Archive - Feb 2015 - Story

Between European uncertainty and last night's massive API inventory build (14.3mm barrels), Brent and WTI crude was sliding into today's inventory data - well off the kneejerk highs at the US equity open (and back under $50). Market participants expected a US crude inventory build of around 3 million barrels but the number more than doubled that at 7.72 million barrels and production soared to new record highs. Idiot algos kneejerked higher (because 7.72 is lower than 14.3?) but that insanity is fading fast...

Earlier today, we got a glimpse of precisely how HFTs are now making a mockery of FX "price discovery" when completely independent of any newsflow, Canadian Dollar futures cratered on what is merely the latest of many flash crashes now coming to an FX market near you.

Hacking - blame The Russians. Global geopolitical instability - blame The Russians. Stock market lower - blame The Russians. Extreme cold weather... guess who?

Following January's crash in Philly Fed from 21-year highs to 12-month lows, expectations among the Keynesian-gazers was for a mean-reverting bounce... it didn't. Falling for the 3rd month in a row, Philly Fed printed a worse-than-expected 5.2 (against 8.43 exp), its lowest in a year. New Orders tumbled to its lowest in a year but most critically, "hope" - the six-month forward outlook index  - tumbled from 50.9 to 29.7 - the biggest MoM drop since lehman.

Once upon a time, Caterpillar was the world's industrial bellwether and a Dow Jones Industrial staple. Lately, in addition to suddenly developing a very close relationship with Federal authorities who "are investigating the movement of cash among Caterpillar Inc. ’s U.S. and overseas subsidiaries", CAT has become a completely ignored and forgotten poster name of the "old-economy" (the on in which cash flow still mattered). However, there are those who still  believe that the second coming "eyeballs" as the only valuation term category is destined to end in tears, and as such care about how companies like CAT do. Sadly, we have some more bad news: Caterpillar just reported that in January, it suffered its worst retail sales month since Lehman, with global sales plunging 14% from last January.

Yesterday, when we reported that the last Ukraine outpost in the rebel-controlled eastern territory, the town of Debaltseve, has fallen into separatist hands, we concluded that "perhaps the only question is whether fighting continues around Mariupol which would enable Russia to have a land corridor all the way to Crimea." Moments ago we got the answer when Reuters reported that "pro-Russian separatists have launched mortar attacks on government-held positions near the coastal town of Mariupol in southeast Ukraine and are building up their forces there, local military reached by telephone said on Thursday."

The S&P 500 and Dow futures are now trading back below the pre-Greek Talks Fail levels from Monday on desk chatter from a New York think-tank claiming contingency planning for a "dirty exit" are being made...

The chorus of companies complaining against the Fed's strong dollar policy just saw one more addition, when moments ago WalMart- which reported better than expected numbers but disappointing guidance - said that "like many other global companies, we faced significant headwinds from currency exchange rate fluctuations."

For the 9th week in a row, the smoothed average of initial jobless claims in Texas surged (Other Shale States - PA, ND, and CO also saw a notable rise in claims). While Tennessee's levels were estimated, the broad levels of claims send a mixed message. Initial claims beat expectations, fell from 304k to 283k with the trend now clearly flat since September. However, Continuing Claims jumped 58k to 2.425 million - the biggest jump in 2015, notably missing expectations. The trend of employmenmt has clearly changed...

Following last night's dramatically larger than expected API inventory build (and ahead of today's EIA inventory and production data), crude oil prices are tumbling. WTI is back below the $50 Maginot Line and Brent has brokenm back below $59...

• Greece requests euro zone loan extension, offers big concessions (Reuters)
• Germany Rejects Loan Request Saying Greece Must Meet Conditions (BBG)
• Did the Fed Just Enter the Currency Wars (BBG)
• French consumer prices fall for first time since 2009 (Reuters)
• Oil falls sharply after U.S. crude inventories rise (Reuters)
• High-Speed Firm Virtu Revives IPO Plans (WSJ)
• Fed Tiptoes Into Rate-Hike Debate (Hilsenrath)
• Rajoy’s Nemesis Is Back: Anti-Graft Editor Targets Vote (BBG)

Today, for the first time, the ECB released minutes from its historic January 21-22 meeting during which the ECB unleashed QE. While hardly containing anything earthshattering, here are the main highlights.

GABRIEL: `WE HAVE REASONS WHY CAN'T SAY YES TO GREEK PROPOSALS'
GERMANY REJECTS GREEK EXTENSION PROPOSAL, GOVT OFFICIAL SAYS

After yesterday's FOMC Minutes, despite a huge dovish reversal by the Fed - one which increasingly puts its "credibility" and reputation at risk - stocks were unable to close green, or even above 2100, for one simple reason: uncertainty with the fate of Greece. Overnight there has not been much more clarity, when as previously reported Greece submitted a 6 month extension request to its master loan agreement but not to its bailout extension, a nuance lost in the annals of diplomacy. But is this the much-awaited Greek capitulation? Or will the Eurogroup reject this too? The answer may be available in a few hours after an emergency Eurogroup meeting due later today. However, as usual stocks are ready to "price in" yet another Greek conflict resolution, and after futures were lower by 7 points overnight, were up 4 points at last check: a rebound which will not correct if the latest Greek "compromise" fails to deliver.

As had been leaked in advance, earlier today Jeroen Dijsselbloem first reported that Greece had submitted a request to euro-area creditors to extend the availability of bailout funds for six months, i.e., an extension to the "Master Financial Assistance Facility Agreement" not an extension to the Greek "bailout programme" aka the Memorandum per se, which has been the sticking point in all Greek government public addresses in recent days. Greece further asked for best use of flexibility in "current arrangement", which supposedly means an unconditional extension with Greece given the liberty to determine what happens in the next 6 months without Troika intervention. But was it a bailout extension or just a loan extension? GREECE DENIES HAS REQUESTED EXTENSION OF 'BAILOUT'-OFFICIAL: MNI

In short, confusion reigns once more.