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Energy Bonds Ain't Buying This Bounce

Submitted by Tyler Durden on 01/07/2015 11:21 -0400

Who could have seen that coming?

Judging by the excitement this morning across the mainstream media, one could be forgiven for assuming WTI was trading back at $100 and everything was fixed again. However, we have seen these 'dead-cat-bounces' numerous times in the past few months and there is one way to know if professionals are buying the stability-is-here-to-stay meme or not... the credit market for energy names remains practically bidless...

Credit is not buying the bounce...

This time is diferent though...

and in a few minutes DOE releases its data...

Chart: Bloomberg

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Wed, 01/07/2015 - 11:23 | 5632577 NotApplicable

Busiest dead cat, EVAR!

Wed, 01/07/2015 - 12:07 | 5632789 DeadFred

Some cats bounce higher than others it seems. I wonder what is the cause of the variation in bounciblity between cats. It doesn't seem (at least in this chart) to be the height of the drop. The breed of cat? Nature? Nurture? My prognostication is the day ends flat back on the 100 dma where it ended yesterday. Prognostications are free and worth every cent!

Wed, 01/07/2015 - 12:55 | 5632972 KnuckleDragger-X

Most of these Energy companies are basically gambling consortiums who thought they had a sure thing. Bankruptcy will be a popular game with the courts stacked up for years.

Wed, 01/07/2015 - 14:49 | 5633576 Againstthelie

But a reversion to the mean is overdue.

Wed, 01/07/2015 - 11:39 | 5632581 ukspreads

NIKKEI futures are buying it +600 points in less than 24 hours

Wed, 01/07/2015 - 11:57 | 5632742 Crazy Canuck

Don't you mean NEKO the cat?

Wed, 01/07/2015 - 11:24 | 5632583 uistbhoy

n00b question, but what does Energy Credit Risk refer to exactly and where can I find this data? (if at all)

Wed, 01/07/2015 - 11:30 | 5632621 magnetosphere

boaml high yield master II index is H0A0, energy sector is H0EN. might have to pay for the latter

Wed, 01/07/2015 - 11:33 | 5632627 uistbhoy

Marvelous. Even if I have to pay, you've set me on the right track.

Wed, 01/07/2015 - 11:25 | 5632587 Batman11

Saudi realises that OPEC does not now contain all the major producers.

The current stance seems to be that Saudi should cut so everyone can enjoy high oil prices with more US oil coming on line.
This doesn't work for Saudi, though it would be nice for the US .

Saudi, not having to worry about Wall Street short termism, can play the long game.
It can, and is, closing down a lot of US shale, Canada tar sands and other future projects.

But in the long term it is in everyone's interests to have some stability in oil prices.

The current strategy could be just what is needed to help the US realise that leaving oil prices to the instability of market forces is in no one’s interests.
It will also help Canada and Russia to realise the importance of working together in a Cartel to keep prices stable.

A cartel, in this case, seems a better option than turbulent markets (i.e. OPEC expands).

The over-supply is quite small and an agreed cut back by all producers could restore stability very quickly.

We can go through the chaos of letting the market do the job.

Wed, 01/07/2015 - 11:40 | 5632668 sk00lb0y

yeah, next lets let international cartels regulate orange juice, milk, air, water. you know cause the chaos of the market and everything...

Wed, 01/07/2015 - 13:00 | 5633000 KnuckleDragger-X

A cartel only works if they all play at the same level but the Saudi's are ignoring the damage they are doing to the other players. Iran is capable of really messing the game up for the Saudi government.

Wed, 01/07/2015 - 11:37 | 5632647 youngman