Archive - Sep 29, 2015

Most people believe that low oil prices are good for the United States, since the discretionary income of consumers will rise. There is the added benefit that Peak Oil must be far off in the distance, since “Peak Oilers” talked about high oil prices. Thus, low oil prices are viewed as an all around benefit. In fact, nothing could be further from the truth...

In the wake of the global commodities rout which recently saw prices touch their lowest levels of the 21st century, there’s been no shortage of commentary (here or otherwise) on the pain that’s been inflicted on commodity currencies and by extension, on EM. As it stands, the world’s emerging economies face a kind of perfect storm triggered by a combination of the following factors: falling commodity prices, depressed Chinese demand, and the threat of an imminent Fed hike. With the situation deteriorating virtually by the day, we thought it an opportune time to highlight the spike in EM credit risk...

After 2 weeks of solid drawdowns, API reports a huge 4.6 million barrel inventory build last week - the 2nd biggest weekly build in over 5 months. Crude prices are dropping on the news...

Remember when the commodity and gas plunge was supposed to be an "unambiguously good" tailwind for discretionary US spending, something which we warned over and over would never happen as the Obamacare "mandatory tax" surge pricing for healthcare insurance more than offset and discretionary savings? Moments ago another 825 or so soon to be formerly paid workers just found out the hard way just how clueless the vast majority of the punditry was when Chesapeake energy just announced it would terminate 15% of its workforce, or about 825 of its 5,500 most recent employees, as a result of the "current oil and natural gas prices."

The S&P 500 is now only about 1% off Black Monday lows. Have the market internals deteriorated as much as the headline price index has?

Arctic Drilling in the U.S. is dead. After more than eight years of planning and drilling, costing more than $7 billion, Royal Dutch Shell announced that it is shutting down its plans to drill for oil in the Arctic. The bombshell announcement dooms any chance of offshore oil development in the U.S. Arctic for years.

Over the past few years three things have 'worked' - Buybacks, Biotechs, and Buying IPOs. Those days are now over...

Yet another auto-maker has lied. Fiat Chrysler Automobiles US says in a statement that it has identified deficiencies in its TREAD reporting and has promptly notified NHTSA. One cannot help but wonder what came first, a leak or some conscience, but as NHTSA notes this means FCA under-reported the number of deaths and injuries that the automaker may be responsible for.

For investors, the markets have been sending a fairly clear warning signal. Market topping processes take time to develop fully and, unfortunately, are only fully recognized in hindsight. The problem in waiting for "recognition" is that the destruction of capital is already far larger than previously expected. This leads to a series of "psychological" responses that exacerbate the problem such as "hoping to get back to even." The last point is critically important. In the world of investing, "hope" has never been an investment strategy that one could profit by. It likely won't be successful this time either.

"The people that want to come in and replace Assad, nobody knows who they are and they could end up being worse. We're constantly going out and siding with people and they turn out to be worse than the people who were there before."

The United States government deliberately hid “the worst nuclear disaster in U.S. history,” according to experts and an in-depth investigation by NBC4 Southern California. Whistleblowers have also come forward to expose the little-known catastrophe, which occurred north of Los Angeles in 1959 and leaked over 300 times the allowable amount of radiation into surrounding neighborhoods. That contamination is now linked to up to a 60% increase in cancer in the area, but the government still refuses to acknowledge its colossal mistake.

In yet another indication that manipulation may well be unspoken (or perhaps even spoken) policy at the BOE, new details regarding the UK Serious Fraud Office's investigation into emergency liquidity auctions conducted during the crisis suggest the central bank may have played a direct role in rigging the bids.