Above the Fold

Crude’s Rude Awakening – Despite the fact that the U.S. produces 17.71 million bpd (barrels per day) of petroleum products, or roughly 87% of our daily consumption of about 20.45 bpd (2018 average), the prices of our petrol products are still at the mercy of global markets. 

Early Saturday, Yemen’s Houthi rebels launched 10 drones, allegedly from Iran, striking two Saudi Arabian oil installations, disabling production and reducing the nation’s output by half. And unlike past OPEC warnings for reductions in supply, which often occur slowly if at all, this attack essentially turned the Saudi oil spigot to the “off” position in a matter of hours. 

Being that the world’s oil supply chain is so delicately balanced and fairly predictable, this disruption not only sparked a double-digit, one-day surge in crude prices, but is likely to keep the price of black gold and other distillates elevated for some time as traders rethink the safety and stability of producing fields. Political stability in the region has also been severely affected, along with our fragile relationship with Iran. And while we should expect an increase in energy prices in everything from automotive gas to heating oil, the end of the summer driving season and onset of more moderate temperatures across America should help curb at least some of the anticipated price hikes. Saudi Arabia will also tap its reserves to minimize supply shortfalls (and keep its income flowing). 

Three Things

1. UAW Strikes GM – With the support of Teamsters, nearly 50,000 United Auto Workers (UAW) went on strike Sunday against General Motors (GM) for the first time in over a decade. Wages, health care, profit sharing and job security were all sticking points in negotiations that broke down over the weekend. GM’s average hourly employee earns about $90,000 per year, not including benefits.
2. Lenders Learn More About Your Habits – Given the antiquated and somewhat manipulatable nature of FICO scores, lenders are exploring new methods of creditworthiness. Big banks and financial upstarts are looking into everything from shopping habits, utility bills and magazine subscriptions, to phone plans and even high school and college transcripts to determine if and how much of a loan you’re eligible for. 
3. Private Mortgage Bonds Are Back! – Just before the Great Recession, private-label mortgage bonds accounted for 40% of the market. After the housing crash, the market for these assets all but disappeared. But as the future of mortgage purchasers Fannie Mae and Freddie Mac becomes a bit cloudier, and traditional bond yields decline, bank-built mortgage bonds are making a comeback.

Did You Know?

The Case of the Golden Throne – A solid 18k gold toilet called “America” was stolen after a short-lived, fully operational installation at Blenheim Palace, the birthplace of Winston Churchill. Valued at more than $1 million, the commode was sculpted by Italian artist Maurizio Cattelan as a reflection of our obsession with luxury. 

After spending years installed in a public bathroom on the fifth-floor of the Guggenheim Museum in New York (where it was used and photographed by hundreds of thousands of people), the throne was offered to the White House as a long-term loan in 2017, in lieu of Trump’s request for Van Gogh’s “Landscape with Snow,” according to an email obtained by the Washington Post. 

Unfortunately, the privy never made it to Washington, where it may have been harder to steal.