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Global Stocks, US Futures Tumble As Emerging Market Turmoil Is Set For A Dramatic Comeback
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. To wit:
In October, equity markets staged a remarkable recovery, recording their strongest one-month gain in recent years. Market nerves were partly calmed by receding fears over tail risk in China. The improvement was broad-based. European and American stocks recouped nearly all losses experienced in the third quarter, while China’s stocks also made up some lost ground
Judging by events in the past 24 hours, the reality is turning out to be anything but as China's "tail risk" appears to set to make a dramatic return and drag all emerging markets lower once again.
Starting first with China's November reserve outflow, which as reported yesterday was the 3rd highest monthly ever, crushing expectations of a slowdown in the Chinese capital exodus, then continuing with last night's dreadful export data (and import numbers which declined for a record 13 months, and which some watchers say may have been fudged to cover hot money outflows as China has done in the past), and finally in China's Yuan, which tumbled and saw its weakest close in 4-yrs following the PBoC's weakest fixing since Aug 27th in a reaction to yesterday's larger than expected decline in the nation's foreign reserves. One wonder what is the agreed upon period of time before a currency can be devalued after entering the IMF's reserve currency basket?
Just like in August, the Chinese weakness promptly spread to other emerging markets, who are further impacted by the latest drop in commodity prices and now have a Fed rate hike in one week to look forward to. As Bloomberg notes, the MSCI Emerging Markets Index is on track for its lowest close since Oct.1. The gauge has sunk 16 percent in 2015, its worst year since 2011, and is close to being oversold. The so-called relative strength index has dropped to 33, the lowest in three months. A level of 30 or lower signals to some traders that selling is overdone. One would almost say we are back to the level from last August when the EM debt crisis tantrum put off the Fed's rate hike.
It would be very ironic if the Fed is thwarted from its Dec. 16 rate hike if over the next 8 days the world suffers another EM/China tantrum.
Elsewhere, crude oil rebounded after the biggest one-day drop since Sept.1. Monday's 5.8 percent decline took crude to its lowest level in six years after OPEC effectively abandoned its strategy of limiting output to control prices. Crude ended yesterday at $37.65 a barrel in New York. The next significant level for traders is the $33.98 closing price on Feb. 12th, 2009. Crude has plunged 40 percent in the past 12 months as OPEC maintains output to defend market share against higher-cost U.S. shale producers. Increased supply from Saudi Arabia, Russia and Iran has lifted global stockpiles to almost 3 billion barrels, according to the International Energy Agency.
And while Asia was certainly not happy with the most recent economic data (with the Shanghai Composite sliding -1.9%, the Nikkei down 1.0% and Australia -0.9%), this weakness has spread to Europe which is down more than -1%, especially after Anglo American announced it would scrap its dividend for the first time in six years as well as proceed to lay off 85,000 workers, while US equity futures are also deeply in the red.
- S&P 500 futures down 0.5% to 2071
- Stoxx 600 down 1.1% to 368
- FTSE 100 down 0.5% to 6191
- DAX down 0.6% to 10824
- German 10Yr yield up 2bps to 0.6%
- MSCI Asia Pacific down 1.3% to 130
- Nikkei 225 down 1% to 19493
- Hang Seng down 1.3% to 21905
- Shanghai Composite down 1.9% to 3470
- S&P/ASX 200 down 0.9% to 5109
- US 10-yr yield up less than 1bp to 2.23%
- Dollar Index up 0.03% to 98.69
- WTI Crude futures up 0.6% to $37.89
- Brent Futures up 1.3% to $41.24
- Gold spot up less than 0.1% to $1,072
- Silver spot up less than 0.1% to $14.26
A closer look at Asian markets, shows equities kicked off the week on the front foot following the strong lead from Wall Street. This came after the better than expected NFP report and upward revisions, which hinted at further strength in the US economy. As such, the Nikkei 225 (-1.0%) has pared over half of Friday's losses, while the ASX 200 (-0.9%) was initially lifted higher by material names amid the gains seen in the precious metals complex. However, did pull off best levels with pressure from energy stocks after oil prices continued to find no reprieve with investors disappointed by OPECs decision to keep producing at record levels. Elsewhere, Shanghai Comp. (-1.9%) fluctuated between gains and loss with strength in healthcare names. Chinese stocks fell the most in a week after trade data signaled a deepening slowdown in the nation’s economy; yuan closed at its weakest level in 4 yrs. Japan’s stocks fell as a rout in oil and commodity prices dragged energy and material shares lower.
