Crude oil prices are on their way up, despite the market panic caused by the collapse of two U.S. banks, the global head of commodities for Goldman Sachs said on Friday in a Bloomberg Television interview. “We would argue you are buying the dip at this point,” Jeff Currie said, adding, “I have never seen a market sell off that sharply, but retain a bullish structure.” Goldman is still a believer that we will see a “solid recovery” from China toward the latter part of the year, as economic activity snaps back from its strict covid lockdowns. China activity—and therefore oil demand—has shown signs that it could be ready to take off, although a market panic over the possibility that two U.S. bank failures could start a contagion has threatened the would-be rally. WTI prices began to fall off their $122 highs in early June of last year, trading between the low $70s and $80s for the better part of this year. But two weeks ago, when news broke of the SVB bank collapse, WTI sank further, to just $66.93 per barrel. Last week, Goldman said that it expected higher oil prices 12 months from now, pointing to a forecast demand increase in China to more than 16 million barrels per day. Goldman was bullish on commodities then, remarking that the ouflow of capital from the energy industry would result in shortages that will manifest later this year—something oil titan Saudi Arabia has said for the better part of a year. Most analysts are expecting China’s oil demand to grow over the next few months, despite average oil imports across January and February in China being lower than last year’s. January and February oil demand in China are typically weaker due to the Lunar New Year holiday. NN: One of the great trades. This oil price collasp is a gift from heaven. And i know a gift when i see one. $120 brent here we come…. And i bought the shit out of it at $70 Oh baby baby! After all is it a China binary trade.
Trump raises over $4M in 24 hours after indictment…… Donations to Trump reportedly top $5M in 2 days
Former United States President Donald Trump’s campaign disclosed that he raised over $4 million in the 24 hours after a grand jury in the state of New York voted to indict him, presumably over alleged falsifying of business records. “Most notably, over 25% of donations came from first-time donors to the Trump Campaign, further solidifying President Trump’s status as the clear frontrunner in the Republican primary,” the campaign revealed. “With an average contribution of only $34, President Trump’s 2024 campaign is funded by an unmatched coalition of hardworking patriots who are fed up with special interest donors like [George] Soros spending billions of dollars to influence our elections,” the Trump campaign also said in a statement.
Donations to Trump reportedly top $5M in 2 days
Former United States President Donald Trump’s presidential campaign received more than $5 million in donations in the 48 hours since he was indicted in Manhattan, Axios reported.
“There’s a whole new group of Trump supporters who are angered by what they see as this political persecution,” campaign senior adviser Jason Miller told the media outlet.
The campaign announced yesterday that one-quarter of donations in the first 24 hours have been made by first-time donors to the Republican politician. NN: I try to avoid politics. Its a lose lose proposition. And really none of them are worth a shit. When the classified documents were found stashed in Trumps basement i though hie enemies got him. Then we had the Biden documents in his “secure” garage revealed. And they hid it till after the election. And that meant trump had a CHANCE from coming back from the dead. NOW THE LEFTY LIBERALS INDICTMENT IN NEW YORK IS A GAME CHANGER. He is now a contender. They over played their hand. Talk about a Lazarus moment. Trump is back from the dead!
Veteran Money Managers Bail on Stock Rally With Fed Hawks Flying
(Bloomberg) — Optimism about imminent rate cuts is stirring animal spirits — and unease — in equal measure at the end of a turbulent quarter in markets. Prominent money managers have stopped chasing the latest stock rally, reasoning that expectations for easier Federal Reserve monetary policy are overblown with inflation still running hot. Should any rate cuts come, they would be intended to halt an economic downturn that also would bode poorly for equity returns, their thinking goes. Barclays Wealth Management just closed out an overweight position on developed market stocks two weeks after initiating it. Legal & General, which manages $1.4 trillion, has cut its equity exposure down to the biggest underweight since the pandemic, concluding that the hit from aggressive tightening will continue to play out on the US economy for months to come. After the bank turmoil this month, asset managers shifted their stock exposure from close to neutral to a level halfway toward historically low underweight measures, according to Deutsche Bank AG. “Market-implied estimates may be exaggerating rate-cut potential before year-end,” said William Hobbs, chief investment officer at Barclays Wealth Management. He favors defensive positioning. Their caution stands against a 20% advance in the tech-heavy Nasdaq 100 during the first three months of this year — its best quarterly gain since 2020. Speculative fervor has also boosted the price of Bitcoin by more than 70%. Markets determined to leave worries about banking sector contagion behind have put falling bond yields and rosy reads of a looser Fed balance sheet in their sights. It’s a view that directly contrasts with the latest messaging from Federal Reserve officials.
