Citi Private Bank

Browser Requirement

To best view Citi Private Bank's site and for a better overall experience, please update your browser to a newer version using the links below.

System Outage
Citi Private Bank logo

Language Notification

Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

Don’t judge the outlook by the oil price

Perspectives

Don’t judge the outlook by the oil price

Steven Wieting

By Steven Wieting

Chief Investment Strategist and Chief Economist

March 7, 2016Posted InCommodities, Investment Strategy and Investments

The world is drowning in cheap oil. At its recent low, the price of a barrel of Brent crude dropped 76% from its 2014 high of $116.

For energy-importing countries, this has been a boon, lowering costs for consumers. But it has also wounded significant parts of the world economy, particularly energy-exporting countries. It has created a financial challenge for producers to repay liabilities incurred when oil prices were much higher. The effects have spilled over into world financial markets, with even oil-consumer equities moving unusually closely with crude in recent months. Could the oil exporters’ pain spread even further, dragging the world economy down with it?

The risks of a spreading financial shock aren’t negligible. We see the US business cycle as now being in its later stages and less resilient to shocks than it was earlier on. There’s a danger that a significant new shock could derail the economic expansion, both in the US and globally.

Investors became unusually wary of this at the start of 2016. Even after huge oil-price declines, recent market pricing suggested some investors expected another halving in oil again over the rest of 2016. Another potential shock could come from China’s exchange rate. With private capital flowing out of China and possible action from the central bank, a further devaluation could trigger yet more turbulence in global markets, just as it did in August 2015.

That previous episode saw global equities drop 12%, a move that was subsequently mostly reversed when no economic contraction ensued. The absence of new lows in China’s currency over the past two months suggests a desire of Chinese authorities to maintain tight control. With deep declines in investment outlays in the energy sector, the current glut in supply is likely to shrink over time. Oil’s stabilization over the past month has eased worst-case fears of producer-debt distress. Meanwhile, in the US, a broad range of industry groups show no sign of following the energy sector down.

In our view, the August scenario is likely to repeat itself, with the world’s slow and disappointing economic expansion continuing, and markets recovering. If risky assets do indeed recover in the now-familiar pattern, we would seek to continue de-risking our allocations. Even before the sell-off, we had already reduced our equity overweight by half over the prior year. However, for those investors that have remained deeply underweight equities relative to their target allocation, we see the recent sell-off as representing more opportunity than risk.