Vladimir Horowitz
“Perfection itself is imperfection.”
US Emergency Oil Reserves Remain at Near Four-Decade Low Amid Rising Global Tensions
:max_bytes(150000):strip_icc():format(jpeg)/INV_StrategicPetroleumReserve_GettyImages-1434804700-930b2f63ac494dccb1223603d993391a.jpg "U.S. Strategic Petroleum Reserve storage facility in Freeport, Texas")
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U.S. Strategic Petroleum Reserve storage facility in Freeport, Texas
Key Takeaways
- After releasing substantial supplies in 2022, the U.S. Strategic Petroleum Reserve remains near a four-decade low.
- That leaves the U.S. with less wiggle room to manage oil and gasoline prices as tensions rise in the Middle East.
- However, as 2022 showed, releasing supplies from the reserve has limited ability to affect the sprawling global energy market.
If the ongoing turmoil in the Middle East boils over, U.S. consumers probably shouldn’t bank on a familiar government tool to ease the potential impact on what they pay for gasoline.
The U.S. government created that tool, the Strategic Petroleum Reserve, in 1975 to maintain an emergency reserve of hundreds of millions of barrels of oil. But it currently has nowhere near that amount.
In fact, since President Biden authorized government sales from the reserve to combat rising oil prices after Russia-Ukraine conflict began in 2022, it’s emptier than it’s been in nearly four decades.
The vagaries of global oil markets and the complexities of the U.S. refining business have at best, demonstrated that SPR releases have a somewhat nebulous impact on U.S. oil and gasoline prices.
Nonetheless, the SPR’s historically low level means the U.S. government has limited bandwidth to address any market disruptions caused by heightened hostilities in the Middle East—despite the Biden administration’s insistence the U.S. could again tap reserves.
Why Talk About The Strategic Petroleum Reserve Now?
Oil prices tend to react quickly to global conflicts, particularly those involving key global crude producers, such as Russia and almost any country in the Middle East.
Brent crude rose 2% in the immediate aftermath of the Hamas attack on Israel in October last year, and has remained volatile since, even though some analysts think the global oil market already had accounted for increased tension in the Middle East.
That doesn’t mean, however, that any new developments or even an escalation—were it to occur—couldn’t change the existing price dynamic.
There’s Just Not Enough In The Strategic Petroleum Reserve
If oil prices jumped suddenly and stayed high, in theory the strategic petroleum reserve should help. However, a severely depleted reserve may not have much to offer.
The SPR contains 365.7 million barrels of crude oil, as of April 19, 2024, according to the most recent data available. While that figure has been rising over the past few months, its down 38% from 593.7 million barrels at the end of 2021, and about half the record high of 726 million barrels it maintained from late 2009 through early 2011.
The U.S. consumes about 20 million barrels of oil each day, accounting for about 20% of the world’s daily consumption. Even though the SPR remains the largest known emergency reserve in the world, that still means existing SPR supplies would cover only 18 days of U.S. oil needs.
Can The Strategic Petroleum Reserve Really Help Bring Down Prices?
Even if the reserve had more to offer, its hard to pinpoint to what extent or how quickly the SPR release may have eased prices at the pump in the past.
For example, prices for both Brent as well as West Texas Intermediate (WTI) crude rose as the Russia-Ukraine conflict began in February 2022, with the monthly average for the next month almost doubling compared with the previous year.
Between March and December 2022, the U.S. sold 10 million to almost 30 million barrels of oil each month from the reserve, in an attempt to stabilize prices.
Spot prices for West Texas Intermediate (WTI) crude, the U.S. price benchmark, hit an all-time high of $120 per barrel in early June 2022, three and a half months after the conflict started. It didn’t fall below the pre-conflict level until early September.
U.S. gasoline averaged an all-time high $4.93 per gallon in June 2022, up 48% from January, even as the SPR sold 100 million barrels in the first half of the year. Gas prices averaged higher than $3.69 per gallon—about 40 cents higher than before the conflict—until December of 2022, when they fell to $3.21.
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Margery Allingham
“When the habitually even-tempered suddenly fly into a passion, that explosion is apt to be more impressive than the outburst of the most violent amongst us.”