"Overall, today’s data underscored the continued weakness we are seeing in global trade," said Bernard Aw, a strategist at IG Asia Pte. in Singapore. “The overnight plunge in oil prices warranted greater attention. Much of the sell-off this morning was attributed to weakness in the energy and material sectors.”
Asia Top News
- China Nov. Exports Fall 6.8% Y/y in USD; Est. -5.0%
- China Nov. Retail Auto Sales Rise 17.6% on Year, PCA Says
- Japan’s Economy Grew in Third Quarter, Avoiding Recession: 3Q revised GDP rose annual 1% vs est. +0.2%
- China Minmetals Buys China Metallurgical in Step to SOE Reform
- Yuan Set for Weakest Close Since 2011 as Exports, Reserves Drop: PBOC cuts yuan’s reference rate to lowest in 3 mos.
- Woodside Abandons $8 Billion Takeover Bid for Oil Search: Woodside ditched offer for Papua New Guinea-focused Oil Search as crude traded near lowest level in >6 yrs amid speculation a global glut will persist
- ICBC Punishes 137 Staff as China Probes Graft in Financial Firms: Some workers expelled from Communist Party, others warned
- Najib Gets Chance to Remove Thorn as Zeti Term Ends in Malaysia: Investors say overt political influence would be detrimental
- AIG Sees India Claims Rising to Decade-High on Worst Floods: Trade body has pegged losses to businesses at $2.3b
In Europe, equities followed the trend lower set by their Asian counterparts (Euro Stoxx: -0.6%) and drifted lower since the open as markets continue to react to the soft energy prices . While energy names are among the sessions laggard, with WTI remaining near 6 year lows and below the USD 38.00/bbl handle for much of the morning, the notable underperformer has been material names. This comes after Anglo American (-7.4%) suspended their dividends for H2 2015 and 2016 and noted they foresee impairments of USD 3.7-4.7b1n, thereby weighing on the sector as a whole.
Despite the apparent risk off sentiment, Bunds have yet to see a tangible benefit and trade in modest negative territory. Of note analysts at ABN Amro suggest that the ECB's expansion of their bond purchasing program to include regional and local bonds is of benefit to German fixed income, with the move likely to have the consequence of alleviating scarcity in German debt.
European Top News
- U.K. Manufacturing Decline Signals Weak Start to Fourth Quarter: Manufacturing output dropped 0.4% from Sept. vs forecast for decline of 0.2%
- Bank of France Sees Weaker Fourth-Quarter Growth After Attacks: 4Q GDP to grow 0.3% vs original est. of 0.4%
- EU Strikes Cybersecurity Deal to Make Companies Boost Defenses: Would mandate all EU countries to share more intelligence and would require search engines, online cloud services and Internet retail sites, to ensure infrastructure is secure
- Orange Said in Early Talks to Buy Bouygues Telecom, Media Assets: Bouygues said to consider minority stake in new company
- Galapagos Gains Most in Nearly 4 Yrs; KBC Eyes ’Lucrative’ Deal: Co. said filgotinib met main goal of mid-stage study in Crohn’s disease.
In FX markets have seen a continuation of yesterday's moves in terms of commodity currencies, with the likes of CAD and AUD continuing to see softness, with the latter trading in close proximity to the 0.7200 handle. Separately, the most notable data of the European morning has come in the form of the UK industrial and manufacturing production, with the data fairly mixed for October, however the September figures all being revised higher (UK Industrial Production 0.1% vs. Exp. 0.10%, Prev. -0.20%, Rev. 0.00%) and as such a slight uptick was seen in GBP/USD to see the pair remain above the psychologically key 1.5000 level on the back of the release, however failing to sustain the level ahead of the North American crossover.
