Rick Rule – Artificial Liquidity Propping up Markets
Our friend Rick Rule had some face time on CNBC this morning. Unfortunately CNBC’s Joe Kernen was a bit too glib to get the most out of the interview, but Rule's comments about artificial liquidity propping up equity markets make the interview worthwhile.
The segment is below. The topic was on energy. Among the highlights, Mr. Rule said: “… the national oil companies have been diverting a lot of their free cash flow away from sustaining capital investments to politically expedient domestic spending problems so countries like Mexico, Venezuela, Iran, have been diverting more and more sustaining capital from production to domestic spending programs, and we've had a bit of a supply constraint. … I think the level of production - the production declines that you're seeing in countries that have national oil companies like Mexico, Venezuela are dangerous. The point is you can't turn around and begin to spend next year, when you have underinvested for ten years in the industry. It takes a long time to turn around those production declines so I think there will be a problem three or four or five years out, a real supply problem - on a global basis.” More at the link below and in the video.