Crude

Global Stocks, Futures Jump On Barrage Of Bad Economic News; Glencore Surges, Volkswagen Slumps

Following Friday's disastrous payrolls report, which confirmed all the pre-recessionary economic data and signaled that instead of approaching "lift-off" and decoupling from the rest of the world, the US economy is following the emerging markets into a slowdown in what may be the first global, synchronized recession since 2008, the market saw its biggest intraday surge since 2011 and the sharpest short covering squeeze in history, we are happy to announce that the "market" is now solidly back in "bad news is good news" mode.

10 Reasons Why JPMorgan Is Apocalyptic On The LNG Market

With supply set to increase meaningfully over the next few years, JPMorgan sees a buyer's market until 2020 with limited new long term contracts being signed and renewal of existing contracts post expiry likely to have more price diversification (i.e. more Henry hub component) and offtake/diversion flexibility. A recent trip to Asia identified 10 key themes reinforcing their bearish outlook on the LNG market for the rest of the decade.

Australia Is "Going Down Under": "The Bubble Is About To Burst", RBS Warns

"Australia has benefited from China’s growth over the past decades, but has become a less diversified and commodity dependent economy in the process. It is now exposed to China’s slowdown, and may be unable to re-engineer itself quickly enough to avoid the end of the commodity super-cycle. The worst is yet to come, in our view."

The Reality Behind The Numbers In China's Boom-Bust Economy

The US Federal Reserve orchestrated an artificial boom from 2001 to 2007 through artificially low interest rates and has resumed doing so once again. Entrepreneurs operating under faulty market signals created by the Federal Reserve malinvested hundreds of billions of dollars into capital intensive projects primarily in the housing sector. We paid for our boom with millions of destroyed jobs, wasted labor, and wasted resources. The Chinese Central Bank learned nothing from the Fed’s catastrophic experiment. They will reap the same rewards.

The Slippery Slope Of Denial

  1. Dollar doesn’t matter, indicates strong economy relative to the world
  2. Dollar matters for oil, but lower oil prices mean stronger consumer
  3. Manufacturing slump doesn’t matter, only temporary
  4. Manufacturing declines are consumer spending, but only a small part
  5. Manufacturing declines are becoming serious, but only from overseas
  6. US consumer demand is strong, except everywhere you look to actually find it.
  7. ...

Crude Surges After US Oil Rig Count Collapses To May 2002 Lows

For the 6th week in a row, Baker Hughes reports a decline in US oil rig counts. With a huge 29 rig drop - the largest in over 5 months - the total oil rig count is 809, the lowest since May 2002. The reaction is a stick-save buying panic surging crude into the green on the day.

Silver Spikes To Six-Week Highs On Heavy Volume - Biggest Jump Since Dec 2014

Precious metals are angrily bid this morning (even as copper and crude tumble) after the dismal US jobs data sent the USD reeling and raised expectations for moar QE down the line. Silver is up 5% on the day - the biggest daily jump since Dec 1st 2014 and gold is up 2.2% - its best day since April.

What's The Worst That Could Happen?

The 30 stocks of the Dow Jones Industrial Average currently trade for an average of 14.8x next year’s consensus earnings.  But... Everyone knows Wall Street analysts are always too optimistic, so what if we just look at the lowest estimate for each company? The driver of market pessimism sits at the top of the income statement – the Street’s worst case revenue estimates call for a decline of 1.7% in 2016.  Now, Q3 earnings season is unlikely to provide much comfort here; why should corporate managements go out on a guidance limb when their stocks are down on the year?  All this points to further volatility in October, and with a bias to the downside.

Calm Before The Payrolls Storm

With China markets closed for holiday until the middle of next week, and little in terms of global macro data overnight (the only notable central banker comment overnight came from Mario Draghi who confidently proclaimed that "economic growth is returning" which on its own is bad for risk assets), it was all about the USDJPY which has seen the usual no-volume levitation overnight, dragging both the Nikkei higher with it, and US equity futures, which as of this moment were at session highs, up 7 points. The calm may be broken, though, as soon as two hours from now when the September "most important ever until the next" payrolls report is released.