- Arab World Unites to Condemn ‘Barbaric’ Death of Jordanian Pilot (BBG)
- Jordan hangs two Iraqi militants in response to pilot's death (Reuters)
- As Oil Prices Climb, Some Harbor Doubts (WSJ)
- Taiwan plane cartwheels into river after take-off, killing at least 19 (Reuters)
- Seven dead as commuter train hits car near New York City (Reuters)
- Apollo’s 600% Profit on Oil Company Leaves Rivals Behind (BBG)
- Greece's rock-star finance minister Yanis Varoufakis defies ECB's drachma threats (Telegraph)
The devil is in the details: The market is likely too excited about falling rig counts. Even after the natural gas experience, the market fails to appreciate that the relationship between rig count and production can be deceptive. Headline rig count declines may look impressive, but as we look at the data, much of the drop in oil rig count has come in low yielding vertical/directional rigs – i.e. the low-hanging fruit. Even within horizontal rigs, much of the decline has come in lower performing plays or lower tier counties within high quality plays. In some cases, we’ve seen a reallocation of rigs between counties within plays. This was particularly prominent in Midland last week. The most productive rigs will likely remain as long as possible, esp where hedges are in place, until redeterminations or cash flow issues force additional cuts.
- Germany Sees No Need to Scrap Troika in Overseeing Greek Turnaround (WSJ)
- European markets subdued as Chinese data weighs (Reuters)
- U.S. Oil Workers Strike Enters Second Day as Crude Prices Slide (BBG)
- Oil prices rally above $55 as investors pile in (Reuters)
- Obama Wants a New Tax on U.S. Companies' Overseas Profits (BBG)
- If Trading Bonds Is Hard, Think About Pain When Rates Rise (BBG)
- Julius Baer Braces for Swiss Franc Impact (WSJ)
- Coke, Budweiser win as Super Bowl ad battle gets serious (Reuters)
"This is going to hurt, no question," fears a landowner in Santa Barbara with a dozen oil wells. Layoffs are "kind of like a death in the family," exclaims a geophysicist in the Permian Basin. Houstonians were hoping for a hiccup, says one restauranteir, but now "they're getting more cautious." As WSJ reports, rumor is becoming reality across America as "unambiguously good" news of low oil prices turns from a trickle to a deluge of job losses and insecurity. Cutbacks aren’t yet reflected in broad data on employment, home sales or tax collections. But fallout is beginning to affect people, starting with the legions working as suppliers to the energy industry.
- Who Doubts Yellen's Policies? Summers for One (BBG)
- Samsung, Apple Back in Dead Heat for Global Smartphone Dominance (WSJ)
- Islamic State purportedly sets new deadline for hostage swap (Reuters)
- Turkey's $7.9 Billion Mystery Money That's Simply Vanished (BBG)
- How a Two-Tier Economy Is Reshaping the U.S. Marketplace (WSJ)
- U.S. Prisons Grapple With Aging Population (WSJ)
- Hasenstab Sees $3 Billion Vanish in Ukraine as One Big Bet Sours (BBG) - maybe he should BTFD, pardon, "invest" in Belarus next?
- Belarus May Seek Debt Restructuring in 2015, President Says (BBG)
U.S tight oil production from shale plays will fall more quickly than most assume. Why? High decline rates from shale reservoirs is given. The more interesting reasons are the compounding effects of pad drilling on rig count and poorer average well performance with time.
The more detached from reality American culture becomes the more strictly ceremonial leadership gets, as illustrated by the raft of bromides Barack Obama floated past the assembled vassalage of government last week in another grand effort to avoid the necessities of the moment. Those necessities include freeing a hostage public from the tyrannical clutches of corporate despotism — the evil empire of big boxes, big burgers, big pharma, Big Brother — and the atrocious rackets fostered by them that masquerade as an economy. The template of the life we have known is broken and the pieces within are flying apart, and no amount of wishing or promising can keep them going. If this society is even going to survive, the people have to smash their way out of this template prison, probably against the efforts of the people and organizations now running it merely for their own benefit.
