't know where you're coming from or where you think you're
appropriate in doing that," the man yells, apparently in reference to
the car honk from earlier. "That's not the way it works. How long have
you been in this country?"
"Almost
how long? Two years?" the officer yells after the driver whispers a
response. "I got news for you and use this lesson: Don't ever do that
again. The only reason you're not in handcuffs going to jail and getting
summonses in the precinct is because I have things to do."
"That's the only reason that's not happening, because this isn't important enough to me, you're not important enough," he says.
The
officer turns toward the passengers in the back seat, asks if they are
fares and says something about the Uber driver wasting their days, too.
The officer hands the driver some kind of piece of paper that looks like
a ticket and leaves as the passenger cellphone video pans to the
flashing lights on the dashboard of his vehicle, parked behind the Uber
car.
Seth
posted video of the exchange on multiple social media accounts. On his
Facebook page, he wrote, "Our Uber driver, Humayun, was abused by a
police officer today in New York. The rage, door slamming, throwing
items into the car, threatening arrest without cause was bad enough --
but the officer's remarks at the end really took it to another level."
Seth
wrote on Facebook that he reported the exchange to the Civilian
Complaint Review Board. According to his profile, Seth works at a
nonprofit in the city and used to work for the parks department.
Asked
about the exchange by NBC 4 New York, Seth wrote, "This very
unfortunate incident is between the driver, Uber, the officer, and the
relevant authorities."
Uber called the behavior in the video "wrong" and "unacceptable," and said it appreciated the NYPD investigating.
"We
are in touch with our driver-partner who was subjected to this terrible
experience and will continue to provide any support he needs," Matthew
Wing, a spokesman for the ride share company, said.
The
CCRB handles complaints about four kinds of alleged police misconduct:
force, abuse of authority, discourtesy and offensive language.
President Barack Obama and Vice
President Joe Biden, with the national security team, participate in a
secure video teleconference from the Situation Room of the White House
with Secretary of State John Kerry, Energy Secretary Ernest Moniz and
the U.S. team in Lausanne, Switzerland, negotiating with Iran, March 31,
2015.
Ben Curtis / AP Opposition candidate Gen.
Muhammadu Buhari waves to supporters after casting his vote in his home
town of Daura, northern Nigeria on Saturday.
Obama Briefed on Iran Nuclear Talks After Deadline Passes
President Barack Obama on Tuesday
evening convened a video teleconference meeting with U.S. officials
trying to reach a nuclear deal with Iran, after talks were extended and a
Tuesday deadline passed with no agreement.
Diplomats from Iran and
the so-called P5+1 countries — the U.S., China, Russia, Germany, France
and Britain — are trying to hammer out the framework of an agreement
that would limit Iran's nuclear program in exchange for an easing of
sanctions.
Obama Tuesday evening
was briefed by U.S. officials trying to work out a deal, said National
Security Council spokesperson Bernadette Meehan. Talks will continue in
Switzerland Wednesday, the State Department has said. A deadline to
reach a general framework of a deal had been set for Tuesday but has
been extended.
One of the talks'
biggest sticking points, according to U.S. negotiators, has been getting
Iran to curtail its research and development on nuclear activity for at
least 10 years but potentially longer. Another has been on the timing
of sanctions relief for Iran if a deal is reached.
"We've made enough
progress in the last days to merit staying until Wednesday, said State
Department spokeswoman Marie Harf. "There are several difficult issues
still remaining."
The March 31 deadline
was to reach a basic deal, with three more months given to iron out the
details. The deadline has been moved twice before.
Iranian officials seemed
not to mind. "We don't have any artificial deadline," said Hamid
Baidinejad, a senior nuclear negotiator.
Nigeria Elections: Muhammadu Buhari Elected President in Historic Vote
A former military dictator with a
checkered human-rights record was elected president of Nigeria on
Tuesday, making him the first opposition candidate to win a presidential
vote in the country's history.
Gen. Muhammadu Buhari
defeated President Goodluck Jonathan after the incumbent of five years
conceded early Wednesday. Jonathan's relinquishing of power has paved
the way for an unprecedented peaceful transition in Africa's most
populous nation.
"Nobody's ambition is
worth the blood of any Nigerian," Jonathan said in a statement,
according to The Associated Press. "I promised the country free and fair
elections. I have kept my word."