Emergency Loan: Types, Eligibility, Pros and Cons
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Emergency loans are a type of personal loan for people who find themselves in an unexpected situation and need cash fast. In general, they provide a lump sum of cash, and then borrowers pay off the loan at a fixed interest rate for a specific term.
Banks, credit unions, and online lenders may offer emergency loans. Eligibility and the cost to you will depend on creditworthiness. Typically, emergency loans have a lower maximum loan amount than some other types of lending products.
Learn more about how emergency loans work, how to qualify, and the pros and cons of using this type of loan.
Key Takeaways
- Emergency loans are meant to provide quick financial assistance to help you cover unexpected costs.
- Eligibility for emergency loans typically depends on factors like credit score and income.
- There are various types of emergency loans, each with its own set of features, advantages, and disadvantages.
- While emergency loans offer immediate relief, they have high interest rates and potential risks.
How an Emergency Loan Works
When deciding if an emergency loan is best for you, start by checking your credit score. You can then search for lenders and try pre-qualifying with one or two lenders to see if you’d meet their basic requirements for approval and get a sense of the interest rate you would receive. From there, you could use a personal loan calculator to see what your monthly and overall borrowing costs would be for different term lengths.
To get an emergency loan, the process is similar to other types of loans. First, you must complete an application, sharing your personal contact information, providing documentation about your income, and stating how much you are hoping to borrow. The lender will review your application and may ask for permission to review your credit.
Once a decision is made, you may be approved, denied, or receive an alternative offer. If approved, you’ll have time to review the loan agreement to decide if you accept. If so, you’ll sign the loan agreement, and funds will be deposited into your bank account of choice. Timing will depend on the lender; some even fund loans on the day of approval.
Types of Emergency Loans
The most common type of emergency loans are personal loans. They allow you to borrow a lump sum of money and pay it back with fixed payments for a specific term. In addition, there are a few different ways to borrow money for an unexpected situation.
- Payday loans: If you just need a small amount of cash, a payday loan gives you an advance on your paycheck. The downside is that these short-term loans have a high fee, but you won’t have to repay them over a long period of time like other loans since they are typically due within a short timeframe.
- Title loans: Another short-term loan option, a title loan is a secured loan that uses a car title as collateral. This could be an accessible emergency loan for people with bad credit, but these loans have very high APRs.
- Credit card cash advances: Most credit cards allow you to borrow cash from your line of credit, but you'll typically pay a higher cash advance APR and have no grace period. There is also an upfront fee added, typically around 3% to 5% of the amount borrowed.
Where to Get an Emergency Loan
If you need fast cash, you can get an emergency loan from several types of financial institutions. If you’re going the personal loan route, these are the three main types of lenders.
- Banks: Banks offer personal loans, and many offer fast funding, which can help in an emergency situation. Interest rates and fees vary, as do lending requirements, though bigger banks tend to have stricter qualifications.
- Credit unions: As member-owned institutions, credit unions sometimes have more flexibility to offer competitive interest rates for personal loans, including emergency loans. You’ll have to be a member to apply.
- Online lender: Online loan companies typically offer the fastest funding options as applications are completed online and processed quickly.
Warning
It’s important to research potential lenders—especially online ones that you may not be as familiar with—to make sure you’re not dealing with a predatory lender. Check the Better Business Bureau, read reviews, and look at consumer complaints.
Eligibility and Requirements
Most lenders that offer emergency loans will have similar eligibility criteria and documentation requirements. Here are some of the key factors lenders will consider.
- Identification: Expect to upload or share a copy of a photo ID such as your driver's license, passport, or other state identification. You’ll also need something to show as proof of address, such as a utility bill in your name.
- Age and citizenship: To get an emergency loan, or most any loan, you need to be at least 18 years of age. Some lenders might only work with U.S. citizens, though some might have options for non-citizens.
- Minimum credit score: Each lender sets its own credit score requirements, some more stringent than others. In general, if you have a credit score in the good to excellent range (670+), you should have no trouble being approved by most lenders. Those with lower scores may still get approved but might pay higher interest rates.
