Author: BlackMask Financial

BOSTON (Reuters) – The United States Oil Fund was sitting on more than $700 million in unrealized losses at the end of March, several weeks before the market fully grasped the outsize role it would play in this month’s unprecedented collapse in the price of front-month oil contracts. U.S. crude oil futures plunged to -$37.63 a barrel on April 20, the first time in history the contract traded in negative territory. Exchange-traded products like USO, along with other investors, were caught holding positions that would have required them to take delivery of crude barrels with few places to put it, leading to a panicked sell-off.

The $3 billion exchange-traded product, known as USO, revealed on Tuesday that it had an unrealized loss of $726 million at the end of March. USO also booked actual realized losses of $466.4 million during March, according to a filing with the U.S. Securities and Exchange Commission.

Investors, nonetheless, have piled into the fund. Net deposits have totaled more than $3 billion this month amid heavy losses, Refinitiv data shows. Individual investors are in a battle with hedge funds, which are using short positions to bet on further declines in the fund. Nearly 50 U.S. money managers and wealth advisers reported holding small amounts of USO shares for clients at the end of March, SEC disclosures show. The trust division at Chicago-based First Midwest Bank, for example, reported holding about 64,000 shares for investors at the end of the first quarter. Meanwhile, short interest in USO is about $94 million, up about 1% in the past week, according to analyst Ihor Dusaniwsky at S3 Partners LLC. Analysts have questioned whether USO is an appropriate investment for retail investors, given that it makes concentrated bets on complex futures contracts. Individual investors, however, are filling a void left by pension funds, Colorado-based energy analyst Phil Verleger of PK Verleger LLC said in a research note this week. USO is now recasting its investment strategy. It is selling its position in front-month June crude futures contracts, and has been diversifying into later-dated contracts to avoid a repeat of last week’s panic. On Wednesday, a previously announced reverse stock split went into effect, reducing outstanding shares to 185 million from about 1.5 billion. The move was designed to add liquidity while protecting shares from delisting. Bloomberg sources suggest that as of two weeks ago, the USO held 25 percent of the outstanding shares of May 2020 WTI oil futures. Shares had been trading around $2 and risked being delisted if they fell below $1. Post-split shares were up about 6% at $18 on Wednesday, but they are still down about 80% this year. Nick Note:  if you or I had 24% of the volume (and open interest) they would double or triple our margins sighting concentration. But the fix was in with Mr McFuck of the CME. So not only where they allowed to concentrate positions they did so with a cute arrangement on margins and allowed to not have to mark to market or realize losses. A little birdie told me that their is a billion dollars in loses to allocate to someone some where… Including i am told 100 million for the pricks at eTrade….. it could not happen to a nicer group of ASHOLES!  I think we are going to get to fuck the monkey again!

My day would not be complete without these guys screwing their costumers

The Federal Reserve kept its main interest rate close to zero on Wednesday, as officials weighed the impact of the heavy dose of liquidity and stimulus already delivered to the US economy in the last two months. At the end of a two-day meeting on Wednesday, the Federal Open Market Committee stopped short of any big new monetary policy action or guidance, but pledged to take additional steps if needed. “The Federal Reserve is committed to using its full range of tools to support the US economy in this challenging time, thereby promoting its maximum employment and price stability goals,” it said. “The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world.” The target range of the federal funds rate was maintained between 0 and 0.25 per cent, its level since March 15, when Fed policymakers were forced to slash rates and boost asset purchases to shield the economy from the coronavirus pandemic. In its statement, the FOMC said that it would keep rates close to zero “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals” — using the same language as in March. It also reiterated that the Fed would “use its tools and act as appropriate to support the economy”, highlighting that the US central bank was still poised for additional action if necessary. The FOMC offered an even more downbeat assessment of the economic outlook than it did in March. “The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” it said. The statement came after new data exposed the economic damage already inflicted by the Covid-19 outbreak on the US economy. Output contracted at an annualised rate of 4.8 per cent in the first quarter of the year, its worst performance since the Great Recession, and the slump is expected to be deeper in the second quarter after at least 26m people were left newly unemployed. The Fed has already stepped in with lower interest rates, a sharp expansion of its balance sheet, the establishment of dollar swap lines with foreign central banks, and the creation of lending facilities with the US Treasury to offer credit to struggling businesses across the country. Trading conditions in critical debt markets have stabilised as a result, buoyed by the Fed’s commitment to expand its efforts as needed. “The committee will closely monitor market conditions and is prepared to adjust its plans as appropriate,” the Fed added in its statement. Jay Powell, the Fed chair, has previously said the US central bank is not considering a move towards negative interest rates, as some of its counterparts around the world have done. However, the Fed still has scope to firm up its commitment to ultra-low rates for a long time, by setting specific targets based on unemployment and inflation levels for any increase. It also has room to expand its asset purchases and credit facilities. Nick Note: they will not stop at zero. How about negative rates….. And are you ready for double digit negative rates. A few yeas back when i was warning about a stock market wipeout and negative rates  i heard  laughter. Well they are not laughing anymore. Especially since they sold oil at a negative 40$ a barrel.

