Venezuela - home to the largest oil reserves in the world - will for the next 40 days experience a four-hour blackout every single day, and there are fears that the rationing could lead to unrest and trigger a decline in oil output at a time when the country is barely hanging on.
It has already been a very bad several years for hedge funds with 2016 starting off especially brutally, when moments ago we learned that it is about to get even worse for one of the most iconic names in the macro hedge fund space, Brevan Howard, which according to Bloomberg has been served with $1.4 billion in cash redemption requests.
During the last week we have highlighted the frightening similarity between the speculative spike in China commodity trading (which has sent industrial metals prices soaring in yet another 'error' signal for real supply and demand) and the pump-n-dump in Chinese stocks. Specifically, as Goldman warns the factor that "concerns us the most is the increased speculation in the Chinese iron ore futures market," and now, as Bloomberg reports, it appears that bubble is bursting as Steel and Iron Ore prices tumble most in 21 months after Chinese exchanges raise margins in an attempt to curb speculation.
Will Algos Push Oil Back To $60? Morgan Stanley Begs You To "Forgive The Macros, They Know Not What They Do"Submitted by Tyler Durden on 04/26/2016 - 11:58
“Close your eyes and buy” seems to be the mantra for now. While fundamentals don’t justify a cyclical recovery in oil yet, the market continues to move higher. The primary driving force has been macro funds, index money and CTAs. Technicals and momentum have only added to it, and there is a sense from some of investors that they need to buy for fear of missing out. Similar to 2015, we see a confirmation bias where any bullish data point is embraced outages, weekly US production, etc) and bearish data points are dismissed or spun as a buying opportunity.
Everything is going wrong for the GOP establishment. Yesterday, 'the alliance' broke down within hours of being conjured into life, and today the anti-Trump-ers face disaster as a new NBC poll shows Donald Trump has reached 50 percent support from Republicans and Republican-leaners nationally for the first time since the campaign began. As Goldman notes, after a brief period of uncertainty following the Wisconsin primary earlier this month, the Republican nomination once again looks like it is Mr. Trump’s to lose.
If there was some confusion why the Atlanta Fed recently revised its GDP Nowcast higher following the recent retail sales miss, that confusion will be even more acute today when moments ago the Atlanta Fed plugged today's weaker than expected durable goods print (and downward revision to past month's data), and ended up with... a GDP forecast that was higher than previously, or an increase from 0.3% to 0.4%.
Exxon Mobil has been rate AAA by S&P since 1930 according to Bloomberg. Today that ended as the global crude explorer with sales that dwarf the economies of most nations was cut to AA+ (Outlook stable). Having been put on notice in February (negative watch), citing concern that credit measures would remain weak through 2018. XOM stock is sliding and weighing on The Dow (back below 18,000).
Japan has proven that decay can be stretched into decades, but it has yet to prove that gravity can be revoked by central bank monetary games.
As European countries deal with the current refugee crisis, each is taking a slightly different approach in response to the escalating situation. In Norway, which has been shocked by the unfolding events in neighboring Sweden which has seen a mass revulsion at the ongoing refugee onslaught (and which recently announced it won't accept any more refugees from the EU) the answer appears to be the simplest possible one: offer asylum seekers money to leave.
For many students who went to school and took on student loans under the expectation of getting a six figure petroleum engineering job, a rude awakening is likely ahead. Petroleum engineering became a much more attractive field thanks to the shale boom, which meant that these engineers were no longer likely to have to take a job abroad or on an offshore platform. If shale is dead or partially dead, that changes the calculus for many petroleum engineers. To employ a meaningful number of the current stock of engineers, oil prices would likely have to get back to around $70 a barrel which would make shale at least reasonably profitable in many geographies.
We're gonna need more money-printing. Consumer Confidence dropped in April to 94.2, missing expectations of 95.8 and hovering at its lowest in 2 years. In fact, the current level is relatively unchanged since the end of QE3, despite all the recent surges in stocks as the post-2009 94% correlation between the S&P 500 and confidence is breaking down rapidly and ruining The Fed's animal spirits' party. Most crucially, income growth expectations are tumbling as The Conference Board suggests American consumers "do not foresee any pickup in momentum."
Following the weakness in Philly and Dallas Fed regional - fading off Feb/Mar dead cat bounces - Richmond Fed's epic 9-standard-deviation biggest spike ever to 7 year highs in March appears to have been a one of as it fell back from 22 (3rd highest ever) to 14 (still above expectations) - the biggest drop since August. Of course how one can take this seriously is anyone's guess as shipments , new orders, wages, and workweek all crashed from March's embarrassing spike as did inventory levels for finished and raw materials (not good for Q2 GDP). Worse still outlook for six months ahead saw wages, workweek and new orders collapse further.
With Manufacturing PMI at multi-year lows and trending lower, why would anyone be surprised that, amid plunging profits in retailers and weakness in restaurant performance indices, Markit's preliminary Services PMI for April would bounce for the 2nd month in a row to 52.1. However, as Markit notes, despite th emodest pickup, "growth is clearly far more fragile than this time last year."
"This Is The Longest Uninterrupted Selling Streak In History" - Smart Money Sells Stocks For Record 13 Consecutive WeeksSubmitted by Tyler Durden on 04/26/2016 - 09:08
As BofA reported overnight when looking at the latest trading activity by its smart money clients, "BofAML clients were net sellers of US stocks for the thirteenth consecutive week last week—making it the longest uninterrupted selling streak in our data history (since 2008) as clients continued to doubt the market rally."