Boston Fed President Susan Collins Friday said that more needs to done to bring inflation down, while Fed Chair Jerome Powell has insisted that officials don’t anticipate cutting rates any time soon.
Markets have priced in a sanguine scenario where cooling inflation triggers 60 basis points of rate cuts by the end of the year. The two-year breakeven rate, a measure of the market’s inflation expectations, is hovering closer to the Fed’s target that before the banking turmoil. The argument that easing inflation will allow the Fed to wind down its rate-hiking cycle was helped by a report Friday showing US inflation rose last month by less than expected and consumer spending stabilized. Still, such priced-for-perfection sentiment can quickly turn around. At a gathering of economists by Lake Como this week Nouriel Roubini, chairman of Roubini Macro Associates, summed it up: “We cannot achieve price stability, maintain economic growth, have financial stability at the same time.” Fund flows underscore jitters about the risk rally. Investors flocked to cash with $60 billion entering money market funds while they withdrew $5.2 billion from global equity funds in the week through Wednesday, according to Bank of America, citing EPFR Global data. For Legal & General, the turning point came when the wobbly balance sheets of US regional lenders like SVB Financial Group were exposed, and a liquidity crisis swamped Credit Suisse Group AG.
The full impact of the Fed’s aggressive rate increases has yet to be fully absorbed by the American economy, warned John Roe, the head of multi-asset funds at Legal & General.
He’s both cut his exposure to equities and added recession hedges in the form of long-duration government bonds. While Wall Street strategists haven’t changed their year-end targets, both systematic and discretionary managers have decreased exposure rapidly since March 8. The equity exposure of systematic investors fell to the lowest since 2021 as trend-following quants were caught in wild swings of the early days of the banking turmoil. Discretionary funds have now cut back exposure to underweight after hovering close to neutral levels at the beginning of March, according to Deutsche Bank. “Our positioning measure had fallen from near neutral when the SVB shock hit to about half-way back to the bottom of the historical band,” said Parag Thatte, a Deutsche Bank strategist. Meanwhile, Fed officials continue to push back on the pivot narrative and have reiterated that more monetary tightening may be needed to fight inflation even after the collapse of three US banks earlier this month. Echoing Boston’s Collins, Richmond Fed President Thomas Barkin sees room for rate increases if price pressures persist. It’s not the first time traders have been caught in wrong-way bets that rate cuts would start earlier than indicated by the Fed. In August traders rushed to buy duration-heavy assets, convinced that an economic slowdown would bring disinflation. Since then the Fed has raised its benchmark rate in five consecutive meetings. BlackRock Investment Institute strategists warned this week investors are wrong to believe US rate cuts are coming. A recession should in theory vanquish inflation, but that’s not a given. In the 1970s the Fed eased policy only to watch as inflation ran rampant and growth flat-lined. “Looking at the price action across asset classes over the last fortnight, the inference seems to be a Goldilocks growth hit for the stock market,” Hobbs said. “Something a bit more difficult to square so neatly feels more likely.”
Inflation Outlook Has Worsened Since Start Of Year: Fed Governor
Nouriel Roubini Warns of Crashes, High Rate….. BlackRock Expects Fed to Keep Hiking Rates ‘Megathreat’
Nouriel Roubini, CEO at Roubini Macro Associates, explains the “megathreat” he sees from higher interest rates, why he expects an economic and financial crash, and US labor market issues. He speaks from Cernobbio, Italy.
BlackRock Expects Fed to Keep Hiking Rates
(Bloomberg) — The Federal Reserve will press on with interest-rate hikes despite the collapse of Silicon Valley Bank, according to the BlackRock Investment Institute. Although stress in the banking sector is denting investor confidence and tightening financial conditions, the US central bank will need to continue to raise rates to combat rampant inflation, says the research arm of BlackRock Inc., the world’s biggest asset manager. “We don’t see these developments allowing the Fed to halt its rate hike campaign-this is a very different environment from 2008 when all monetary policy levers were used to support the economy,” BII strategists wrote Monday. “Instead, by shoring up the banking system, the Fed can focus monetary policy on bringing inflation down to its 2% target.” According to BlackRock, the collapse of Silicon Valley Bank is an example of “financial cracks” stemming from the fastest rate-hiking campaign since the 1980s. Knock-on effects for the economy will include tighter financial conditions and credit supply, particularly in the technology sector.