The historic victory
marked the second time 72-year-old Buhari rose to power in Nigeria. In
the 1980s, he seized power in a coup and ruled Nigeria as a military dictator for around 18 months — before he was ousted in a counter-coup.
Human-rights groups
accused Buhari's regime of crushing political dissent and installing
harsh military values into civilian life.
The Buhari victory,
though, underscored Nigeria's frustration with Jonathan, whose People's
Democratic Party (PDP) had ruled the country since it transitioned from
military rule to democracy in 1999.
Jonathan had come under
fire for failing to stem the growth of militant group Boko Haram — along
with rampant corruption in the country.
Buhari — who since
coming out of retirement ran for election several times, though this
poll was the first as leader of the opposition All Progressives Congress
(APC) — made those two issues central to his campaign.
"This is the first time
in Nigeria that a sitting government will be voted out of power using
purely democratic means," APC spokesman Lai Mohammed told Reuters. "The
people of Nigeria have taken over."
While the U.S. and U.K. warned Monday
of "disturbing indications" that the vote-counting process was being
subject to political interference, Jonathan willingly conceded — even as
the Independent National Electoral Commission was still tallying votes.
With
the results uncontested, so far, the election's outcome will become the
first democratic transfer of power since Nigeria gained independence
from British rule in 1960. Since then, military rulers and presidents
have only been deposed in coups and counter-coups.
While there were some issues with malfunctioning equipment, delayed ballot deliveries and sporadic violence on election day — Boko Haram attacks killed dozens — the vote drew praise for its largely peaceful nature.
The National Democratic
Institute, which sent a monitoring team to Nigeria, said that "Nigerians
showed perseverance, creativity and discipline."
The NDI said in a statement
that "Nigerian voters conducted themselves in a peaceful and orderly
manner on election day" and urged politicians to recognize and respect
the citizens' "commitment to the democratic process."
In the last election,
allegations of vote-rigging around Buhari's loss to Jonathan set off a
wave of violence that left around 800 people dead.
Ben Curtis / AP Opposition candidate Gen.
Muhammadu Buhari waves to supporters after casting his vote in his home
town of Daura, northern Nigeria on Saturday.Less Bearish About The Russian Bear
For investors focused on geopolitical risk, few equities markets in
the world appear as unattractive as Russia’s. For starters, the oil
exporter has been one of the hardest hit nations on the planet by the
sharp drop in crude prices. Add to the mix the uncertainty posed by
Russia’s conflict with Ukraine, and the related U.S. and European Union sanctions,
and some investors may have written the market off entirely. But when
no one else is buying, there is often opportunity. When it comes to
Russia, Credit Suisse has posited that this could be the case. On March
3, analysts Alexander Redman and Arun Sai reduced their underweight on
Russia equities from 50 percent below benchmark to 20 percent. In other
words, they’re still concerned about all of the above, but less so than
they have been.
Credit Suisse has become less bearish on two particular fronts. The first is the impact of Western sanctions. The restrictions have been quite damaging to the economy and have exacerbated the declines in the currency caused by low oil prices. The Russian government has been forced to use the country’s foreign reserves, which have fallen by 27 percent to $368 billion since November 2013, and the ruble has fallen 82 percent since last June to 61.49 per dollar. Sanctions introduced last September block European companies and citizens from buying or selling new bonds or equity issued by any of the five major state-owned Russian banks or the three major Russian energy companies if they have a maturity exceeding 30 days. Even those companies not literally under sanction are finding it difficult to borrow from international creditors loath to lend amid the uncertain economic and political environment.
There is the possibility that the second round of the Minsk ceasefire accords, agreed to in February, could lead to a relaxation of European Union sanctions. British Foreign Secretary Philip Hammond has gone so far as to say that the European Union will unwind sanctions if Russia fully complies with the terms of that agreement. It is however critical that this happens no later than 12-24 months from now as Russia will probably be able to cover its external debt obligations only until then given its surplus net international investment position — the value of its overseas assets is $233 billion greater than the value of domestic assets owned by foreigners, according to fourth quarter central bank data.