Over in Asia, CNY fell against the greenback and saw its weakest close in 4-yrs. This came after the PBoC weakened CNY fix the most since Aug 27th in a reaction to yesterday's larger than expected decline in the nation's foreign reserves. In turn, the latest lacklustre trade data could also provide the impetus for further deprecation in the CNY setting.
In commodities, the energy complex continues to reside near multi year lows, with prices still impacted by Friday's OPEC decision. In terms of price action today, the likes of Brent and WTI crude futures have grinded higher throughout the European session to reside in modest positive territory, however Brent Jan'16 futures reside below USD 41.50, while WTI Jan'16 futures remain below USD 38.00/bbl. In terms of the notable event of the day for energy traders, this comes in the form of API crude oil inventories, which last week showed a build of 1600k.
Separately, gold remains near yesterday's lows following the broad-based weakness seen across commodities during US trade, although like the energy complex is in modest positive territory for the day . Elsewhere, COMEX copper prices were relatively flat, although underperformance was seen in its Shanghai counterpart and Dalian iron ore futures were lower by 1% in continuation of the weak-China-demand triggered slump which has already pushed prices below USD 40/ton.
Today's US economic data calendar is light, with just the November NFIB small business optimism read, IBD/TIPP economic optimism print and the October JOLTS job opening data. While the latter is on a one month lag, the data is still important given its closely followed by the Fed. The quits rate in particular worth keeping an eye on.
Bulletin Headline Summary from RanSquawk and Bloomberg
- European equities followed the trend lower set by their Asian counterparts and drifted lower since the open as markets continue to react to the soft energy prices as well as downside in material names
- FX markets have seen a continuation of yesterday's moves in terms of commodity currencies, with the likes of CAD and AUD underperforming
- Today's calendar is fairly light in terms of data, with the notable highlight coming in the form of API crude oil inventories, while participants will also be looking out for comments from ECB's Makuch
- Treasuries lower led by 2Y and 3Y, curve flattens as overseas equity markets selloff amid declining commodity prices, China export data; $24b 3Y auction today, WI 1.26% vs 1.271% seen last month.
- Mining companies led a drop in stocks around the world and currencies of commodity-producing nations slid after another month of weak Chinese trade data underscored the global demand slump; Iron ore’s tumble into the $30s threatens the world’s biggest miners as prices approach break-even costs, according to Capital Economics Ltd
- As Swiss National Bank President Thomas Jordan and fellow policy makers gather for their quarterly meeting, they can take comfort after the ECB’s latest stimulus failed to live up to expectations. Economists forecast the SNB will keep the deposit rate at a record-low minus 0.75 percent on Thursday
- Euro-area growth in the 19-nation bloc rose 0.3% in the three months through September after expanding 0.4% in the prior quarter
- Japan’s GDP expanded 1% (annualized) in the 3Q rather than contracting 0.8% as previously thought, meaning the economy didn’t enter a recession earlier this year
- During a raucous rally in South Carolina on Monday night, Republican presidential front-runner Donald Trump expanded on his calls to temporarily prevent Muslims from entering the U.S., drawing cheers from the crowd
- Sovereign 10Y bond yields mostly lower. Asian, European stocks drop and U.S. equity-index futures fall. Crude oil and gold higher, copper falls
US Event Calendar
- 10:00am: JOLTS Job Openings, Oct., est. 5.580m (prior 5.526m)
- 10:00am: IBD/TIPP Economic Optimism, Dec., est. 45 (prior 45.5)
- 1:10pm: Bank of Canada’s Poloz speaks in Toronto
- 1:00pm: U.S. to sell $24b 3Y notes
Top Overnight News
- CP Rail Expected to Revise Bid Terms for Norfolk Southern: WSJ: New bid could include $32.86 in cash and 0.451 shares in a new holding co.; overall amount remaining at just over $30b
- Iron Ore Below $40 Is Seen Near Tipping Point for Largest Miners: Miners’ shares retreat, with BHP at lowest in 10 yrs and Rio Tinto Group dropped to the lowest since 2009
- Anglo Shares Tumble After Miner Suspends Dividends to Save Cash: Dropped to a new record low after scrapping its div. for the 1st time since 2009 and pledging deeper spending cuts
- Staples Vows to Fight U.S. Challenge to Office Depot Takeover: FTC said Monday it would seek to stop the combination