But the situation is different than the global financial crisis in 2008, BlackRock said. The assets at the center of the current bank troubles — US Treasuries — are among the most liquid and transparent, which will increase the effectiveness of the US government’s measures to prevent wider contagion. The firm also said that most equities aren’t fully pricing in the economic damage of the Fed’s hikes, and it is sticking with its underweight stance on developed market stocks. NN: US Treasuries are one of the greatest investing vehicles ever devised. BUT they are complicated buggers. The secret is duration and skillfully anticipating future rates. This is an art not a science. I do not care how many mathematicians you have. How many chalk boards you fill up with equations. Or how many super computers you string in a row, it will not work unless you have a overview of the economic fundamental events. The whole shit storm is because said mathematicians and 500 super egos with doctor degrees from prestigious universities made one obvious and simple mistake. They declared from on high that inflation was transitory. And the pompous prick professor elitist economists are making another mistake. They do not understand how big the inflation boogie man is and how hard he/she/it will be to kill…. that begs a question. Is the boogie PERSON a boy, girl, binary or transgender fluid? Really i could care less. I say kill the bitch, prick asshole while you still can. BlaskMask Podcast:
Size Matters and How Long You Make It Last
The PCE price index rose 5% compared to February 2022. The core PCE price is up 4.6% annually
The US Bureau of Economic Analysis reported on Friday inflation in the US, as measured by the Personal Consumption Expenditures (PCE) Price Index rose 5% on a year over year bases. The Core PCE inflation index the Federal Reserve’s preferred gauge of inflation rose rose 4.6%. On a monthly basis, Core PCE inflation and PCE inflation both rose 0.3%. NN: The spin is the PCE index was done… Not true both indexes were Up .3%. It was only down according to Wall Street inflated “expectations.” for a headline number old wallstreet trick
Heavy Crude Oil Is Climbing in Price
- Heavy crude oil traditionally trades at a significant discount to lighter and sweeter grades, but the price of heavy crude is climbing.
- The main factor driving the uptick in heavy crude prices is a new mega-refinery in China which has contracted at least 8 million barrels of heavy crude.
- As well as China’s mega-refinery, constrained supply from Venezuela and Ecuador and the end of refinery maintenance season in the U.S. are pushing prices higher.
A new Chinese refinery is pushing the price of heavy crude oil higher after a prolonged period of depression. Heavy crude has traditionally traded at an often significant discount to lighter and sweeter grades but now producers of the heavy varieties of oil are set to see some higher prices as PetroChina starts up a new refinery, Bloomberg reports. Originally designed to work with Venezuelan crude, the new refinery will now be using heavy crude from Colombia, Ecuador, and Canada for its operations, the report noted, citing unnamed sources. According to them, PetroChina has contracted at least 8 million barrels of heavy crude from these three countries, to load in April. And prices are already reflecting this tick-up in demand: Canada’s Cold Lake sells at a discount of $11.50 to Brent crude, which is down from about $20 per barrel earlier this year. More bullish factors have lined up for heavy crude prices, too, including the end of maintenance season in the United States, which would mean a rise in demand heavy crude grades. Another bullish factor is limited supply from Venezuela and Ecuador, according to Bloomberg’s sources. Venezuela’s oil exports have shrunk considerably as the government investigated unpaid oil delivery bills and Ecuador recently had to reduce production amid anti-industry protests in several communities from oil-producing parts of the country. The protests prompted state-owned Petroecuador to declare force majeure on production from these regions, reducing the available amount of heavy crude.The new refinery, located in the southern Chinese province of Guangdong, is currently ramping up, after trial runs last year. At capacity, the refinery will be able to process 400,000 barrels of crude daily. It can run on heavy crude only. Exxon is among the investors in the mega-refinery project as part of its strategy to expand its global chemicals manufacturing capacity. NN: This new rfinery is a great big oil sucking machine. Designed when China made a deal to buy heavy crude from Venezuela. Its can not run on Russia or US oil. the only reliable supplier left since the Spaniards fucked it up again is Canada. And this heavy crude is the only grade upper Midwest US refiners can use. Which was suppose to be supplied by the pipeline to the US from Canada Biden cut off. That oil is coming down by rail car…… Now their is competition for the heavy Canadian crude. Deep pocket China and that is why the price is soaring. US shoots itself in the dick once again.
