Natural Gas

We would say today's main event is the culmination of the Fed's two-day meeting and the announcement slated for 2 pm this afternoon, however with the 90 economists polled by Bloomberg all expecting no rate hike, today's Fed decision also happens to be the least anticipated in years (which may be just the time for the Fed to prove it is not driven by market considerations and shock everybody, alas that will not happen). And considering how bad the economic data has gone in recent months, not to mention the recent easing, hints of easing, and outright return to currency war by other banks, the Fed is once again trapped and may not be able to hike in December or perhaps ever, now that the USD is again surging not due to its actions but due to what other central banks are doing.

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Who holds the majority of the debt that would be at risk in a Russian default? Not China.  Not Iran.  Not Syria.  No, it’s the exact same nations, and banks and funds within those nations, that are applying the sanctions against Russia. So, if Russia does default, what does it mean in terms of its political relationship with the West? Nothing. But what does it mean to its creditors? Everything... Simply put, if Putin believes that the benefits of a default outweigh the consequences to his country, he won’t hesitate to do it, no matter the international ruckus it might raise.

Two biggest move overnight came from everyone's favorite carry pair, the USDJPY, which may have finally read what we said yesterday, namely that with the Fed and ECB both doing its job, there is little need for the Bank of Japan to repeat its Halloween massacre for the second year in a row, and as a result will keep its QQE program unchanged. It promptly tumbled from its 121 tractor level, to just above 120.25, where BOJ bids were said to be found. With the FOMC October meeting starting today, the other overnight catalyst was not surprisingly the latest Hilsenrath scribe in which he removed any uncertainty about a Wednesday hike, "leaving mid-December as the central bank’s last chance to raise rates this year."

There are two general schools of thought amongst noted contrarians and libertarians regarding China’s overriding objectives. One school has it that China is very much a part of the One World Government philosophy and their primary goal is to acquire a more powerful seat at the IMF. Having done so, they will settle in and be content to be one of the leading jurisdictions that run the world collectively. The other school suggests that China means to become the most powerful nation in the world - to replace the US in every way as the world’s dominant nation. And that’s the case here. The world’s most powerful (and most oppressive) political/economic power structure has begun to go under the bulldozer. Its replacement will hopefully be a better one.

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For once, blaming the weather is not a 'joke'. Natural gas futures fell to the lowest since April 2012 as traders reacted to near-record inventories and mild weather that’s pushing back the start of winter demand for the heating fuel.

With Russia now in the driver's seat in terms of supplying crude to China, and with Iranian supply set to come back online with the lifting of economic sanctions, Saudi Arabia faces a serious threat to its dominance of the global oil market. Given the increased cooperation between Moscow and Tehran in Syria, it comes as no surprise that Ruusia and Iran are now in talks on some $40 billion in energy projects which the two countries say could lead to the formation of a new development bank.

"Anything that protects the Syrian people and Syria from partition, we will not spare any effort to carry it out with our Saudi and Turkish brothers, no matter what this is. If a military intervention will protect the Syrian people from the brutality of the regime, we will do it."

"We wish that Iran would change its policies and stop meddling in the affairs of other countries in the region, in Lebanon, Syria, Iraq and Yemen. We will make sure that we confront Iran's actions and shall use all our political, economic and military powers to defend our territory and people."

Current oil prices are simply not low enough to stop over-production. Unless external investment capital is curtailed and producers learn to live within cash flow, a production surplus and low oil prices will persist for years.

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Another day, another "crackdown" by the CFTC on an "evil spoofing mastermind."

Despite the intense pain they are suffering in the low price Crudedome, both the Russian and Saudi governments profess for public consumption that they are committed to their volume and market share policies. This observer believes the two countries cannot long withstand the pain they have brought upon themselves - and this article only scratches the surface of the negative impact of low crude prices on their economies. They have, in effect, turned no pain no gain into intense pain no gain and set in motion the possibility neither will exit the low price Crudedome under its own power.

It’s unfortunate that it took the corporate media all these years to" discover" that the United States and Russia are fighting a geopolitical proxy war in Syria. It remains to be seen how many more years and lost lives it will take for them to also "discover" that this proxy war is being fought over resources and power. It’s a sad state of affairs when the Western media provides humanitarian cover for the U.S. and NATO to fuel a brutal civil war simply to create economic advantages for NATO states and allies while undermining stability in the Middle East - creating the greatest humanitarian catastrophe since World War II. And as millions of refugees continue to pour out of Syria into Europe and abroad, the NATO-dominated public of the E.U. and U.S. remain largely ignorant to the fact their own governments helped create the refugee crisis they so abhor.