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Andy Hall Loses 7% In September, Down 20% YTD: Will He Blow Up Twice In One Year On The Same Trade?

After losing 7% in September, and down 20% for 2015 as of Oct. 1, the question is will Andy Hall be the only hedge fund manager with the distinction to have blown up not once but twice in one year, on the very same bet?

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Futures Slump After China Imports Plunge, German Sentiment Crashes, UK Enters Deflation

For the past two weeks, the thinking probably went that if only the biggest short squeeze in history and the most "whiplashy" move since 2009 sends stocks high enough, the global economy will forget it is grinding toward recession with each passing day (and that the Fed are just looking for a 2-handle on the S&P and a 1-handle on the VIX before resuming with the rate hike rhetoric). Unfortunately, that's not how it worked out, and overnight we got abysmal economic data first from China, whose imports imploded, then the UK, which posted its first deflation CPI print since April, and finally from Germany, where the ZEW expectation surve tumbled from 12.1 to barely positive, printing at just 1.9 far below the 6.5 expected.

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Why Oil Is Tumbling: Oil Hedges Were Just Rolled Over

Wwith oil volatility surging in recent months, oil producers needed to take advantage of a rally, technical or otherwise, and an oil vol lull to reestablish hedges, even if it meant at far lower prices than recent benchmarks.  This is precisely what happened in the past week following one of the most torrid surges in the price of oil seen in recent years.

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WTI Crude Surges Back Above $49 After OPEC Comments

WTI Crude has recovered the losses following yesterday's DOE-reported inventory and production rise as it appears comments from OPEC Secretary-General Al-Badri told The IMF that demand will climb more this year than previously projected (coming on the heels of EIA's comments that oil companies worldwide will cut investments in oil exploration and production by a record 20 percent this year.) USD weakness is also helping drive algos to run stops in crude.

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Gartman vs Goldman: "Oil Rally To Fade" Warns Blankfein's Bank

Just a day after no lesser world-renowned newsletter writer than Dennis Gartman went full bull-tard of crude oil (in $29.95 terms), Goldman Sachs has come out with a "lower for longer" warning about the crude complex noting that the gains have been exacerbated by still large short positioning and the break of key technical levels. Despite the magnitude of this rally, Goldman does not believe that data releases over the past week suggest a change in oil fundamentals. In fact, high frequency data continue to point to an oversupplied market despite a gradual decline in US production.

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This Month Could Make Or Break The Oil Markets

Saudi Arabia’s competitors from the Gulf cut their prices last month, forcing the largest OPEC producer to follow suit. Although there was little expectation of a shift in strategy, the price cut highlights Saudi Arabia’s determination to continue to pursue market share by keeping production volumes elevated. On top of that, October could be a crucial month for struggling drillers. With drillers undergoing credit redeterminations, October could see a wave of debt restructuring and cuts to credit lines, potentially forcing deeper cuts in the shale patch.

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Frontrunning: October 7

  • How Iranian general plotted out Syrian assault in Moscow (Reuters)
  • China FX reserves post record quarterly fall as cenbank steps up yuan support (Reuters)
  • MSF calls for independent inquiry into U.S. attack on Afghan hospital (Reuters)
  • Yen Advances as Bank of Japan Refrains From Adding to Stimulus (Reuters)
  • Abu Dhabi Said to Explore Asset Sales After Slump in Oil Price (BBG)
  • U.S. Oil Approaching $50 Boosts Stocks as Emerging Markets Surge (BBG)
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Is Russia Plotting To Bring Down OPEC?

Russia can be seen as maneuvering to split OPEC into two blocs, with Russia, although not a member, persuading the “Russian bloc” to isolate Saudi Arabia and the Gulf Arab OPEC members within OPEC. This might persuade the Saudis to seek a compromise with the have nots.

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The US Shale Oil Industry Will Simply Vanish

Without government intervention the “invisible hand” of the world oil market will simply bankrupt US shale companies and with it destroys the US shale oil industry.

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