Banks: Capital + Liquidity = Solvency
Bank capital, and a bank’s liquidity position, are concepts that are central to understanding what banks do, the risks they take and how best those risks should be mitigated. This article provides a primer on these concepts. It can be misleading to think of capital as ‘held’ or ‘set aside’ by banks; capital is not an asset. Rather, it is a form of funding — one that can absorb losses that could otherwise threaten a bank’s solvency. Meanwhile, liquidity problems arise due to interactions between funding and the asset side of the balance sheet — when a bank does not hold sufficient cash (or assets that can easily be converted into cash) to repay depositors and other creditors. Banks are suppose to ensure that they have sufficient capital and liquidity resources to properly account for the risks that they take. The truth is as long as they are speculative and trading entities the job is impossible. They will wipe out each and every time. Below is a PDF you can look at to give you some idea of the bullshit they spin that they can be managed
g.Bank liquidity and capital shocks in unconventional times-1
BlackMask Pod Cast:
If the lack of Capital does not get them The Lack of Liquidity will
EIA: US oil inventories down by 7.5 million barrels
Commercial crude oil inventories in the United States, went down by 7.5 million barrels to 473.7 million barrels in the week ending March 24, the US Energy Information Administration (EIA) stated in its report issued on Wednesday. The crude oil refinery inputs averaged 15.8 million barrels per day (bpd) during the same week, up by 437,000 barrels compared to the previous seven-day’s average. Refineries operated at 90.3% of their capacity. Gasoline production rose, averaging 10 million bpd. NB: up 2% since last week. Reflecting the fact refineries are slowly coming back on line. As they return as you are seeing inventories of crude decline.
Crude oil imports averaged 5.3 million bpd, dropping by 847,000 bpd compared to the previous week.
Meanwhile, total commercial petroleum inventories went down by 10.7 million barrels.
U.S. crude oil production rose to 12.3 million bpd for week ending March 17.
U.S. production is now 800,000 bpd lower than the peak production seen in March 2020
With the large draw in crude oil inventories came product draws as well. Gasoline inventories fell by 5.891 million barrels, on top of last week’s draw of 1.09 million barrels. Distillate inventories rose 548,000 barrels after decreasing by 1.84 million bpd in the week prior.
Inventories at Cushing, Oklahoma, decreased by 2.388 million barrels—after falling 760,000 barrels last week.
How Herd Mentality Sparked Chaos In Oil Markets
The only certainty an oil industry observer can bank on right now is that no one understands the markets. The extreme end of globalization has introduced so many variables that market analysts can no longer effectively predict the non-linear ripples. Right now is a case in point. We have a clean cut dividing line between key markets analysis, with those who fear a banking failure contagion threatening oil demand, and those who say there is no systemic catastrophe and oil will be bulldozing its way back to $100 in no time. Neither narrative can catch oil prices, however, which have had an extremely volatile couple of weeks. Just over two weeks ago, oil prices crashed as fears of contagion following the sudden collapse of Silicon Valley Bank (SVB) and signature bank. That was followed by the share crash at Credit Suisse, which suggested that the initial failures with small, regional U.S. banks perhaps had a global financial crisis aspect. By the week of March 20th, oil prices were clawing back some of those losses, and by the week of March 27th, we saw a major rally (on Monday, the 27th, alone, oil prices gained ~5%). Still, oil rests in the $77 range for Brent and the $72 range for WTI. This, recession fears, and what to expect from Chinese oil demand, rule the key narratives that are so divided on what oil prices will look like for the rest of this year, and beyond. The bulls’ camp includes Goldman Sachs, Barclays and ING. While all three have cut their oil price forecasts for this year after crude lost 10% two weeks ago, their target prices for this year run from $80-$96 per barrel. For the bulls, it’s all about China right now, and they are fairly confident that commodities markets will be spared from the banking sector’s problems. They don’t see this as a financial crisis along the lines of 2008-2009. While Goldman revised its $100 oil price target to $94 in the next 12 months, and $97 next year, it’s still quite bullish. “Oil prices have plunged despite the China demand boom given banking stress, recession fears, and an exodus of investor flows,” Goldman said in a note last week, as quoted by Bloomberg. “Historically, after such scarring events, positioning and prices recover only gradually, especially long-dated prices.” But even the bulls are following the herd mentality. With their pens, big oil traders are calling an imminent oil price rally, but with their trades they are selling-off in a temporary panic because everyone else is. The bulls are betting on a long-term market rally on one hand, but on the other hand, they are taking part in the near-term sell-off. Rebecca Babin, a senior energy trader at CIBC Private Wealth, explained it to Bloomberg like this: Traders “can still have a bullish thesis but realize surviving the next month is mission critical. Many investors are in survival mode here.” So, they’re all rushing for the exits while predicting a bright future for oil prices, and the herd mentality takes over for all animals. NB: I BUY PANIC ANS SELL EUPHORIA Another way to interpret this is that no one really has a handle on what oil prices will look like for the rest of this year, and to be safe, they’re all playing it bearish in the immediate term. Ed Moya, OANDA senior market analyst, calls the nature of this market “Jekyll and Hyde”, warning in a podcast cited by SP Global on Monday that while he was optimistic that oil would be spared from the banking crisis, the market could turn on a dime. Again, it’s another way of saying we find it impossible to hedge our bets on oil prices. NN: I buy fear especially when its fucking bankers running around like a chicken with its head cut off…. this is just the start…..BlackMask Pod Cast: