Jeff Gundlach

"Oil goes below $40, it’s frightening for geopolitical behavior. Guess what, folks? It’s below $40 and this frightening political behavior is upon us.... We could be looking at a really ugly situation during the first quarter of 2016... I think we're going to take out the September low of the S&P500."

"Crude oil prices, finally, have stabilised, and we shall go our far upon a limb here this morning suggesting very strongly that when nearby February WTI traded to $29.93 at its low yesterday amidst a great deal of very vocal consternation on the national business television channels that crude had “TRADED BELOW $30 PER BARRELL” that that was what we in the past had referred to as the “obscene number” and may well have been the low."

China = Japan: China, like Japan in the early-1990s, has entered a secular period of significantly slower economic growth, compounded greatly by debt deflation; like Japan in the 1990s, Chinese asset prices, currency, banks (Chart 5) and capital flows will periodically cause severe disruptions to global financial markets, even if China does not itself cause a global recession.

In yet another hit for the energy complex, EIA just cut their global oil demand forecast to 95.19 million barrels a day this year (down from 95.22 million in December’s outlook). The energy agency also increased its forecast for global production to 95.93 million barrels a day (up from 95.79 million last month). This pressured WTI Crude back off a brief bounce and pushed it to a 20-handle at $29.97 for the first time since December 2003.

“To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything.” ~Edward Abbey

Jim Cramer - of all people - warned about this in 2007: watch the video inside!

 "The reason the markets aren't going lower is people are holding and hoping." Incidentally, there is a reason why hope is not a strategy: in the end, it always fails.

Forced liquidation... capitulation ... contract roll... or "liquidity provision" gone awry? You decide.

For the first time since March 2009, the front-month WTI crude futures contract has traded with a $41 handle. As it draws ever nearer the 2009 lows, we are reminded of the ominous warnings that DoubleLine's Jeff Gundlach issued in January. - "I hope it does not go to $40 because then something is very, very wrong with the world, not just the economy. The geopolitical consequences could be – to put it bluntly – terrifying."

As we hurtle toward the absolutely critical months of September and October, the unraveling of the global financial system is beginning to accelerate.

"We have a problem with this, and that is central bank hubris. They now think that they are omnipotent, because, essentially the government has said we are going to pass over all control of the economy to the central banks, they say to everybody else including financial market participants that “you don’t know, you don’t understand, we have our models and they are right”. And that kind of hubristic approach is when you sow the seeds of your own destruction."

Rates have been so low for so long, that many of the traders who will be on the front lines if and when the Fed ever does decide to start down the long path to normalizing policy have never, in their professional careers, seen a rate hike. “The experience that many investment operations have with rising rates for most of us is very low for some it’s nonexistent," Jeff Gundlach warns.

Puerto Rico is racing the clock ahead of a July 1 deadline to pass a fiscal budget for 2016 and scrape together $360 million due to creditors. Without a budget, the commonwealth will face a partial government shutdown and may be unable to issue $2.9 billion in oil-tax bonds needed to pay The Government Development Bank.

Battered by Bill Gross and Jeff Gundlach, SocGen warns that the current correction in 10Y Bunds remains atypical from a technical perspective and bears the characteristics of a panic selling.