And then there’s the price of oil. While the decline has been devastating in terms of revenues, it’s already happened, and analyst estimates have all been readjusted to reflect the lower-price environment. What’s more, the likelihood of oil prices rising in coming months seems higher than them moving much lower. Credit Suisse expects the average price of Brent to increase to $71 per barrel by the end of 2015 from its current $56 per barrel, which would help Russian equities. At the very least, corporate earnings revisions should actually improve in 2015 as exporters benefit from a cheaper ruble.
Credit Suisse has become less bearish on two particular fronts. The first is the impact of Western sanctions. The restrictions have been quite damaging to the economy and have exacerbated the declines in the currency caused by low oil prices. The Russian government has been forced to use the country’s foreign reserves, which have fallen by 27 percent to $368 billion since November 2013, and the ruble has fallen 82 percent since last June to 61.49 per dollar. Sanctions introduced last September block European companies and citizens from buying or selling new bonds or equity issued by any of the five major state-owned Russian banks or the three major Russian energy companies if they have a maturity exceeding 30 days. Even those companies not literally under sanction are finding it difficult to borrow from international creditors loath to lend amid the uncertain economic and political environment.
There is the possibility that the second round of the Minsk ceasefire accords, agreed to in February, could lead to a relaxation of European Union sanctions. British Foreign Secretary Philip Hammond has gone so far as to say that the European Union will unwind sanctions if Russia fully complies with the terms of that agreement. It is however critical that this happens no later than 12-24 months from now as Russia will probably be able to cover its external debt obligations only until then given its surplus net international investment position — the value of its overseas assets is $233 billion greater than the value of domestic assets owned by foreigners, according to fourth quarter central bank data.
And then there’s the price of oil. While the decline has been devastating in terms of revenues, it’s already happened, and analyst estimates have all been readjusted to reflect the lower-price environment. What’s more, the likelihood of oil prices rising in coming months seems higher than them moving much lower. Credit Suisse expects the average price of Brent to increase to $71 per barrel by the end of 2015 from its current $56 per barrel, which would help Russian equities. At the very least, corporate earnings revisions should actually improve in 2015 as exporters benefit from a cheaper ruble.
Developing an Eye for R&D
Despite the strong economic recovery in the U.S., nominal global GDP
growth over the next few years is unlikely to reach the levels reached
just prior to the global financial crisis. Developed economies grew an
average of 5 percent between 1997 and 2007, while Credit Suisse
estimates they will expand at an average of 3.9 percent between 2010 and
2019. As a result, it will be more of a challenge to find strong
earnings growth in global equities markets. So how can investors
play the market? Credit Suisse suggests focusing on companies that spend
heavily on research and development.
Indeed, after being in decline for nearly two decades, R&D outlays are once again on the rise, and heavy spenders tend to outperform over time. Drawing on a database of 3,400 globally listed companies excluding financial and utilities firms, Credit Suisse calculates that total spending on R&D has risen from 1.9 percent of revenue in 2007 to 2.3 percent in 2013. And among that group, companies that spend more than 5 percent of revenues on R&D outperform global equities. Up to a point: those that spend more than 30 percent of revenues – Credit Suisse calls them “extreme R&D spenders” — do not. Momentum matters, too. The stocks of companies that have continually increased their levels of R&D spending have outperformed those reducing their commitment to R&D by some 7.5 percent a year over the past 10 years.
What parts of the world see the most R&D spending? In a recent report entitled “Investing for Growth: The Innovators,” Credit Suisse analysts Eugene Klerk and Richard Kersley point out that U.S. companies dominate a list of “high” R&D spenders, making up 65 percent of the total. Other countries with above average spending include Japan, the U.K., Taiwan and China. But some R&D spending is clearly more effective than others: Returns show significant dispersion at the country level, with companies in the U.S., Canada, the U.K., Denmark and Germany proving much more adept at getting a return on their R&D investment than those in Thailand, New Zealand, Israel, Italy and Spain
The same goes for sectors. R&D spending has proven a far more effective generator of return for companies in the technology, healthcare, and industrials sectors as it has in telecom and services. And within those winning sectors, basing stock picks on R&D spend can be a winning strategy. In healthcare, for example, selecting stocks based on their R&D profile has provided 3.5 percent of annual outperformance when compared to a portfolio of all healthcare stocks. Likewise technology, in which an R&D-focused portfolio has delivered almost 4 percent outperformance annually since 2000.
