Oils Well That Ends Well
Oils well that ends well for sure; however there's no substantial indication of a 'deal' between OPEC members to cut production levels. Nevertheless, and I'll add in-spite of the Wall Street Journal retracting the report of a 'deal', issued at the exact moment the DJIA started going to a new sub-400 point decline low; at that very point a one-liner said the report was merely a rumor; there's more.
The 'more' might well be a quid-pro-quo given the hateful tension between rival Islamic states Iran and Saudi Arabia, if it were conditional on a grander deal as might relate to the Syrian war, that Saudi and Turkey have threatened entering, and that Iran (and Russia) would clearly like to keep them out of.
Remember our mentioning 'Munich' last night? Well the talks concluded today, with little details revealed; but a statement from Secretary Kerry that 'hostilities are scheduled to cease next week'. We've heard that before and it didn't work; and of course the odds of it holding now are slim indeed, with the Russians and Iran (and their Hezbollah proxies) so close to completing what has been called their 'extermination campaign' around Aleppo.
So how would one get the Russians to agree to stop, and the Iranians, since it was only a week ago when Kerry responded to a reporter; saying 'what do you want us to do, go to war with Russia?'. The answer might be: get a deal that is a win-win for all the principle powers in this: Iran, Saudi Arabia and Russia all are in desperate need of higher oil prices. So that's the leverage Saudi Arabia has, if they want to use it, and the 'cash reserves' chart we showed this week is revealing how draining things have been, especially with ongoing Yemen wars.
Bottom-line: that's all I know. And we're very suspicious; not only because of the 'later-denied-rumor', but the 'coincidence' of releasing that (not from regular wire services, but the Wall Street Journal) right at the S&P and NYA daily lows, that just happen to essentially match the January 20 low points. (Hope there is something to it, as discussed regarding Munich, but skeptical.) Also not saying the WSJ isn't right, but within minutes 'they' backtracked the story to being just a 'rumor'. Financial TV sounds unconvinced of an oil deal, but (from what I hear so far) hasn't emphasized that the WSJ recanted on it being a confirmed story.
Now, I'm not suggesting the WSJ or any source would contrive to post such key market-moving stories at precisely the last-ditch moment of breaking to a lower low; but that's not for me to draw a conclusion about (looked fishy, didn't it?).
Elsewhere: lots of other issues; the most significant being Financial weakness that can't be offset by a nominal increase in Oil prices, as much as it's needed and would be welcomed. Nor would a cessation of hostilities in Syria solve key financial challenges; though it sure would reduce the pressure on Europe's very anxious efforts to be both protective of their societies and compassionate to the hungry and homeless refugees. Not to mention Turkey's resistance to take in a ton more refugees.
Perhaps the Turkish and Saudi threats to invade Syria (risk of a wider war with US involvement if that happens, given Turkey's NATO membership) combined with the EU 'finally' asking for NATO warships to deflect uncontrolled immigrant flows (Turkey to Greece) effective today, led by a German warship incidentally (as I'm sure everyone heard in the news), and Merkel's pressure on Turkey that also is well known; combined to stimulate the parties to make a deal in Munich. (Last week we showed the Fleet composition and pointed-out preparation for a large expansion of the EU and NATO vessels being used in additional roles.)
There's so much; I could chat about the Boeing audit by the SEC; I could delve into lower earnings and growth realizations by lots of reluctant skeptics (lots of the bullish managers are willing to acknowledge a problem in markets; really?). How kind of them to say 'maybe' a bear or a recession looms after all of this. In fact if we get to a great unanimity of skepticism or pessimism, I might back off my own; especially since I'm so opposed to pressing the downside after breaks that have achieve more on the downside for traders than many entire years; or for investors perhaps an absolutely comfortable feeling if they used all of 2015 for lightening-up on rallies, and putting absolutely no fresh money into markets.
In-sum: the videos cover the evolution of this wild day; and notice that the Fed Chair Yellen (almost forgot after the last hour) was not constructive nor helpful in her responses. She skirted both sides of everything in her effort to say little; and did not retract her 'negative interest rate' (NIRP) ideas from yesterday.
As a matter of fact she made it clear NIRP is 'on the table', which proves that a tired Fed is behaving either with a lost oar, no idea which way the rudder points the monetary battleship, or seems oblivious to intelligent exchanges about the risk or inability of funding sovereigns in a 'negative rate environment'. What's to an extent lost is this; is the reality that so-called 'accommodation' policies aren't that at all now. Because credit available actually becomes tighter in a near-zero environment not to mention CapEx reluctance by companies.
Here's a reminder: monkey-week is ending; so Monday (Sunday night U.S.) we get Shanghai reopening; and with it the risk of a spillover from already-evident financial shares declining in Hong Kong. 'If' that persists and spills-over into the European markets Monday morning, and lingers, then it could impact the US as well. Just know that Japan and Hong Kong have been substantially lower while China was closed, and that Shanghai might have to 'catch-down' with the other large Asian markets, which could provide some drama.
That might be the moment the contrived (if there were contrived) efforts to stem the slide in New York on Thursday, finds a breakdown to lower levels as well; a possible trigger to new algorithmic sell signals generating more belated selling.
There are no guideline changes on our end.
Disclosure: None.
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