Weekly Geopolitical Report – Manufacturing Renaissance? (November 10, 2014)

by Kaisa Stucke, CFA

Falling energy prices and historically high domestic hydrocarbon production have left many consumers giddy at the pump, while leaving many investors wondering what the market ramifications of cheap oil and natural gas could be.  Short-term effects have included improved consumer confidence and increased consumption as people have more available income.  A longer term question that many analysts have been asking is whether the abundance of cheap domestic energy could breathe new life into the U.S. manufacturing sector.

This week, we will take a look at the possibility of a manufacturing renaissance in the U.S.  We will start by exploring the domestic and global implications of falling energy prices, paying attention to the countries and industries that could possibly benefit or suffer from energy price declines.  We will briefly comment on the geopolitical effects of falling energy prices.  We will then look at the factors that could boost or hurt the domestic manufacturing base, commenting on the importance of each.  As always, we will conclude with market ramifications.

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