Indeed, after being in decline for nearly two decades, R&D outlays are once again on the rise, and heavy spenders tend to outperform over time. Drawing on a database of 3,400 globally listed companies excluding financial and utilities firms, Credit Suisse calculates that total spending on R&D has risen from 1.9 percent of revenue in 2007 to 2.3 percent in 2013. And among that group, companies that spend more than 5 percent of revenues on R&D outperform global equities. Up to a point: those that spend more than 30 percent of revenues – Credit Suisse calls them “extreme R&D spenders” — do not. Momentum matters, too. The stocks of companies that have continually increased their levels of R&D spending have outperformed those reducing their commitment to R&D by some 7.5 percent a year over the past 10 years.
What parts of the world see the most R&D spending? In a recent report entitled “Investing for Growth: The Innovators,” Credit Suisse analysts Eugene Klerk and Richard Kersley point out that U.S. companies dominate a list of “high” R&D spenders, making up 65 percent of the total. Other countries with above average spending include Japan, the U.K., Taiwan and China. But some R&D spending is clearly more effective than others: Returns show significant dispersion at the country level, with companies in the U.S., Canada, the U.K., Denmark and Germany proving much more adept at getting a return on their R&D investment than those in Thailand, New Zealand, Israel, Italy and Spain
The same goes for sectors. R&D spending has proven a far more effective generator of return for companies in the technology, healthcare, and industrials sectors as it has in telecom and services. And within those winning sectors, basing stock picks on R&D spend can be a winning strategy. In healthcare, for example, selecting stocks based on their R&D profile has provided 3.5 percent of annual outperformance when compared to a portfolio of all healthcare stocks. Likewise technology, in which an R&D-focused portfolio has delivered almost 4 percent outperformance annually since 2000.
Rally ‘Round the Dollar
There’s been so much coverage of plummeting oil prices lately that it
has crowded out another major financial markets story of 2014—the rise
of the U.S. dollar. The currency has gained more than 11 percent on the
euro since May, and the trade-weighted U.S. dollar index has gained 20
percent since its low point in 2011. While that sounds significant, it’s
actually a small move as dollar bull cycles go. The index, which
measures the greenback against a basket of world currencies, gained 70
percent between 1978 and 1985 and 40 percent from 1995 to 2002. It
remains to be seen whether the current rally has that kind of legs, but
Credit Suisse believes the dollar’s rise will continue, to the tune of
another 5 percent next year.
A key reason is monetary policy, as the Federal Reserve is widely expected to begin increasing interest rates next year. True, the market has already begun to price in a Fed hiking cycle. But Credit Suisse expects the central bank to be more hawkish in 2015 than the market does, forecasting the first hike in June and a total increase of 100 basis points during the year. All things being equal, higher U.S. yields will attract foreign capital and strengthen the currency. What’s more, the European Central Bank is expected to continue loosening its policy, potentially announcing more significant quantitative easing early next year, which bodes for further weakening of the euro against the dollar.
Credit Suisse also expects the U.S. economic recovery to continue next year, which should likewise attract more capital flows and strengthen the dollar. Recent economic data have been strong: the unemployment rate has fallen to 5.8 percent, while wage growth finally accelerated to 0.4 percent in November, signaling that employers are starting to give more raises and hire more from competitors. Consumer confidence in December rose for the fifth consecutive month to the highest level since 2007. All-in, Credit Suisse forecasts GDP growth to accelerate to 3.1 percent in 2015 from an estimated 2.3 percent in 2014.
History provides some guidance as to the implications for the market: global equities tend to perform well in times of a strong dollar. Since 1980,
equities have risen 72 percent of the time during years the dollar has strengthened, compared with 62 percent when it weakened, according to Credit Suisse. In particular, stocks of European companies that sell a large percentage of their products to the United States will benefit. Health care, pharmaceutical, and consumer staples stocks should see the most upside, according to Credit Suisse. By the same token, U.S. exporters in industrials and materials should perform poorly, as their products are becoming more expensive for foreign buyers.
The implications for emerging markets aren’t as encouraging. As we’ve already discussed, rising yields in the U.S. are causing heavy capital outflows from EM countries and weakening those currencies in the process. The declines are even more pronounced in oil-exporting countries such as Russia and Mexico because of the sharp drop in crude prices. A rising U.S. dollar will also crimp the ability of emerging market borrowers to pay off debts denominated in U.S. currency.
