Natural Gas

News That Matters

With China closed today, the usual overnight market manipulation fireworks out of Beijing were absent but that does not meant asset levitation could not take place, and instead of the daily kick start out of China today it has been all about the ECB which as we previewed two days ago, is expected - at least by some such as ABN Amro - to outright boost its QE, while virtually everyone else expects Draghi to not only cut the ECB's inflation forecast, which reminds us of the chart which in March we dubbed the biggest hockeystick ever (we knew it wouldn't last) but to verbally jawbone the Euro as low as possible (i.e., the Dax as high as it will get) even if the former Goldmanite does not explicitly commit to more QE.

Not a week goes by without the Pentagon carping about an ominous Russian "threat". The Pentagon’s rhetorical games also serve to mask a real high-stakes process; essentially an energy war – centering on the control of oil, natural gas and mineral resources of Russia and Central Asia. Will this wealth be controlled by oligarch frontmen “supervised” by their masters in New York and London, or by Russia and its Central Asian partners? Thus the relentless propaganda war.

Perhaps the greatest nightmare for investors in a commodity stock is that the commodity in question goes the way of coal. After more than a century of dominance in the U.S. and abroad, coal appears to have entered into a structural decline. A funny thing happened on the way to the graveyard for coal companies though – one of the industries greatest detractors, George Soros, appears to be stepping in as a supporter.

• Charting the Market: New Month, Same China (BBG)
• China jitters send stocks tumbling (Reuters)
• Oil falls on weak China factory data (Reuters)
• Euro zone factory growth eases in August despite modest price rises (Reuters)
• Euro-Area Joblessness Falls to Lowest Level Since Early 2012 (BBG)
• Clinton friend advised on U.S. politics, foreign policy (Reuters)
• Korea exports slump as Asia's woes deepen (Reuters)

Some context for those who insist renewables will 'solve' everything...

After a 5 day tumbling streak, which saw Chinese stock plunge well over 20% and 17% in just the first three days of this week, overnight the Shanghai Composite was hanging by a thread (and threat) until the last hour of trading. In fact, this is what the SHCOMP looked like until the very end: Up 2.6%, up 1.2%, up 2.8%, up 0.6%, up 2%... down 0.2%. And then the cavalry came in: "Heavyweight stocks like banks and insurance companies helped pull up the index, and it’s possibly China Securities Finance entering the market again to shore up stocks," Central China Sec. strategist Zhang Gang told Bloomberg by phone. Net result: the Composite, having been red just shortly before the close, soared higher by 156 points or 5.4%, showing the US stock market just how it's down.

Both the stock market and oil prices have been plunging. Is this “just another cycle,” or is it something much worse? We think it is something much worse...

News That Matters

As the great EM unwind continues unabated, we’ve noted that in some hard-hit countries, the terrible trio of falling commodity prices, decelerating Chinese demand, and looming Fed hike has been exacerbated by political turmoil. Now, we turn to Malaysia where an already tenuous situation just got worse as PM Najib Razak is now facing calls for a no-confidence vote amid allegations he embezzled some $700 million from the country's development fund.

News That Matters...

It is unclear what precipitated it (some blamed China concerns, fears of rate hikes, commodity weakness, technical picture deterioration although  it's all just goalseeking guesswork) but overnight S&P futures followed yesterday's unexpected slide following what were explicitly dovish Fed minutes, and took another sharp leg lower down by almost 20 points, set to open below the 200 DMA again, as the dazed and confused investing world reacts to what both the Treasury and Oil market signal is a deflationary deluge. Indeed, oil is about to trade under $40 while the 10Y Treasury was last seen trading at 2.07%. Incidentally, the last time oil was here in March of 2009, the Fed was about to unleash QE 1. This time, so called experts are debating if the Fed will hike rates in one month or three.

A German company, airport operator FRAPORT won the bid to operate and maintain 14 regional airports, considered to be top of the top in Greece. With an offer of 1.23 billion euro, the consortium of Fraport-Slentel (a unit of Greek energy group Copelouzos) won the bid to lease the regional airports for 40+10 years. Among the 14 regional airports are those on most popular tourist Greek islands like Mykonos, Rhodes, Kos, Santorini and Corfu. It is the first privatization deal under SYRIZA-ANEL coalition government and the biggest privatization deal in Greece since beginning of the crisis and the bailout programs in 2010.

• China stocks slump 6 percent on fears of further yuan depreciation (Reuters)
• U.S. Lacks Ammo for Next Economic Crisis (Hilsenrath)
• Emerging Markets Extend Slide as Commodities Fall; Pound Jumps (BBG)
• China yuan to move both ways, more 'adjustments' unlikely: central bank economist (Reuters)
• Playing Chinese markets is as simple as 'follow the leader' (Reuters)
• PBOC Injection Shows China Worries About Outflows (WSJ)
• Russia Fails to Soothe Oil Concerns as Citi Joins Ruble Bears (BBG)