- Euro-Area Economy Grows 0.3% in Third Quarter on Domestic Demand: Growth bolstered by private consumption and government spending as exports suffered from a slowdown in global trade
- China Exports Decline for Fifth Month as Import Slump Moderates: Overseas shipments dropped 6.8% in Nov. in dollar terms y/y vs median forecast for 5% decline in survey
- Jarden, Newell Rubbermaid Said to Be Holding Merger Talks: Would create a consumer-products giant with combined $14b sales
- Time Running Out on New Tax Extension Plan, Republican Says: Congressional leaders are pushing to reach a deal on a must- pass U.S. government spending bill as a Friday deadline nears to avoid a federal shutdown
- Yahoo May Unveil Media Unit Restructure, Spinoff: Re/code: Co. preparing to restructure and consolidate media unit, press ahead with spinoff of 15% stake Alibaba stake, Re/code reports
- Valeant Said to Consider Selling Paragon Division: Reuters: Co. reaching out to potential buyers amid scrutiny from the FTC, Reuters reports, citing two unidentified people familiar
- LeBron James Signs Unprecedented Lifetime Contract With Nike
- Chipotle Closes Restaurant After Boston College Players Get Sick
DB's Jim Reid concludes the overnight recap
It was mostly an oil story as the hangover from OPEC's chaotic meeting on Friday continues. The collapse saw WTI close below $38 yesterday, finishing the session at $37.65/bl after plummeting -5.80% on the day. That saw it fall below the level we hit in summer and to a near 7-year low. It was the same for Brent, down -5.28% on the day at $40.73. The rest of the energy complex came under huge pressure too. Gasoline and Natural Gas finishing -4.79% and -5.44% respectively. In fact it was a pretty rough day for commodities all round yesterday. Gold (-1.39%) came under pressure as a result of the stronger Dollar, while industrial metals all closing with losses. Iron ore is hitting the headlines in Asia in particular after falling below $40/tn, the lowest price now with data back to 2009.
This deeper rout will likely continue to focus the spotlight on last week’s ECB decision. Unless this is a temporary move lower, oil anywhere close to these levels for a sustained period of time will keep a further lid on European inflation well below target. It's a tough one for the ECB as their policy has minimal impact on the price of oil but oil has a big impact on their inflation rate. Oil is also very volatile so to calibrate policy according to current levels is very tricky and risky. Overall though if oil stays low well into early 2016 it's likely the market pressure on the ECB to ease further will rise regardless of whether it's the right thing to do or not.
Before looking at the knock-on impact on other markets yesterday as a result of the slide in commodities, it’s over to Asia where there’s more important China data to look at with the November trade numbers out. The focus has been on the continued sluggish export numbers, with exports down -6.8% yoy in dollar terms which is pretty much where they were in October. That’s after expectations had been for a lift to -5.0% yoy. The latest number marks the fifth consecutive negative print. Imports were -8.7% yoy last month (vs. -11.9% expected) meaning the trade surplus narrowed slightly to $54.1bn from $61.6bn previously. There was better news to be had in the latest auto sales numbers in China however, where retail sales of vehicles were up +18% mom in November, the biggest monthly gain since February having been boosted by a government tax cut.
The data comes after China reported another fall in its FX reserves yesterday shortly after we went to print. Reserves were down $87.2bn to $3.44tn in November which was a slightly higher fall than expected ($3.49tn expected), with reserves now at the lowest level since February 2013. It’s worth highlighting that the data may also underestimate the full extent of the fall in reserves, given that it doesn’t capture transactions by the PBOC in the forwards market.
Chinese equity markets are down post the trade data. The Shanghai Comp is -0.78% and the CSI 300 is -0.70. The commodity slump yesterday is dominating much of the tone this morning with falls for the Hang Seng (-1.58%), Kospi (-0.60%) and ASX (-0.91%). The Nikkei (-1.02%) is also lower despite an upward revision to Japan’s Q3 GDP reading. The final print was revised up to +0.3% qoq from a -0.2% contraction in the first preliminary release. Nominal GDP was revised up also, to +0.4% qoq from 0.0%. In particular, upward revisions were made in private capital investment growth and the contribution from private inventories. Looking quickly at Oil this morning, WTI is up around half a percent in early trading.