- Income: Lenders want to know about your ability to repay the loan, so you’ll need to show proof of income. You may have to submit documents like pay stubs, bank statements, or tax returns.
- Debt-to-income (DTI) ratio: In addition to what you earn, lenders also want to understand what your other obligations are so they can determine your DTI, or how much of your income is needed to cover your bills.
- Reason for the loan: Emergency loans are flexible and can be used for almost any reason, but there are usually a few exclusions such as college tuition, business expenses, gambling, illegal activity, or a home deposit.
Pros & Cons of Emergency Loans
Pros
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Fast access to funds
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Many options
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Easy to apply
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Flexibility in how to use the funds
Cons
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Paying interest
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Some loans have fees
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Another monthly bill obligation
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Low maximum loan amount
Pros Explained
- Fast access to funds: Emergency loans can provide money quickly to help you cover unexpected expenses. Other sources of funding, such as home equity loans, can take several weeks to process.
- Many options: You’ll find several types of emergency loans from various lenders. Each will have different interest rates, terms, and fees. Compare different loans to see which fits your needs.
- Easy to apply: The application process for an emergency loan is fairly straightforward. You’ll need to provide information required by the lender, which usually includes your personal information.
- Flexibility in how to use the funds: You can use the funds from an emergency loan to pay for nearly any expense, such as paying for a medical bill or car repair.
Cons Explained
- Paying interest: Emergency loans generally have a high interest rate, so they can be expensive, especially if you don’t pay them off quickly.
- Some loans have fees: Many lenders charge fees like a loan origination fee or a late fee if you miss payments. Read the loan terms carefully and fully understand the fees before signing a loan.
- Another monthly bill obligation: An emergency loan will add to your total debt, which can lower your credit score and increase your monthly payment obligations.
- Low maximum loan amount: Typically, emergency loans are available in smaller amounts. If you want a larger loan, you will likely have to turn to other funding sources.
Alternatives to Emergency Loans
Emergency loans are not the only option to help you when you need immediate funding. Other options to explore include:
- Emergency savings: Ideally, you should build an emergency savings account that you can draw from. This can help you avoid borrowing costs. Many experts recommend saving three to six months’ worth of expenses in an emergency savings account.
- Borrowing from friends or family: One way to get money quickly for little or no expense is to borrow from your friends or family. The downside of this strategy is that it could affect your relationship with that person, especially if you don’t repay the funds.
- Home equity line of credit (HELOC) or home equity loan: Homeowners can borrow against their home equity with products like HELOCs or home equity loans. While these options might provide some temporary relief, your home debt will increase and you will potentially put your home at risk if you cannot repay the loans.
To start an emergency fund, set up automatic deposits into a separate account every pay period (consider a high-yield account for extra interest), and let it grow. If you do borrow from it, replenish the funds as soon as you can.
What Is the Minimum Credit Score Needed to Get an Emergency Loan?
Minimum credit score requirements vary by lender. In some cases, you may only need a fair credit score (580 and above), but other lenders might only work with people who have good credit (670 and above).
How Quickly Can You Get an Emergency Loan?
Emergency loans are intended to provide fast funding, and you may even find some same-day loans. Timing really depends on the lender and when you submit your application. For example, applying early in the day mid-week rather than late Friday afternoon of a holiday weekend can help you get your loans faster. Also, be sure to fill out the application accurately and provide the necessary documentation for a faster process.
How Quickly Do You Need to Pay Back an Emergency Loan?
Emergency loans can have a wide range of terms—it depends on the type of lender you work with and the amount of money you’re borrowing. In general, personal loan terms can range from two to seven years. If you’re using a short-term lending product like a payday loan or title loan, the timeframe will be shorter, such as within two weeks or 30 days.
How Much Could an Emergency Loan End up Costing?
When you need cash quickly, you can expect it to come with a steep cost. The cost will depend on the loan type and your credit status, which determines what the interest rate will be. Some loans may also have fees.
