Shares outstanding in the U.S. Oil Fund are nearing record levels even as the premium between the second- and first- month contract has ballooned to a four-year high.
When Q1 results start to roll in for E&P companies, expect to see massive writedowns across the board as industry balance sheets will no longer benefit from calculating PV-10 based on inadequate SEC accounting rules.
Following last week's slowing in the pace of rig count, crude prices dropped and then spiked, and it makes today's data under more scrutiny. At around $49.50, WTI prices have round-tripped back almost perfectly to the scene of the crime before today's rig count data hit. The total oil rig count dropped almost 6%, down 75 to 1,192 meaning a re-acceleration of the rig count decline and the 2nd biggest drop since 1993. WTI prices popped on the news and are fading back now...
When the better-than expected headline data hit, stocks briefly questioned its reality then plunged. Bond yields initially tumbled (before the number had hit newswires) but once it did, they soared back higher (now up 6-8bps on the day). Crude plunged, bounced, and re-plunged as most commodities are notably lower amid the surge in the US Dollar. Good news, it appears is really bad news as a boxed-in Fed will be forced to raise rates.
- 5 Things to Watch in February’s Jobs Report (WSJ)
- Draghi Declares Victory for Bond-Buying Before It Starts (BBG)
- Apple Pay Sign-Ups Get Tougher as Banks Respond to Fraud (WSJ)
- As World’s Hottest Economy Unravels, Nigerians Feel the Squeeze (BBG)
- EU discontent over French budget deal's 'political bazaar' (Reuters)
- Foreign Takeovers See U.S. Losing Tax Revenue (WSJ)
- Goldman Shareholders’ Hope for Bigger Payout Dashed by Fed (BBG)
- Europe Stocks Headed for 31% Surge This Year Amid QE, Citi Says (BBG)
- Dollar revs up for jobs data, euro bonds rally on ECB (Reuters)
The question stands: how much longer will the Fed allow the ECB to export its recession to the US on the back of the soaring dollar, and how much longer will the market be deluded that "decoupling" is still possible despite a dramatic bout of weakness in recent US data. Look for the answer in today's BLS report, which - if the Fed is getting secound thoughts about its rate hike strategy in just 3 months - has to print well below 200,000 to send a very important message to the market about just how much weaker the US economy is than generally perceived. For now, however, the ECB is getting its way, and the question of just how much European QE is priced in, remains open, with peripheral bond yields dropping to new all time lows for yet another day, while the EURUSD has plunged to fresh 11 year lows, sliding below 1.094, and making every US corporation with European operations scream in terror. Looking at markets, US equities are just barely in the red, coiled to move either way when the seasonally-adjusted jobs data hits.
Thick black smoke billowing from oil wells northeast of the city of Tikrit is obstructing Shi'ite militiamen and Iraqi soldiers attempts to drive ISIS from the Sunni Muslim city after militants set them on fire. Reuters reports a witness and a military source said Islamic State fighters ignited the fire at the Ajil oil field to shield themselves from attack by Iraqi military helicopters. As we noted previously, the battle for Tikrit is key as it will determine whether and how fast the Iraqi forces can advance further north and attempt to win back Mosul, the biggest city under Islamic State rule.
It wasn't the vetoed Keystone XL pipeline which exploded today: it was a tanker train carrying 103 trains of oil and belonging to none other than Obama's tax advisor, Warren Buffett, that ended up in a dramatic fireball in the middle of rural Mississippi.
Update: And just to prove that people are indeed, idiots, moments ago this hits:
ENERGY XXI GULF COAST, INC. PRICES UPSIZED PRIVATE OFFERING OF $1.45 BILLION OF 11.000% SENIOR SECURED SECOND LIEN NOTES DUE 2020
Back in August 2014, yield-starved bondholders were delighted to give American Eagle Energy $175 million in cash, and why not: the company promised them an 11% annual cash coupon. Seven months later the company is in default, and the same bondholders are looking at an 80% loss, without receiving even one coupon payment. Movie Gallery anyone?
It’s not that long ago, in 2001, that Jim O’Neill, then still with Goldman Sachs, coined the term BRICs, for the fast emerging markets of Brazil, Russia, India and China. O’Neill saw a global power shift from the west to these four nations happening. Fast forward to today, and we see Russia under multiple attacks, including economic ones, from the west, as India just announced the second rate cut this year and China is attempting controlled demolition of the possibly biggest financial bubble in the history of the world. And Brazil? If anything, it’s falling even faster off its pedestal than the other three nations.
Bronzeye identified a weakness in the two-step authentication process used by most banks and reported it to the FCA in July of last year. It identified one “large British bank”, the name of which was redacted in the documents, that had “22 critical vulnerabilities”.
EURUSD rallied 100 pips into Draghi's press conference as weak shorts covered but the moment he opened his mouth), it collapsed and is now looking to break to a 1.09 handle for the first time since 2003. Despite hockey-stick-like expectations for EU growth, bond yields are compressing (as EU arbs the world) and oil prices are waking up to the reality that China took an ax to its growth expectatiuons overnight. But apart from that, stocks are higher...
It has been a while since we have seen the USDJPY rampathon push US equities higher, so in a day dominated by central banks (first the BOE momentarily), and then the ECB's much anticipated announcement of the actual QE launch at the Draghi press conference at 1:30pm CET (taking place, ironically enough, in the place that was the blueprint for the Eurozone's capital controls, Cyprus), it only makes sense that after weeks of stage fright, the USDJPY algos reminded the world they are alive and well, and proceeded to ramp the key FX pair above 120, even though the currency that everyone will be talking about today is the Euro, hugging 1.10 as of this moment, but the real question is what happens after Draghi gives the asset buying green light: has all of Q€ been priced in already in FX, and will the EURUSD resume its surge higher, or is parity next stop?