Crude

"Anything that protects the Syrian people and Syria from partition, we will not spare any effort to carry it out with our Saudi and Turkish brothers, no matter what this is. If a military intervention will protect the Syrian people from the brutality of the regime, we will do it."

After running stops above $46 this morning, WTI Crude has tumbled back to test yestrerday's $44 handle lows... must be all that "growth" that Draghi promised...

Spot the difference...

S&P 500 Futures just broke above the 200-day moving-average for the first time since August 19th. With crude, bonds, and credit all decoupled from this exuberance, one wonders what happens next... though clearly all-time highs will be required to enable The Fed to raise rates in October (currently a 6% probability)

What happens next?

After yesterday's dramatic late day market rout catalyzed by the tumble in the biotech sector in general, and Valeant in particular, and foreseen in its entirety by Gartman who went bullish just hours before, this morning US equity futures and European stocks have recouped some losses on the recursive, and traditional, hope that Mario Draghi will say something to push risk higher when he speaks in 2 hours at the ECB's press conference in Malta. And yet, just like Yellen a month ago, Draghi faces the paradox of reflexivity that after years of being ignored, is the "new thing" in town: how does he intervene and demonstrate he is readier than ever to set up stimulus, without panicking investors over euro area’s health.

As a desperate Saudi Arabia taps the bond market to mitigate the SAMA drawdown while simultaneously attempting to muscle in on Moscow's Eastern European market share, Russian crude sales to China soared 42% in September. The result: for the second time this year, Russia has overtaken Saudi Arabia as the number one crude supplier to Beijing. 

The DOE just reported an 8.028mm barrel inventory build in crude stocks, even larger than the API reported data. This is the highest weekly build since April 3rd and is dramatically higher than expected. Crude prices are pressing on lower, with the new Dec contract now trading with a $44 handle. To make matters worse, US crude production was unchanged.

As WTI Crude tests new lows this morning (Dec contract $45.32) after API reported a huge build, we can't help but wonder "what happens next" in Dow Transports as the exuberant index has decoupled from oil for the 3rd time in a week... the only saving grace for the collapse in oil - Gartman warned "this could get very, very ugly and do so very, very quickly."

26 years ago, today was envisioned as day when cars flew, holographic movies were box office hits, hoverboards roamed, and people were fired by fax. None of the happened. Instead the only "back to the future" moment this morning is a deja vu one we have seen every day for the past 7 years: bad economic news leading to surging stocks.

For the 4th week in a row, US Crude inventories rose according to API. With a larger than expected 7.1 million barrel build (3.5mm exp.), which follows DOE's reported 7.56 mm build last week, it is clear that stocks are piling up considerably faster than expected. The reaction was an immediate algo slam to the lows of the day...