With oil prices down another 6% this week (despite Saudi leadership uncertainty and ECB QE), widespread layoffs announced in Shale states, and despite Lew's comments that he doesn't see US oil production declining, it is perhaps no surprise that the US rig count cratered further to its lowest level since August 2010. The US rig count is now down over 15% from the highs, with its biggest 10-week drop since May 2009 (and down 8% YoY). The pace of collapse in the rig count has now accelerated for 7 weeks in a row, and judging by lagged oil prices, there is a lot more room to drop yet. The oil rig count standalone is now down 7% YoY - its biggest drop sicne Nov 2009. As T.Boone Pickens so rightly noted, watch the US rig count (and suggested it will need to drop 500 rigs or more before any stability returns).
- Obama Targets Income Gap in Address That Shapes 2016 Election (BBG)
- Republicans Reject Obama’s Main Economic Proposals (WSJ)
- Senate’s Shelby Says White House Bank Tax Is Dead on Arrival (BBG)
- Is Dollar Next? Investors Reassess After Swiss Shock: Currencies (BBG)
- Bank of Japan Cuts Price Forecast, Maintains Record Stimulus (BBG)
- Pound Weakens After BOE Policy Makers Drop Call to Raise Rates (BBG)
- Putin not flinching on Ukraine despite economic crisis (Reuters)
- Indonesia will not make public full preliminary AirAsia crash report (Reuters)
- Party Hasn't Stopped for Russians at Davos Even With Ukraine Sanctions (BBG)
The old joke is "In America, you correct newspaper, but in Soviet Union, newspaper corrects you.” Switzerland is now experiencing the bond market equivalent.
Exporting crude oil and natural gas from the United States are among the dumbest energy ideas of all time. Exporting gas is dumb. Exporting oil is dumber.
- Obama to focus on middle class in State of Union address (Reuters) - all 4 of them?
- European Stocks Buoyed by ECB Hopes (WSJ)
- China's 2014 economic growth misses target, hits 24-year low (Reuters)
- Federer on Swiss Franc Shock: "Does It Mean I've Got to Win Now?" (BBG)
- First-time buyers help Christie’s reach record sales (FT)
- So it was the NSA? U.S. Spies Tapped North Korean Computers Prior to Sony Hack (BBG)
- Why Chinese Developer Kaisa's Default Risk Has Money Managers Spooked (BBG)
- Morgan Stanley Misses Estimates on Drop in Bond-Trading Revenue (BBG)
The standard modest or moderate growth comments of the Fed's typically boring Beige Book were awkwardly interspersed with a narrative-interrupting 45 mentions of concerns about oil's price plunge impact...
The touts have it backwards. This isn’t about greeters at Wal-Mart handing out tax cuts to hard-pressed American consumers. Its about the coming liquidation of the massive malinvestments and bloated economies that have been enabled by rampant central bank money printing and the resulting madcap expansion of unrepayable debt. Buying-the-dip was always a strategy that would work until it didn’t. The “oil tax cut” tale is designed to ensure that Wall Street’s Muppets will be the last to get the word.
- Police Surround Paris Terror Suspects Near CDG Airport (BBG)
- ECB Said to Study Bond-Purchase Models Up to 500 Billion Euros (BBG)
- How OPEC Weaponized the Price of Oil Against U.S. Drillers (BBG)
- German Industrial Production Falls Amid Plunge in Energy Output (BBG)
- Car Loans See Rise In Missed Payments (WSJ)
- Jim O'Neill threatens he will replace BRICs with ICs (BBG)
- Oil heads for seventh weekly loss as supply glut drags (Reuters)
- Armed man takes hostage in kosher grocery in Paris (AFP)
- Janus Chairman Didn’t Know Details of Gross’s Investment (WSJ)
- Kaisa Bondholders Dream of White Knight as Default Becomes Real (BBG)