Roughly half of all U.S. workers stand to earn more in unemployment benefits than they did at their jobs before the coronavirus pandemic shut down swaths of the U.S. economy, a result of government relief that employers say is complicating plans to reopen businesses. The package of coronavirus stimulus laws Congress passed and President Trump signed in March included a $600 boost to weekly unemployment benefits through July 31. As that support is added to state benefits over the coming weeks, the average weekly payment to a laid-off worker should rise to about $978 from the nearly $378 the Labor Department said was paid on average late last year. Qualified workers will receive the government payout every week through July, and in most cases, the combined $978 weekly payout amounts to better pay than what many workers received before the crisis hit. Labor Department statistics show half of full-time workers earned $957 or less each week in the first quarter of 2020. The stimulus measure means that in coming months many low-wage workers will avoid both significant harm to their finances and the potential health risks—and further virus spread—of returning to crowded workplaces. That money in consumers’ pockets in turn puts the U.S. economy on firmer footing to rebound once authorities allow businesses to reopen. Figures on prior earnings of the more than 26 million Americans who sought unemployment benefits from March 15 through April 18 aren’t yet available, but the initial wave of job losses were concentrated among restaurant, hospitality and retail workers, whose median hourly pay is less than the minimum now paid under enhanced unemployment benefits. The $600 bonus payment was intended to make sure the average worker had full wage replacement in the months following mass layoffs caused by the pandemic. Last year, states’ unemployment benefits replaced about 45% of laid-off workers’ wages, according to the National Employment Law Project, which advocates for low-wage workers. Congress opted for a flat amount because decades-old technology underpinning state unemployment systems didn’t allow for payments to be calibrated to each worker’s lost wages. “If we waited for the systems to be set for 100% wage replacement, the payments wouldn’t go out until June,” said Michele Evermore, a NELP senior policy analyst. She added that under the existing system, many laid-off workers waited weeks to have their unemployment claims processed and some still are waiting for the enhanced payments. The $600 payment aligns with working full time at $15 an hour—the minimum-wage level many Democrats in Congress support. The federal minimum wage—followed by 21 states—is $7.25 an hour and has been unchanged for a decade. Restaurant and front-end retail workers in those states, including Texas and Georgia, are likely to receive more in benefits than from their jobs. Nick Note: For the record the masses are sitting fat and sassy. they are chomping at the bit to   spend their happy checks. They have no rent to pay, their mortgage payments are suspended. The charge card companies are letting them delay payments same thing with car payments even the damn internet company  is letting them off the hook. And the limit on their credit card has been lifted. Banks and lenders are chockablock full of cash to loan out in vast amounts on any fool thing. GENTLEMAN START YOUR SPENDING SPREE!

Many of you have a LLP or a sub S corporation or are 1099 earners. You are eligible for happy checks. And n]the loans will be forgiven. SO check this out!