Archive - 2015 - Story

Just as T.Boone Pickens warned, watching the US Rig Count is key to comprehending the looming crisis in oil. The last 4 weeks alone have seen a drop of over 100 rigs - the 2nd fastest slide since 2001 in percentage terms. This is the worst December to January since 2008/9. As Pickens noted, "demand is down" - "lower demand is the main driver" - "rig count is gonna fall - drop 500 rigs in next 6-9 months"

The Dow Industrials Index is down over 600 points from its 18,051 (futures) intraday record high on Boxing Day (12/26/14). Today's 275 point drop below 17,450 is now over 500 points lower than the New Year's Eve highs as energy (oil plunge gravity) and financial (oil exposure, low rates, counterparty risk) names catch back to gravity.

While the predictions of Blackstone's Byron Wien (born in 1933) have been all over the place in the last few years, they nevertheless provide some color on just what the mainstream does not believe... This is the 30th year Byron has given his views on a number of economic, financial market and political surprises for the coming year. From "our luck running out on cyberterrorism" to "shock and awe no longer working in Japan", Wien's non-predictions range from The Fed to China and from Oil to Hillary Clinton...

"Sixty-four unskilled workers will report to new jobs in Washington, D.C. on Tuesday as part of a federal jobs program that provides employment for people unable to find productive work elsewhere... The new hires, who have no talents or abilities that would make them employable in most workplaces, will be earning a first-year salary of $174,000...Expensive as this program is, it is much better to have these people in jobs than out on the street."

WTI crude oil prices are now down almost 55% from the June highs, the impossible just happened... WTI Crude broke into the $40s... the 6-month plunge is the largest since the pre-Lehman plunge and 2nd biggest plunge in 28 years.

In what can only be described as a puiblic relations disaster, Morgan Stanley has just admitted that an employee (former) had stolen partial client data for around 900 high net worth Wealth Management clients and briefly posted it on the internet. Overall, around 10% of all the accounts (as Bloomberg reports - 350,000 wealth-management clients) data was stolen. While social security numbers and bank account data was not released, we can only imagine the anxiety-ridden outflows the firm will suffer from this security breach.

2014 proved to be a momentous one for the oil markets, having seen prices cut in half in just six months. The big question is what oil prices will do in 2015.
It is anybody’s guess, but here are the top five variables that will determine the trajectory of oil prices over the next 12 months, in no particular order.

Back in 2008, Goldman got rid of not one but two main competitors when first Bear and then Lehman quietly went into that good night when a Goldman-controlled Fed refused to bail these banks out, in the process unleashing the biggest taxpayer-funded, and still ongoing, wealth transfer to bank executives in history. 7 years later, banks have proven surprisingly resilient to the massive commodity deflationary impulse even as the global growth is slowing to a pace not seen since the events in 2008, which is why Goldman decided it is time to take matters into its own hands with what may be the most "modest proposal" of the day, if not year: it may be time for JPM to break itself up voluntarily... a process Goldman (and its bonus-receiving employees, not to mention shareholders) would endorse wholeheartedly as it would remove its biggest and most connected competitor in the US financial landscape today.

While Bob Pisani last week told the world that he was "encouraged" by the decoupling of energy-related stocks from their basic raw material oil prices, today's rational response to fresh 5-year-lows in crude oil prices would suggest the 'most important thing' is to be "discouraged." Just how long did 'investors' think energy stocks and crude could remain decoupled... as the post-FOMC Yellen squeeze is erased rapidly...

The ubiquitous opening ramp into the US equity open has given way rapidly and stocks are testing earlier lows - along with WTI Crude (as energy stocks lead the way lower). Silver is surging higher (up almost 3%) and Gold is back above $1200. USDJPY broke below 120.00 and is weighing heavy on stocks broadly. So much for the Santa Rally..

Just over 4 months ago, the US was furious as the "mysterious" bloc launching bombing raids on Libya was identified as consisting of Saudi Arabia, UAE, and Egypt. This weekend saw another "mysterious" bombing raid, but as AP reports, this time it was not on Libya directly but on a Greek-owned tanker ship at the eastern Libyan port of Darna (killing 2 sailors). The Greeks have strongly condemned this "unprovoked and cowardly" act and are taking all necessary steps to identify and punish the perpetrators. One can't help but wonder, if the Saudi/UAE bloc is doing everything in its power to eliminate all competition: from Russia to Venezuela to US shale; why not anyone transacting with a bunch of Libyan terrorists?

When thousands of cops showed up yesterday to pay their respects to their slain colleague Wenjian Liu who was murdered in cold blood two weekends ago, perhaps the only question on everyone's mind was whether the local police would - once again - turn their back on NYC mayor Bill de Blasio, who as we reported previously, the NYPD is engaged in a cold war with, with arrests and citations plummeting in recent weeks as a result of what has become a police boycott of city hall.  The answer: a resounding yes, and as the AP reports, "thousands of police turned their backs Sunday as Mayor Bill de Blasio eulogized an officer shot dead with his partner, repeating a stinging display of scorn for the mayor despite entreaties to put anger aside."

Having tested the almighty 10,000 level, Germany's DAX is plunging back to pre-FOMC earth levels following the weak CPI print this morning...

Issuing lies and pursuing willful blindness is not leadership: it's failure on a grand scale.