The Bottom Line
In life, unexpected things happen, but it’s important to carefully consider your options before taking out an emergency loan. Emergency loans can be costly, increase your debt, and add to your monthly expenses. Having a payback plan can help you successfully pay back your emergency loan. Once you get through your setback, try to create an emergency fund so that you’re better protected in the future.
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Vladimir Horowitz
“Perfection itself is imperfection.”
S&P 500 Gains and Losses Today: Resmed Soars Amid Strong Demand for Sleep Devices
:max_bytes(150000):strip_icc():format(jpeg)/latestGainersLosers-da3dc30744c44554b28966c4ea038d8e.png "A chart shows the companies in the S&P 500 that gained and lost the most on April 26, 2024.")
Investopedia
Key Takeaways
- The S&P 500 jumped 1.0% on Friday, April 26, shaking off hot inflation data and receiving a boost from big tech earnings strength.
- Shares of Resmed soared as the maker of devices that treat sleep apnea said the growing use of weight-loss drugs would not diminish its sales.
- Intel’s quarterly results exceeded forecasts, but shares dropped amid underwhelming guidance and uncertainties around the firm’s AI opportunity.
Although the latest Personal Consumption Expenditure (PCE) data showed inflation persisting in March, strong earnings reports from several big tech firms helped major U.S. equities indexes pop higher on Friday.
The S&P 500 jumped 1.0% in the week’s final trading session. The Nasdaq soared 2.0%, while the Dow was up 0.4%.
Resmed (RMD) shares led the S&P 500 higher, skyrocketing 18.9% after the health care technology company posted better-than-expected quarterly revenue and earnings results. Demand for Resmed’s products remained strong, particularly its sleep devices, and the company refuted concerns that the growing use of weight-loss drugs could subdue sales.
Google parent company Alphabet (GOOGL) beat first-quarter sales and profit estimates, and its shares jumped 10.2%. The CEO highlighted Alphabet’s YouTube, search, and cloud businesses as drivers of the strong performance. Alphabet also announced its first-ever dividend and approved a massive stock buyback program. Alphabet Class C (GOOG) shares were up 10.0%.
Shares of high-performance server manufacturer Super Micro Computer (SMCI) added 8.9% ahead of the company’s quarterly earnings report, which is set to be released on Tuesday. The pre-earnings gains reversed some of the heavy losses posted by the stock last week after Super Micro chose not to preannounce its results, raising questions about how much the firm has capitalized on artificial intelligence (AI) opportunities.
Dexcom (DXCM), which makes continuous glucose monitors to help patients manage diabetes, reported better-than-expected first-quarter sales and profits, but its shares tumbled 9.9%, marking the S&P 500’s weakest performance on Friday. The midpoint of Dexcom’s updated full-year sales guidance remained below analysts’ forecasts, and operating expenses increased from the prior year.
Tech giant Intel (INTC) found itself in a similar situation, beating top- and bottom-line estimates for the first quarter but providing underwhelming guidance for the current quarter. Sluggish growth by Intel’s data center and AI segment raised questions about the firm’s capability to benefit from a potential AI boom. Intel shares slid 9.2% on the day.
Shares of Old Dominion Freight Line (ODFL) fell 7.2%, extending losses posted earlier this week when the less-than-truckload (LTL) shipping firm posted lower-than-expected quarterly revenue. Analysts at TD Cowen lowered their price target on Old Dominion stock following the report.
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Elbert Hubbard
“He has achieved success who has worked well, laughed often, and loved much.”
Elbert Hubbard
“He has achieved success who has worked well, laughed often, and loved much.”
Elbert Hubbard
“He has achieved success who has worked well, laughed often, and loved much.”
What We Learned From Big Tech Earnings This Week
:max_bytes(150000):strip_icc():format(jpeg)/News-Image---What-We-Learned-from-Big-Tech-Earnings-this-Week-3ec67d75196f4d2ea67b8b40e6e7e9f7.jpg "Illustration of person with VR goggles looking at Meta, Microsoft and Alphabet logos")
Investopedia / Julie Bang
Key Takeaways
- Artificial intelligence was in the spotlight in Meta Platforms, Google parent company Alphabet, and Microsoft earnings reports, but investors were difficult to please despite the companies’ earnings beats.
