Natural Gas

With just 72 hours to go until Yellen decides to soak up to $800 billion in liquidity, suddenly we have China and the Emerging Market fracturing, commodities plunging, and junk bonds everywhere desperate to avoid being the next to liquidate.

Seven years of zero rates, massive monetary inflation and incessant market backstopping have desensitized and anesthetized. Rational thought ultimately succumbed to "perpetual money machine" quackery. And now all of this greatly increases vulnerability to destabilizing market dislocations, as senses are restored and nerves awakened. "A lot of this looks like late 2007 or early 2008," warns one manager, but today, market mispricing is systemic and global – virtually all securities classes at home and abroad.

He got caught up in the future of energy, instead of focusing on maximizing profits and running the business in the here and now.

Following a miss in retail sales (if slight beat in core spending), the final key economic update the Fed will look at before its "first rate hike in nine years" meeting next week is today's Producer Price Inflation report which rose 0.3%, above the expected unchanged print and even higher compared to October's -0.4% decline. The report showed that while the decline in energy prices continued as expected, sliding 0.6% in the Final Demand Goods category, there was a surprising pickup in final demand services, which rebounded by 0.5% driven by Trade which rose 1.2% from the prior month, driven by an unexpected pickup in margins for apparel, jewelry, footwear, and accessories retailing.

"The move would arguably represent the biggest transfer of sovereignty since the creation of the single currency."

The Supreme Court may shortly decide an obscure case entitled Federal Energy Regulatory Commission v. Electric Power Supply Association (FERC v EPSA). The issue before the court is whether FERC can compel regional power markets to pay consumers who reduce their electricity usage at critical peak periods. And if so, at what price?

While the headline import price figure suggested there is some hope that import prices will improve at the headline level in the coming months, something else has emerged which suggests that the real importing of others' deflation is only just starting. Or rather, someone else. China.

After yesterday's rollercoaster session in both the S&P and in oil, where initially stocks soared alongside oil, only to promptly tumble as stops were taken out and as the refiners' inventory strategy was exposed after the DOE's latest weekly numbers were released, it has been a quieter session so far, though maybe not for China where stocks jumped at the open only to fizzle and close at the lows in what appears to be ever less intervention by the market manipulating "National Team."

The huge spike in the BofAML High Yield CCC’s that we noted last week is proving to be a real event, real trading and possibly a wholesale reset of the whole funding and liquidity environment. This is far, far more serious than just oil trading below $40 once more.. and brings the death of "transitory."

With prices below $50, what is a stripper to do?

FCX announced today that its Board has suspended its annual common stock dividend of $0.20 per share. This action will provide cash savings of approximately $240 million per annum and further enhance FCX’s liquidity during this period of weak market conditions. FCX’s Board will review its financial policy on an ongoing basis and authorize cash returns to shareholders as market conditions improve.

The day of reckoning has arrived for the oil price. After a year of "Oil Price Crash" in October the world managed record production of 97.09 Mbpd. Production momentum built in the period of high price, 2007 to 2014, is proving very difficult to switch off. It must be switched off and it seems to me the most likely scenario is sharply lower oil price in the near term.

Over the weekend, in its latest quarterly presentation, the Bank of International Settlements made what may have been a very premature assessment that China is now contained. Judging by events in the past 24 hours, the reality is anything but.

The Keystone Pipeline debate isn`t really about the environment at all, but rather money.

With at least 83 percent of these companies' operating cash being spent on debt repayments - the highest on record - the renewed collapse in crude oil prices of the last month has renewed focus on the tidal wave of defaults that the credit market is increasingly pricing in (and stocks not).