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Chart(s) Of The Day: Gasoline, Greenback, & Ghosts Of 1937
Submitted by Sean Corrigan via True Sinews blog,
Taken over a forty year history, US gasoline is trading in its 3rd percentile – 1.8 sigmas from the mean – when expressed as a ratio of the price of heating oil. In seasonal terms, this makes sense as the winter draw for space heating coincides with the consumption lull in (discretionary) road transport and the anticipatory change of emphasis by the refiners. Given the severe weather being endured Stateside these past several weeks, it should surprise no-one to learn that stocks of heat are more than 8% below the mean for the time of year, while those for mogas are 4.3% above that norm. Hence the wider price differential.
On a much shorter timeframe, however, we can see heat coming under pressure in the current trading session as the recent crude-led rally fades. Gasoline, conversely, is so far holding up rather better. Time to spread ‘em in anticipation of the arrival of spring?
* * *
With the yuan-dollar rate edging ever higher (led by pressures which seem to emanate from activity in the offshore version in HK), the Chinese press is starting to resound to the sound of calls for a more active policy of devaluation interspersed with a counterpoint of official denials that this is in any way being contemplated.
Apart from the slump in the euro – the ‘Zone being at least as important as the US as a Chinese export destination – the real killer has been the post-Abenomics move versus the yen, especially when gauged in terms of real (i.e., domestic price-adjusted) effective (trade-weighted) rates. Since the latter part of 2012, China’s currency has undergone a 73% overall, 19% annualized, rise versus that of Japan, prompting some of the latter’s companies to start thinking about relocating production back to their homeland. Not so much yendaka, as yuandaka, this time.
As WantChina Times put it in a recent piece, the effects may already be beginning to make themselves felt:-
‘Citizen China, which produces Japanese Citizen watches, to fold its production base in Guangzhou, on the heels of Microsoft which announced on Dec. 17 its decision to close the mobile-phone factories of Nokia, under its auspices, in Beijing and Dongguan by the Spring Festival moving facilities to Nokia’s factory in Hanoi.
A number of other foreign enterprises are scheduled to join the exodus this year, including Panasonic, Sharp, Daikin, and TDK, all Japanese firms, which plan to transfer some capacity from China back to Japan or to other countries. Others, such as Uniqlo, Nike, Foxconn, Funai, Clarion, and Samsung, are setting up new factories in Southeast Asia and India, while scaling down their Chinese operations.’
So, you can see why some think China will be tempted to – err – address the balance, shall we say?
One thing is for sure, whether we look at Asian currencies’ relationship to the Greenback with (ADXY+J) or without (ADXY) the yen, the charts are pointing lower and that, in turn, suggests there is only one way for commodites to trade, too.
* * *
Finally, as Mme. Yellen gives us the usual rigmarole of soft-cop-hard cop-soft cop in her Congressional testimony, the market’s first reaction has been to believe that the Ghost of ’37 is still far from being laid: bonds have rallied nicely, especially in the belly where mid-curve euro$ have jumped 12bps or so in the immediate aftermath of her comments.
If, however, we compare the actual real Fed funds rate to the state of the job market – either using continuing jobless claims as a percentage of the population (here inverted) or the real wage fund (hours x pay rates / CPI) – you can see that Ms. Yellen is taking rather more of a gamble than she is willing to admit.
Courtesy: Bloomberg
From the Volcker Era to the Anti-Vocker Era, indeed.
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I wonder what Kim Kardashian thinks about all this.
Mr. Yellen - was the Fed involved in Operation Choke Point? "not to my knowledge"
Mogas! Mogas! Mogas!
Kim Kardashian thinks??? LOL!!!
man ... vxx is getting absolutely crushed ...
There is a kinda "true Morgan" feel to all this...meaning in the USA after the Civil War there was a MASSIVE credit boom...and bust...and boom...and bust.
The Treasury Department itself had to be bailed out regularly!
Debt holders...by definition 2/3 of the "the stock" in the equity space, well...let's just call that market "opaque" for a reason.
Remember triple AAA rated MBS's?
Common stock at least has a bid and an ask. What the heck is a "vix"? Just a contract really...basically based on nothing.
When a State buys an asset they don't just hold it for the life of the State...but they also are taking that currency out of circulation.
BIG BUBBLE.
The disciplined Banker works against this "trade" by buying gold...and providing a reasonable rate for depositors (say 4 percent) in order to raise cash.
So yes...gasoline prices can absolutely collapse to say a dime a gallon come April or May, but that only makes that refined product that much more valuable.
The "Enterprise Value" would be enormous for a business able to off such a "discount.". This in turn could force the Banks into "dollars."
If the American people suddenly forced into a barter regime...well, good luck finding those dollars.
Jack Daniels or Jim Beam be yo money now bro.
Yeah it is - shakedown days... I picked up some VIXY yesterday, may pick up some more today or tomorrow, volatility is close as the defeaning silence to nearly every piece of macro data is 2007 all over again, has been for some time obviously but, patience will payoff at this level....A reason for the blind Americans and or businesses to 'convert' most of their USD 5 trillion 401k, IRA's, pensions, investment accounts etc. into 'savings' bonds needs to arise. The PPT will quit propping stocks and, god forbid, allow price discovery; scaring the sheep into the slaughter house before our masters attempt to confiscate the remainder all in the under the guise of 'God's work'.
Students refusing to repay loans:
http://www.huffingtonpost.com/2015/02/25/corinthian-15-student-loans_n_6...
Guess they're just making a "business decision" of "just walking away."
Sweet Moar renters