Photo courtesy of Shutterstock.com / Bernhard Richter
Another month, another decline in oil prices. The cost of a barrel of
Brent crude fell more than 60 percent between last June and the end of
January, dropping for a record seven consecutive months. And the
declines may not be over yet: Credit Suisse forecasts Brent will average
$45 per barrel in the first quarter, down from $57 currently. Lower oil
prices have, without question, been a boon for most parts of the global economy,
because they have freed up cash for increased consumer and corporate
spending. But is there a price for oil that’s too low? One that hurts
more than it helps?
Consider the well-documented woes of oil-exporting countries such as Russia and Venezuela, whose government revenues have been severely reduced by lower oil prices, provoking fiscal imbalance. In both instances, there could be a wider regional impact. Fortunately, they aren’t expected to contaminate the global economy. “If Russia suddenly defaulted, or another major sovereign had difficulty, that would potentially lead to tighter credit conditions, says Neville Hill, co-head of global economics and fixed income strategy at Credit Suisse. “But it’s not likely.”
Then there’s the negative effect of cheap oil on U.S. producers. When the oil price was high, the majority of U.S. producers were operating well in the black. But it is rapidly approaching (or has already passed), the threshold at which many companies start to lose money on every barrel sold. As a result, the rig count for U.S. upstream companies is already down more than 10 percent, capital expenditures are expected to drop 35 percent this year, and production growth should slow to 300,000 barrels a day in 2015 from 1.6 million barrels a day last year. The industry will likely respond to cheaper oil by consolidating around companies with high-quality, low-cost reserves. Stockholders of or lenders to the weaker players, however, have already suffered losses, and there are surely more to come.
Specific oil-producing countries or oil producers themselves aside, the looming risk to all investors has to do with a lack of inflation—and, in some cases, deflation. Amid low oil prices, inflation rates in the 34 member countries of the Organization for Economic Cooperation and Development have fallen to their lowest levels since 2009, reaching 1.1 percent in December from 1.5 percent in November. At the same time that growth is already anemic in much of the developed world, deflation is a very unwelcome development, as it tends to prolong economic downturns.
Policymakers, however, appear to be very focused on the problem. In Europe, where worries about deflation are the most heightened, the central bank just announced a major quantitative easing program aimed at boosting growth and fueling inflation. Credit Suisse thinks the combination of easier bank lending conditions might just combine with the decline in oil prices to finally snap the continent out of its economic torpor, with low oil prices ultimately proving a boon to—and not a drag on—the region’s growth.
In the U.S., long-term inflation expectations have fallen sharply. The five-year inflation breakeven rate—a key gauge of long-term inflation expectations—fell steadily from 2.03 percent last July to 1.24 percent by the end of January. In a typical economic cycle, employment follows prices down. But that isn’t happening this time around, and it appears that just as in Europe, lower oil prices are helping much more than they’re hurting. Credit Suisse estimates that cheap oil will reduce the proportion of energy in total consumer spending from 3.2 percent last year to 2.5 percent by March. And since it usually takes several months for consumers to trust that lower gas prices will last before they then begin to increase spending, it’s quite possible that consumer spending on non-energy items will see a significant boost as the year unfolds. And when that happens, inflation should pick up. “One month of strong retail sales is one thing,” Hill says. “With six months, you’ve changed the game quite considerably.”
According to Credit Suisse, cheap oil is a large part of the reason global industrial production momentum, a rolling three-month measure of IP growth, hit 5.3 percent in January, up from 1.2 percent in August. U.S. IP momentum should peak in January above 7 percent, the bank says. Plus, global goods demand growth averaged 0.6 percent in October and November, nearly double its long-term average, and it looks set to continue to expand in the coming quarters. Falling oil prices usually signal an economic slowdown, and the farther they fall, the uglier things can get. But this time around, with increased U.S. shale production a major cause of the price decline – in other words, it’s a supply issue, not a demand one — falling oil prices are not so much a signal of decline but fuel for an upswing.
