Tuesday, April 14, 2015

Credit Markets Flashing Red

Alexander Giryavets at Dynamika Capital for pointing us to something which is far more troubling than even the Atlanta Fed's collapse in Q1 GDP tracking: namely the latest Credit Managers Index for the month of March which "deteriorated significantly over the last two months and current readings stand at the recessionary levels not seen since 2008." 

"We now know that the readings of last month were not a fluke or some temporary aberration that could be marked off as something related to the weather. There is quite obviously some serious financial stress manifesting in the data and this does not bode well for the growth of the economy going forward. These readings are as low as they have been since the recession started and to see everything start to get back on track would take a substantial reversal at this stage. The data from the CMI is not the only place where this distress is showing up, but thus far, it may be the most profound."  Alexander Giryavets, Dynamika Capital

Economic Worries Prevail As Treasuries Continue to Rise

Today's big mover, US Treasuries, is a sign that investors are worried today!

Economic Headlines for April 14, 2015

The Dollar was hit hard this morning by the retail sales slump.

 Treasuries are up sharply. Investors buy treasuries when they're worried. They have been rising steadily since March 9th.
Today's economic headlines: Slumping retail sales leads today. The sharp changes in the two charts above both occurred at 6:30 am Mountain Time, at the hour that the data was released regarding retail sales.

Monday, April 13, 2015

CITI Predicts Weaker Oil Price Even As Prices Continue Recent Trend Higher

from CITI:

Already at record levels, US storage capacity may be tested in 2Q as production shows no signs of slowing yet. Prices should bottom if capacity limits are reached, then recover but in previous episodes such as shale gas when the market has expected the US to hit a wall, it hasn’t. Any price recovery will likely be short lived as higher prices should re-start shale drilling, once again increasing supply and sending prices back down…

US crude oil mid-continent inventories are expected to draw down mildly from May to August, and the next problem could well arise come fall when refinery maintenance begins with seasonally highest level stocks…

And by autumn, the US Gulf Coast could also see storage constraints when refiners go into what could be deeper and longer maintenance given the shallow maintenance this winter and spring.

 But crude prices have been trending modestly higher!
At the same time, hedge funds have been piling in to buy crude oil lately.

Bubble Quote

“A group of lemmings looks like a pack of individualists compared with Wall Street when it gets a concept in its teeth.”- Warren Buffett