Back to yesterday. Despite those huge slides in Oil and other commodities, the impact on risk assets was actually fairly well contained all things considered. Oil prices were already moving south in the European session but despite that, there was a modest rebound for European equities after the weakness post-ECB with the Stoxx 600 closing up +0.51%. European credit had a better session too, Crossover finishing 8bps tighter. The afternoon session saw US markets trend lower, although a late rebound into the closing bell helped the S&P 500 limit its losses to -0.70%. Energy stocks fell a combined -3.7% while materials names were down nearly -2%. Energy heavyweights Exxon Mobil, Chevron and Schlumberger finished with losses of nearly 3%.
Commodity sensitive currencies felt the full force of yesterday's move. The Colombian Peso dropped over 3% to lead losses in the FX space, in the process hitting a record low. The Russian Ruble was down nearly 2%, while there were big falls also for the South African Rand (fresh all-time low) and Canadian Dollar (hitting an 11-year low). The US Dollar firmed, with the Dollar index +0.38% while the flight to quality bid saw Treasuries rally, the 10y benchmark yield in particular falling over 4bps to 2.229%. In fact bond yields in Europe fell sharply too. 10y Bunds were down nearly 10bps in yield at 0.580%, snapping a three-day move which had seen yields move some 20bps higher.
Away from the moves in commodities, it was actually relatively quiet newsflow wise yesterday. The St Louis Fed President Bullard highlighted the importance of the Fed not being mechanical in its future moves after liftoff and that the Fed ‘have to be more willing to pause if the data is weaker and speed up if the economy’ accelerates. The Fedspeak takes a break now until post next week’s rate decision.
Data-wise yesterday, in the US we saw a slight drop in the November labour market conditions index to +0.5 (vs. +1.5 expected), a fall of 1.7pts. Consumer credit during October also came in lower than expected at $16bn (vs. $20bn expected), which followed an upwardly revised $28.6bn in the previous month. In Europe Euro area investor confidence ticked up 0.6pts in December to 15.7 (vs. 17.0 expected). Finally German industrial production for the month of October was softer than expected at +0.2% mom (vs. +0.8% expected).
In terms of the day ahead, we’re kicking off the European session this morning in France where we’ll get the latest business sentiment reading along with trade data. Over in the UK we’ll get the October readings for industrial and manufacturing production, shortly followed by the preliminary Q3 GDP reading for the Euro area (no change expected from the +0.3% qoq flash print). Over in the US this afternoon it continues to remain relatively quiet with just the November NFIB small business optimism read, IBD/TIPP economic optimism print and the October JOLTS job opening data. While the latter is on a one month lag, the data is still important given its closely followed by the Fed. The quits rate in particular worth keeping an eye on.
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Iraqi and Iranian forces will be attacking Turkish invaders by Monday.
Hedge Oilcorrdingly.
5 years from now, anyone who bought oil shares at these prices will be laughing deep belly laughs, watching their money grow multiple times, while morons chase negative returns on Euro bonds.
Would that prediction hold both with or without WWIII breaking out in the interim?
Does digital fiat work after a nuclear electromagnetic pulse?
Yes! That's why you should keep buying ShitoshiCoin & i-shit! ;-)
Everything, including oil, is cyclical. Oil will be $150 in five years I would not be surprised. Oil is one of the commodities the Fed bankers cannot control completely like the stawk market and housing market.
US Dollars will not exist in Five Years.
U.S. will not exist in Five Years.
And you are extremely optimistic.
You are optimistic.
Oil will be $150 in five years
Let's just try to get through tomorrow......OK?
It's not going to be $150 tomorrow.....you have my word on that.
Today is trouble enough
After a Nuclear Winter...after the ELE???
Why Russia can win a Thermonuclear Holocaust and the ones in umderground caverns will survive...NOT.
This is meaningless. It is all meaningless.
You need to meet my therapist.....only costs 5 bucks....but he doesn't make change.
Sooooo....bring some quarters.....I can almost assure you won't last the full 5 minutes.
https://www.youtube.com/watch?v=9Wk1iz86hAI
LMAO
He thinks that we will be here in 5 years...