A key reason is monetary policy, as the Federal Reserve is widely expected to begin increasing interest rates next year. True, the market has already begun to price in a Fed hiking cycle. But Credit Suisse expects the central bank to be more hawkish in 2015 than the market does, forecasting the first hike in June and a total increase of 100 basis points during the year. All things being equal, higher U.S. yields will attract foreign capital and strengthen the currency. What’s more, the European Central Bank is expected to continue loosening its policy, potentially announcing more significant quantitative easing early next year, which bodes for further weakening of the euro against the dollar.
Credit Suisse also expects the U.S. economic recovery to continue next year, which should likewise attract more capital flows and strengthen the dollar. Recent economic data have been strong: the unemployment rate has fallen to 5.8 percent, while wage growth finally accelerated to 0.4 percent in November, signaling that employers are starting to give more raises and hire more from competitors. Consumer confidence in December rose for the fifth consecutive month to the highest level since 2007. All-in, Credit Suisse forecasts GDP growth to accelerate to 3.1 percent in 2015 from an estimated 2.3 percent in 2014.
History provides some guidance as to the implications for the market: global equities tend to perform well in times of a strong dollar. Since 1980,
equities have risen 72 percent of the time during years the dollar has strengthened, compared with 62 percent when it weakened, according to Credit Suisse. In particular, stocks of European companies that sell a large percentage of their products to the United States will benefit. Health care, pharmaceutical, and consumer staples stocks should see the most upside, according to Credit Suisse. By the same token, U.S. exporters in industrials and materials should perform poorly, as their products are becoming more expensive for foreign buyers.
The implications for emerging markets aren’t as encouraging. As we’ve already discussed, rising yields in the U.S. are causing heavy capital outflows from EM countries and weakening those currencies in the process. The declines are even more pronounced in oil-exporting countries such as Russia and Mexico because of the sharp drop in crude prices. A rising U.S. dollar will also crimp the ability of emerging market borrowers to pay off debts denominated in U.S. currency.
Photo courtesy of Shutterstock.com / Bernhard Richter
The High-Yield Seesaw
The past five years have been interesting times in high-yield debt
markets. On one hand, the world’s major central banks have been holding
interest rates near zero for an unprecedented length of time,
encouraging a hunt for yield that has turned the very phrase “high
yield” into an oxymoron. Average junk bond yields
were below 6 percent for much of 2013 and 2014, compared to the 8
percent-plus levels that were common before the financial crisis – never
mind the 10 percent-plus rates that prevailed between 1998 and 2003.
On the other hand, a drastic reduction in market liquidity has made for punctuated periods of intense volatility – dramatic selloffs followed by full recoveries. One reason for that: Financial institutions have drastically reduced the assets available for trading in order to meet new capital requirements mandated in the wake of the financial crisis. Fixed income, currency, and commodities trading assets at large brokers have declined $600 billion – some 30 percent – between 2009 and December 2014, according to Credit Suisse estimates. The already relatively illiquid world of high-yield bonds has thus become even more illiquid, with sharp moves coming not only as a result of credit risk, but also with the onset and easing of unpredictable macroeconomic jitters, according to Credit Suisse Head of Global Leveraged Finance Strategy Jonathan Blau.
The sharp drop in oil prices at the end of last year prompted the latest such panic. There was legitimate concern that highly leveraged energy companies would run into difficulty meeting their bond obligations as oil prices fell. But Blau says the principal reason for the selloff was that the decline sparked fears of global deflation that sent markets into risk-off mode, which hurt riskier assets such as high-yield bonds across-the-board.
The trouble in high yield followed on the heels of oil’s own. On June 19, the one-month forward price of Brent crude, the benchmark for global oil prices, hit a high for the year at nearly $115 a barrel. Four days later, yields on high-yield bonds troughed at 5.1 percent. When oil prices began falling thereafter, bond yields rose right along, peaking at 7.7 percent on Dec. 16, when Brent was trading at just $59.75 a barrel. There was another important December milestone, too. Europe slipped into deflation for the first time since 2009.
The entire high-yield sector saw a flight to quality in the fourth quarter of 2014, but energy credits were the hardest-hit. Total returns on energy bonds roughly tracked Credit Suisse’s overall high-yield index until late September, when oil prices sank into the low $90s. By the time high-yield troughed on Dec. 16, energy credits were showing an abysmal -14.8 percent year-to-date return, compared to 1.89 percent for non-energy credits and -0.94 percent for the index as a whole. (Energy makes up some 15 percent of the index).