- All three tech giants planned to ramp up AI-related capital expenditures, but Meta shares tumbled as its AI spending raised near-term concerns.
- Meta pointed to the early success it has seen in integrating AI tech into its recommendation engine, but investors seemed to want more clarity on how the AI investments could translate to advertising revenue.
- Microsoft and Alphabet reported earnings beats supported by their cloud segments as the companies leverage AI in improving their existing cloud platforms for enterprise customers.
Artificial intelligence (AI) was in focus as Meta Platforms (META), Google-parent Alphabet (GOOGL), and Microsoft (MSFT) reported earnings this week, but investors weren’t easily impressed despite better-than-expected results posted by all three tech giants.
Meta shares plunged after the company emphasized increased spending to invest in AI. Meanwhile, Alphabet shares surged and Microsoft shares gained as cloud strength seems to ease investors’ concerns about the increased AI spending.
Big tech earnings demonstrated that companies’ enterprise customer businesses were key to AI monetization last quarter. The emphasis on enterprise offerings persisted with a focus on cloud segments.
AI Spending Ramps Up
Meta’s earnings beat was overshadowed by the company’s plans to increase spending on AI investments which sent the stock tumbling. The worry for investors in the near term was perhaps how quickly the investment would yield returns, even as analysts said it could boost Meta’s position in the long term.
However, investors didn’t seem to feel that way about Meta’s counterparts.
Alphabet noted increased spending fueled by AI investments. AI-related growth in Google Cloud and YouTube “support the notion that Google is seeing AI tailwinds across the business,” analysts at Raymond James wrote.
Microsoft’s chief financial offer Amy Hood said the company expects “capital expenditures to increase materially on a sequential basis driven by cloud and AI infrastructure investments,” during the company’s earnings call.
Hood said while the company expects capital expenditures to be higher in the 2025 fiscal year than in 2024, “these expenditures over the course of the next year are dependent on demand signals and adoption of [Microsoft’s] services.”
Can AI Spend Translate Into Ad Revenue?
While Meta has highlighted its early success in leveraging its AI tech, analysts say investors are looking for more clarity on how it can contribute to the company’s existing structure.
“Upside in the near term may be limited,” Wedbush analysts wrote in a note, adding that investors are waiting for “more clarity on potential 2025 spending levels,” evidence that the company can meet growth expectations despite harder comparables, and sustainable user and advertiser engagement with new AI offerings.
The company generates almost all of its revenue from advertising and has been increasingly looking at ways to leverage AI to boost that revenue. Meta reported that 30% of the content users see on Facebook and 50% on Instagram is delivered by its AI recommendation engines which improve engagement and increase ad efficiency.
Alphabet also has set its sights on AI-driven advertising revenue growth. The company’s Chief Business Officer (CBO) Philipp Schindler spoke during its earnings call about how generative AI helps advertisers target their audience better, and tools like Gemini could also aid in creating the images and text they need for those ads.
Cloud Is Key For Enterprise Customers
At Alphabet’s recent Google Cloud Next conference, hundreds of the company’s enterprise customers spoke about using the cloud platform’s genAI tools, with some notable business users including Mercedes Benz and Walmart (WMT).
Alphabet CEO Sundar Pichai said the company is “committed to making the investments required to keep [it] at the leading edge in technical infrastructure” as increased capital expenditures “will fuel growth in Cloud, help [the company] push the frontiers of AI models, and enable innovation across our services, especially in Search.”
Pichai outlined the company’s “clear paths to AI monetization through Ads and Cloud.” He said the “cloud business continues to grow as we bring the best of Google AI to enterprise customers.”
While AI initiatives are top of mind for investors, Microsoft’s cloud strength fueled its third-quarter earnings beat.
“Cloud and AI continued to fuel upside for Microsoft,” Bank of America analysts wrote, saying they “believe Azure strength is enough to drive total revenue growth higher for now.”
Microsoft’s Hood said “I know it isn’t as exciting as talking about all the AI projects,” but Azure “is still really foundational” to the company’s enterprise customers.
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