Overly optimistic,,,
Glencore looking terminal.
Enron terminal?
Has anyone asked the CEO if he's smokin dope?
So is the World Economy...WE ARE ALREADY IN A COLLAPSE.
Look at the commodities. Look at World Trade. Look at shipping.
The STAWK MARKET is being pumped up for appearance's sake.
40% of the Nation is on Government Assistance...the hidden Soup Lines of EBT.
Oil has not been this low since the 2008 Meltdown.
This is MOPE..Management Of Perception Economics.
"If they think that it is good then we have a chance..."
It is not good. They know that the Muppets look at two numbers..the STAWK Market and Gold.
Keep the DJIA artificially elevated and the price of Gold depressed and they hope that the muppets will figure that ecerybody else is doing fine...jost not them.
But they failed to factor in Social Media.
There is a certain unease in the air as we are being herded into the slaughterhouse.
Check this legitimate ways to mak? money from home, working on your own time and being your own boss... Join the many successful people who have already used the system. Only reliable internet connection needed, no prior experience neccessary, that's why where are here. Start here... www.wallstreet34.com
Currency and commodity wars will bring down the hyperconsumerist modelled global Empire ; hoisted on its own petard. Too many balls up in the air; too few assets which aren't overvalued and too much debt that makes the economy Obese.
Bread and Circuses will continue as WS hopium gets ready for Yellen's "Blast off" of the US economy to the Moon.
The reset will come in a slim fast mode based on AI and deflationist collabortive commons archtitecture.
Going "green" bigtime is a step in that direction.
Meanwhile the neo-fascist knee jerk plans its permanent war scenario.
Gold having it's usual midday (GMT) dump.
Could set my watch by it.
fat finger : collaborative & architecture. My bad.
The US continues to clobber oil in Obama's full spectrum war against Putin and Russia. That is having a very negative effect on all commodities and especially emerging markets.
Oil production is 94 million barrels a day and oil is down $90 or so from its peak about 15 months ago. That is a revenue loss of $8.4 billion a day or $3 trillion a year. If you take away $3 trillion from a world economy of $70 trillion, of course, you will have massive deflation.
The credit for this new emerging market crisis belongs solely to the Nobel Prize Winner's war against Putin and Russia.
What would a commercial airliner shot down in new york and la at the same time do to the us economy hence war machine?
The us government, which is a hostile Zionist and banker controlled one, is playing with fire.
Sooner or later, a skilled opponent playing a defensive strategy can not maintain that strategy safely and must move to an offensive stance.
The israelis already murdered russian civilians, the turks and their proxies a russian pilot, shooting as the parachuted, shooting at search and rescue.
Why would Russian and the rest of the victims of the Anglo-Zionist empire not give the us and uk and saudis and turks and international zionist jewry and israel a little taste?
Obama has destroyed in the world economy in his war against Russia. The emerging market economies are suffering massively especially Venezuela, Brazil and Nigeria. Oil is driving down the prices of all commodities and screwing every emerging market since their exports are usually commodities.
When a single country controls all financial markets, it can screw the rest of the world at will. A few more months of this and there will be a major war.
Yo, Einstein! Search and rescue objectived w/ SNR of a military a/c in hostile territory IS a military target.
Ever hear of USAF pararescue: https://en.wikipedia.org/wiki/United_States_Air_Force_Pararescue#/media/...
You need to get out of momma's basement a little more often. I guess Uncle Putin sent in the Cub Scouts.
WTF are you talking about? Shooting at parachuting pilots is a war crime. Who cares about those over exalted PJ's?
I think tyou are making a bad supposition: That there is actual revenue lost. I do not see it htat way i just see that the money is going elsewhere and not in to the revenue stream of Exxon and BP. Besides if you increase oil prices, you will fo surely trigger inflation, and then there will be less revenue in the global market for sure.
Another notable date when oil traded below $40/bbl. December 1973 (about $22/bbl). One month later is was $50.
http://www.macrotrends.net/1369/crude-oil-price-history-chart
Of course, that was when the A-rabs turned off the tap, which they're nowhere in the vicinity of now.