Blau says the reduced liquidity available in the marketplace exacerbated the impact of what was actually a relatively limited selloff. “Some of the price losses that occurred through mid-December were due to the fact that there were very few sellers, but those that sold were determined to exit their positions,” Blau says. “The buyers who came in knew they could extract a large premium.”
In the end, Blau says, high-yield bonds ended up priced well below “fair value.” But since that time, risk-off sentiment has gradually abated, helped along by strong U.S. economic data and the announcement of a quantitative easing program from the European Central Bank. A tepid recovery in oil prices over the last two months — Brent crude has rallied from a low of $47.20 a barrel in mid-January to $58.56 in early March — has also bolstered the high yield market, with yields back down to about 6.5 percent. Total return for 2015 year-to-date is 2.5 percent overall, and energy has recovered strongly, returning 4.2 percent.
One thing that hasn’t changed much, however, is the liquidity situation, and the increased likelihood of another bout of skittishness. The most obvious catalyst is an expected rate hike from the Federal Reserve. Blau says investors are likely to be more concerned with the pace of rate hikes than the timing of them, but notes that tightening could certainly put a strain on high-yield markets given the existing low levels of liquidity.
Once upon a time, if there weren’t enough willing buyers, banks would act as principals by holding bonds on their own books. But now that financial institutions have pared back their trading assets, investors are exposed to much more volatility than in the past. It remains to be seen just how much of an impact a Fed hike will have on the market – or if it will happen this year at all. But hike or no hike, the high-yield world is ever more vulnerable to sudden fits of nerves.
On the other hand, a drastic reduction in market liquidity has made for punctuated periods of intense volatility – dramatic selloffs followed by full recoveries. One reason for that: Financial institutions have drastically reduced the assets available for trading in order to meet new capital requirements mandated in the wake of the financial crisis. Fixed income, currency, and commodities trading assets at large brokers have declined $600 billion – some 30 percent – between 2009 and December 2014, according to Credit Suisse estimates. The already relatively illiquid world of high-yield bonds has thus become even more illiquid, with sharp moves coming not only as a result of credit risk, but also with the onset and easing of unpredictable macroeconomic jitters, according to Credit Suisse Head of Global Leveraged Finance Strategy Jonathan Blau.
The sharp drop in oil prices at the end of last year prompted the latest such panic. There was legitimate concern that highly leveraged energy companies would run into difficulty meeting their bond obligations as oil prices fell. But Blau says the principal reason for the selloff was that the decline sparked fears of global deflation that sent markets into risk-off mode, which hurt riskier assets such as high-yield bonds across-the-board.
The trouble in high yield followed on the heels of oil’s own. On June 19, the one-month forward price of Brent crude, the benchmark for global oil prices, hit a high for the year at nearly $115 a barrel. Four days later, yields on high-yield bonds troughed at 5.1 percent. When oil prices began falling thereafter, bond yields rose right along, peaking at 7.7 percent on Dec. 16, when Brent was trading at just $59.75 a barrel. There was another important December milestone, too. Europe slipped into deflation for the first time since 2009.
The entire high-yield sector saw a flight to quality in the fourth quarter of 2014, but energy credits were the hardest-hit. Total returns on energy bonds roughly tracked Credit Suisse’s overall high-yield index until late September, when oil prices sank into the low $90s. By the time high-yield troughed on Dec. 16, energy credits were showing an abysmal -14.8 percent year-to-date return, compared to 1.89 percent for non-energy credits and -0.94 percent for the index as a whole. (Energy makes up some 15 percent of the index).
Blau says the reduced liquidity available in the marketplace exacerbated the impact of what was actually a relatively limited selloff. “Some of the price losses that occurred through mid-December were due to the fact that there were very few sellers, but those that sold were determined to exit their positions,” Blau says. “The buyers who came in knew they could extract a large premium.”
In the end, Blau says, high-yield bonds ended up priced well below “fair value.” But since that time, risk-off sentiment has gradually abated, helped along by strong U.S. economic data and the announcement of a quantitative easing program from the European Central Bank. A tepid recovery in oil prices over the last two months — Brent crude has rallied from a low of $47.20 a barrel in mid-January to $58.56 in early March — has also bolstered the high yield market, with yields back down to about 6.5 percent. Total return for 2015 year-to-date is 2.5 percent overall, and energy has recovered strongly, returning 4.2 percent.
