Yowza! This proves exactly what I used to think - that in an alphabetical list comprised of a handful of countries, Australia would likely figure near the top and USA near the bottom.
Analyzing the answers shows clearly that the GDP and inflation numbers are fictitious and the equites performance is 100% correlated with said countries QE. Pretty much what we all knew all along...
"Oilfield services company Baker Hughes Inc. says the number of rigs exploring for oil and natural gas in the U.S. this week declined by 13 to 744. A year ago, with oil prices almost double the prices now, 1,917 rigs were active."
Oil isn't just about US production even though that is a big part. OPEC is pumping out more than expected. Ask opec how low can prices go and that is your answer. They have a lot of oil still.
On oil: US crude inventories are near 80 year highs for this time of the year. The WTI futures market is in a very strong contango, giving incentives to store even more crude. The storage trade only defers the supply impact - eventually this oil needs to be used. Refineries are operating at high capacity given the large supply of crude available and juicy crack spreads (margins) and yet this isn't making a dent on crude inventories. The supply response from small (now unprofitable, even with the strong contango structure mentioned above) shale plays has an out-sized impact on rig counts, but actual production hasn't dipped much as efficient plays have excess capacity to ramp up and a large amount of debt to repay (meaning they need the cash flow).
On the demand side: refined industrial metals prices have tanked to multi-year lows, painting a bad picture for Chinese commodities demand. Strategic oil/product reserves and storage in China has been built out already and it is unlikely that authorities extend this further unless the market takes another major leg lower on spot prices.
Not to mention extremely currency weakness in major energy exporting nations (Russia) who also need USD at the cusp of the first Fed hiking cycle in a very long time.
7 comments
Click here for commentsYowza! This proves exactly what I used to think - that in an alphabetical list comprised of a handful of countries, Australia would likely figure near the top and USA near the bottom.
ReplyAnalyzing the answers shows clearly that the GDP and inflation numbers are fictitious and the equites performance is 100% correlated with said countries QE. Pretty much what we all knew all along...
ReplyFor inflation to rise by 2% or more, we need equities to fall by at least 4%.
Replyhttp://www.bloomberg.com/news/articles/2015-11-25/yuan-fixing-near-post-devaluation-low-is-bearish-sign-to-socgen
Replyto me as well
"Oilfield services company Baker Hughes Inc. says the number of rigs exploring for oil and natural gas in the U.S. this week declined by 13 to 744. A year ago, with oil prices almost double the prices now, 1,917 rigs were active."
ReplyHave we hit bottom yet?
Oil isn't just about US production even though that is a big part. OPEC is pumping out more than expected. Ask opec how low can prices go and that is your answer. They have a lot of oil still.
ReplyOn oil:
ReplyUS crude inventories are near 80 year highs for this time of the year. The WTI futures market is in a very strong contango, giving incentives to store even more crude. The storage trade only defers the supply impact - eventually this oil needs to be used. Refineries are operating at high capacity given the large supply of crude available and juicy crack spreads (margins) and yet this isn't making a dent on crude inventories. The supply response from small (now unprofitable, even with the strong contango structure mentioned above) shale plays has an out-sized impact on rig counts, but actual production hasn't dipped much as efficient plays have excess capacity to ramp up and a large amount of debt to repay (meaning they need the cash flow).
On the demand side: refined industrial metals prices have tanked to multi-year lows, painting a bad picture for Chinese commodities demand. Strategic oil/product reserves and storage in China has been built out already and it is unlikely that authorities extend this further unless the market takes another major leg lower on spot prices.
Not to mention extremely currency weakness in major energy exporting nations (Russia) who also need USD at the cusp of the first Fed hiking cycle in a very long time.