I hope everybody is ready for at least 10 years of pain and economic hardship because the printing presses won't be able to save us now.
If you shake my faith in the printing press fixing everything I won't have anything left to believe in. Please knock it off.
In more serious commentary you think only 10 more years? Optimist.
He meant Dog years. They really are dog years now, every one seems like seven.
I hope it's only 10 years. A Cycle like that normally takes about 75 years, that means we would never see a good day like we had in our life anymore. Can you imagine that?
I'm not ready for that way of thinking.
Rebound?
What rebound?
Who's up for a breakfast of goal seeked Keynesian souffle, stuffed full of central bank gooey goodness, smothered in unicorn awesome sauce with a side of national debt hash browns, served up by a bubble gum snapping college grad with a BA in social science?
#MmmYummy ;-)
Exactly
Pleeeeeeeeeeze raise those rates, Mr. Yellen....
THERE WILL BE NO RATE HIKE.
Is a rate hike in the Chinese interest? Might they toss a monkey wrench into the works if it is beneficial? (Do the British say monkey spanner?). Did you hear the joke about the three white guys in tactical gear who went into a conference room and came out as 2 dead Arabs handcuffed in the back of an suv?
No, just "A spanner in the works"
2" Whitworth I think, normaly does the job.
In the UK a monkey wrench is the one with adjustable jaws that grip tighter the more you pull (not to be confused with mole-grips), they tend to have long handles.
Spanners are the simple ring or open ended type.
Anglo American lays off 85,000 out of 135,000 and kills dividend.
That is Glencores current problem.
FTSE a little lower too ;-)
Peter Shiff says "The reality is that the American economy is on its last leg ... U.S. national debt will soon surpass $20 Trillion", or something like that. So why the f is everyone busting a gut to buy the dollar? Please tell me why my third world African currency is tanking because everyone's selling to buy the greenback.
Because the dollar is the reserve currency of the world. If it didnt hold that title then it would be worthless.
Would you like some fries with that shake?
Come on baby...let's get this show on the road. Made some $$ in August on the market decline, ready for the repeat this month or early January. Then will be setting up for the grand finale whenever that may be.....this bitch is McGyver'd together with ducktape and bubble gum and at the speed we are traveling it can't hold together much longer.
Well, this is the wrong thread to read for some Holiday cheer.
What matters and what don't: energyandincomeadvisor.com
OIL PRICES AND GEOPOLITICS
"The influence of geopolitical events on oil prices tends to receive a great deal of play in the financial media.For example, on the morning of Nov. 24, reports surfaced that Turkey had shot down a Russian fighter jet that ostensibly had violated its airspace and failed to respond to warnings. Russia continues to launch air strikes near the Turkish border and has asserted that the warplane was in Syrian territory when it was downed.The incident received widespread media attention, with many outlets citing the downed plane as the reason that the price of front-month West Texas Intermediate (WTI) oil futures spiked to an intraday high of $43.46 per barrel—up roughly 4 percent from a close of $41.75 per barrel on Nov. 23.In an ideal world where market participants operate in an emotional vacuum and have perfect clarity regarding the factors that move oil prices, the downing of the Russian plane and subsequent controversy wouldn’t have produced such a move in WTI prices.In 2014, Syria produced 33,000 barrels of oil per day and Turkey flowed less than 50,000 barrels per day—drops in the bucket in a global market of more than 90 million barrels per day.Oil pipelines with a combined capacity of about 3.3 million barrels per day pass through Turkey. But the 1.2-million-barrel-per-day Baku-Tbilisi-Ceyhan pipeline is located far from the Syrian conflict, and the 1.5-million-barrel-per-day Kirkuk-Ceyhan pipeline has operated at a fraction of its nameplate capacity for years because of sabotage to the Iraqi portion. Further damage to the Kirkuk-Ceyhan pipeline wouldn’t affect global oil supply meaningfully.Iraqi oil shipments recently climbed to 4.3 million barrels per day from about 3.1 million barrels per day at the end of 2013, making the nation the second-largest oil exporter in OPEC.Oil fields in southern Iraq—for example, Rumaila, West Qurna and Zubair—account for roughly 95 percent of the nation’s oil exports and have