One thing that hasn’t changed much, however, is the liquidity situation, and the increased likelihood of another bout of skittishness. The most obvious catalyst is an expected rate hike from the Federal Reserve. Blau says investors are likely to be more concerned with the pace of rate hikes than the timing of them, but notes that tightening could certainly put a strain on high-yield markets given the existing low levels of liquidity.
Once upon a time, if there weren’t enough willing buyers, banks would act as principals by holding bonds on their own books. But now that financial institutions have pared back their trading assets, investors are exposed to much more volatility than in the past. It remains to be seen just how much of an impact a Fed hike will have on the market – or if it will happen this year at all. But hike or no hike, the high-yield world is ever more vulnerable to sudden fits of nerves.
Can Oil Go Too Low?
Consider the well-documented woes of oil-exporting countries such as Russia and Venezuela, whose government revenues have been severely reduced by lower oil prices, provoking fiscal imbalance. In both instances, there could be a wider regional impact. Fortunately, they aren’t expected to contaminate the global economy. “If Russia suddenly defaulted, or another major sovereign had difficulty, that would potentially lead to tighter credit conditions, says Neville Hill, co-head of global economics and fixed income strategy at Credit Suisse. “But it’s not likely.”
Then there’s the negative effect of cheap oil on U.S. producers. When the oil price was high, the majority of U.S. producers were operating well in the black. But it is rapidly approaching (or has already passed), the threshold at which many companies start to lose money on every barrel sold. As a result, the rig count for U.S. upstream companies is already down more than 10 percent, capital expenditures are expected to drop 35 percent this year, and production growth should slow to 300,000 barrels a day in 2015 from 1.6 million barrels a day last year. The industry will likely respond to cheaper oil by consolidating around companies with high-quality, low-cost reserves. Stockholders of or lenders to the weaker players, however, have already suffered losses, and there are surely more to come.
Specific oil-producing countries or oil producers themselves aside, the looming risk to all investors has to do with a lack of inflation—and, in some cases, deflation. Amid low oil prices, inflation rates in the 34 member countries of the Organization for Economic Cooperation and Development have fallen to their lowest levels since 2009, reaching 1.1 percent in December from 1.5 percent in November. At the same time that growth is already anemic in much of the developed world, deflation is a very unwelcome development, as it tends to prolong economic downturns.
Policymakers, however, appear to be very focused on the problem. In Europe, where worries about deflation are the most heightened, the central bank just announced a major quantitative easing program aimed at boosting growth and fueling inflation. Credit Suisse thinks the combination of easier bank lending conditions might just combine with the decline in oil prices to finally snap the continent out of its economic torpor, with low oil prices ultimately proving a boon to—and not a drag on—the region’s growth.
In the U.S., long-term inflation expectations have fallen sharply. The five-year inflation breakeven rate—a key gauge of long-term inflation expectations—fell steadily from 2.03 percent last July to 1.24 percent by the end of January. In a typical economic cycle, employment follows prices down. But that isn’t happening this time around, and it appears that just as in Europe, lower oil prices are helping much more than they’re hurting. Credit Suisse estimates that cheap oil will reduce the proportion of energy in total consumer spending from 3.2 percent last year to 2.5 percent by March. And since it usually takes several months for consumers to trust that lower gas prices will last before they then begin to increase spending, it’s quite possible that consumer spending on non-energy items will see a significant boost as the year unfolds. And when that happens, inflation should pick up. “One month of strong retail sales is one thing,” Hill says. “With six months, you’ve changed the game quite considerably.”
According to Credit Suisse, cheap oil is a large part of the reason global industrial production momentum, a rolling three-month measure of IP growth, hit 5.3 percent in January, up from 1.2 percent in August. U.S. IP momentum should peak in January above 7 percent, the bank says. Plus, global goods demand growth averaged 0.6 percent in October and November, nearly double its long-term average, and it looks set to continue to expand in the coming quarters. Falling oil prices usually signal an economic slowdown, and the farther they fall, the uglier things can get. But this time around, with increased U.S. shale production a major cause of the price decline – in other words, it’s a supply issue, not a demand one — falling oil prices are not so much a signal of decline but fuel for an upswing.
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