driven the vast majority of the country’s oil production growth in recent years. These volumes exit the country through ports in southeastern Iraq on the Persian Gulf, far from the Syrian conflict and regions controlled by ISIS.The downing of a warplane also won’t affect Russia’s ability, or willingness, to supply oil and gas to the global market. Energy commodities account for about 70 percent of Russia’s total exports; the country can’t afford to curb this trade in response to an international incident.Meanwhile, Russia supplies 30 percent of Turkey’s oil and 55 percent of its gas; the country likewise can’t afford to allow its relations with Moscow to deteriorate too badly.By the end of the week, the knee-jerk rally in oil prices triggered by news of the downed fighter had dissipated.EIA Bloodbath AdAlthough geopolitical incidents often move oil prices in the near term, far too many pundits overestimate the longer-term importance of geopolitics on oil prices—especially in a well-supplied market.Consider Iraq’s invasion of Kuwait in August 1990 and the US-led coalition’s subsequent military action to expel these forces in early 1991.Iraq began massing troops along the Kuwaiti border in early July 1990, though many intelligence analysts regarded this as a bluff to persuade Kuwait and other OPEC members to reduce surplus production and bolster oil prices.Iraq invaded Kuwait in the early morning of Aug. 2, 1990, quickly overwhelming its much smaller neighbor’s security forces and prompting government officials and some of the Kuwaiti military to retreat into Saudi Arabia. Iraq eventually grew the occupation force to about 300,000 soldiers.The US-led coalition’s defense of Saudi Arabia, or Operation Desert Shield, officially began Aug. 9. After a series of diplomatic efforts to force Saddam Hussein to withdraw his troops from Kuwait, the coalition launched Operation Desert Storm on Jan. 16, 1991, with a massive air offensive. The ground offensive began on Feb. 24, effectively defeating Iraq’s army by the end of the day. Four days later, Kuwait had been liberated and US President George Bush declared a cease-fire.This conflict had significant implications for global oil supply. After Iraq invaded Kuwait, Saddam Hussein controlled about 20 percent of the world’s total estimated reserves.Iraqi forces also set fire to Kuwaiti oil fields and damaged critical infrastructure as they withdrew from the country.In the year prior to the Gulf War, Iraq produced about 2.8 million barrels of oil per day, Kuwait flowed 1.41 million barrels per day and Saudi Arabia lifted 5.64 million barrels per day; in 1991, Kuwait produced 185,000 barrels per day and Iraqi output plummeted to 285,000 barrels per day.Kuwaiti production didn’t recover to its prewar peak until 1993, and Iraqi output didn’t top 2.8 million barrels per day until 2011.WTI crude-oil hovered between $20 and $25 per barrel at the beginning of 1990, before slumping to a low of about $15.30 per barrel in June. After Iraq’s invasion of Kuwait and the start of Operation Desert Shield, oil prices surged, peaking at $41.02 per barrel on Oct. 11.These gains were short-lived. By the end of December 1990, oil prices had tumbled to $25 per barrel—the level where they began the year. And by the time US and coalition forces launched airstrikes against Iraq in January 1991, oil prices had slipped to less than $20 per barrel.Bottom Line: At the height of the Gulf War, oil prices actually declined.The 1990-91 experience resembles the current environment in many ways, at least from a supply and demand standpoint. At the time, Saudi Arabia, Kuwait and other OPEC members continued to flood the market with oil in an attempt to squeeze out high-cost production and regain market share lost between 1973 and 1985, when the organization scaled back output in an ill-fated effort to support prices. (See Lessons from the Past.)And back then, some OPEC members argued that the organization should reduce output to bolster prices—one of the motivations behind Iraq’s invasion of Kuwait and threats against Saudi Arabia.In short, the global oil market faced a significant oversupply in 1990 that limited the effect of production disruptions caused by the Iraq war. Similar conditions exist today.Although oil prices may still react to geopolitical events in the near term, supply and demand will drive prices in the long term. Debating (or shouting about) geopolitical risk premiums may be a big deal to the financial infotainment complex—these developments attract a lot of eyeballs—but they remain a secondary consideration."
As w/ the limbo: How low can they go?