Is the stock market going to tank?

[Benny Profane]

Junk bonds better hold their lows or hang on to your hat. Cash (or Treasury) is king:

US Monthly Inflation Rate on January 03, 2015*: -0.945%

http://statestreetglobalmarkets.com/...ch/pricestats/

Bond funds are stupidly bubbled.

[Bromontana]

That does look good. Between that and the daily on EEM you should be able to wait a bit for a good a long entry. First chance a double bottom or higher low

[4matic]

Bond funds are stupidly bubbled.

If you annualize that de/inflation rate a 2% yield is a 12% total return. Keep looking in the rear view mirror.

[4matic]

EEM

It was on my watch list but too much risk for the long term now. IWM is a better play if you a think some kind of low is near, however, price deflation will crush small cap.

[Bromontana]

Don't think a low is near on EM unfortunately. Something to monitor for a deep value buy if things get ugly or if it lags enough could follow the oil trade. Take it with a grain of salt, haven't paid much attention to EM lately.

[Benny Profane]

If you annualize that de/inflation rate a 2% yield is a 12% total return. Keep looking in the rear view mirror.

I said funds.

[Bromontana]

Exited PACD b/c it broke its prior low and OAS because I got scurred. PVA still on, may just average down with that as it's a small position. 90% cash / 10% providers for the time being. If there's a big ramp up in WTI I'll reshort via $SCO.

Again, nothing on the daily chart shows signs of bottoming... There's some minor strength on very short timeframe charts, but it's consistent with consolidation after a large drop in prior weeks.

[huckbucket]

HOLD the line!!!

[Bromontana]

HOLD the line!!!

Hourly chart is how low detail you have to go to see any reason to go long crude. So in that sense it's a buy, but only if you're watching a few different duration charts with a real time feed. If you're not into that, watch the daily. Watch the chart you're willing to trade. Monthly, weekly, daily, down to the tick.

[Bromontana]

Now it formed a higher high and went up 0.61 from that last frame, but the higher high was weak and it immediately wen back to test the prior highs in the low $49s. Rising wedge like that it should roll over soon and test $48.

[huckbucket]

Fear the rising wedge!!

(you'll make yourself nuts lookin' at those things thinking you know where things go from here)

[Bromontana]

Fear the rising wedge!!

(you'll make yourself nuts lookin' at those things thinking you know where things go from here)

Is that what's happening?? 😜

[Bromontana]

for vindication.. no clue as to next move.

Rising wedge like that it should roll over soon and test $48.

[WTF is dat]

Stock market is the prettiest girl at the dance, and, from all present indications, may even get prettier in '15. Tons of cash in the world seeking yield. Look what's happening with the Shanghai. Now that real estate, the prime depository of the Chinese savings, is going bust, all that money is buying a crooked market. It will end badly, soon. The smart money is flowing into the west, primarily, S&P. Treasuries are totally bubbled, too. Absurd. VUSTX is up ridiculous in the wrong direction. We still, after a period we should have known, are Japan, in a new, well armed version. The American consumer is toast, and the greatest consuming demographic, the Boomers, are literally dying, basically, bankrupt. That will take time, though. Maybe ten to twenty. Saw this today: http://www.rigzone.com/news/article.asp?a_id=115404 which I posted above, and, I know, may be simplistic, but, still, the demographics here should not be ignored. Look at real estate. That's a demographic fueled market that will take two decades to clear.

And really, fuck the Saudis in their smelly asses. And Texas, too, Fuck them into the stone ages they deserve.

Benny what do you think about the implications of oil collapsing? All of the fake growth we have seen in this country since 2008 has been powered by oil; however, this fracking boom is about to collapse. I am sure you understand basic economics. Getting 2 dollars for something that costs 5 is not economical. That is what our shale bubble is. Up to 1/3 of recent capital expenditures in the US have been tied, in some way, to the energy sector and its from borrowed money expecting oil prices to stay high. Its bigger than the housing bubble. We are more or less fucked. I hope you all enjoyed the ride.

Most drillers are leveraged over 6 to 1 in debt, hoping prices stay high. You will see bankruptcies ignite in the drilling industry. Where do you think all the good paying jobs in the states have come from recently? Do you think they will keep paying?

States without shale have lost over 400,000 jobs while shale states have gained more than 1.3 million since 2008. The shale powered energy boom has masked the real economic outlook which is grim. Lower gas prices below the shale bottom line is NOT GOOD FOR AMERICA! That bottom line is around 80$ a barrel. We are currently sitting at 49$.

I hope I am clear. Get ready for another 08. Look at any market graphs of bonds and oil prices and you will see a very nice corollary to those most recent events we hoped would never return.

It gets worse... Most shale fracking wells lose 90% of their production capacity within the first few years. Production is going to rise in the short term keeping prices down (not good) since we are still drilling, but exploration and permitting has already tanked. If prices stay low, new fracking will cease due to bankruptcies/lack of capital and in a few years we will be out of production, so to speak. I am not saying I support fracking. In fact I believe its short sighted. Not to mention it will leave us with a massive cleanup job; however, I am just relaying the facts. All fracking has done is buy time, but not much.

Peak oil is real, its happening now, but its just playing out a little differently than expected.
#peakoil

I hope you heed my warning. Just make sure you are ready for another downturn, which in my mind, will be worse than 2008. Unless oil prices march back up, which is unlikely given Saudis recent moves and our general economic health, our boom is about to bust. As the economy retracts so will oil demand, keeping prices down, making all these great shale fields we have economically unfeasible.

Its not the end of the world, but its going to suck.
Believe me, I hope I am wrong.

Good luck and happy new year!

[Benny Profane]

It's not the same as 08. Everybody either owns or rents a home. Not everybody is dependant upon the energy industry for their income. But, everybody consumes energy. Everybody. So you tell me again how this is as bad as the housing crash, when everybody needs a roof over their head, and most of those need energy to either heat or cool those homes, which is now 50% cheaper at it's source for many.

Besides, heard of any cracks in the banking industry from all this? It's been six months. You would think, by now, this price drop would have brought somebody down. Maybe this is the new disaster call that just won't happen?

[skiballs]

See what you did to the youngsters, Benny.

[Harry]

Dude in my condo complex quit his $9.00 lifty job last year and is working 2 weeks in the Baaken, and 2 weeks off in Big Sky. Just bought a pimped-out diesel pickup with big tire and a huge texas bull bar. Fracking goes bust and he will be back to sharing a Hill condo with 6 other dudes and driving a 20 year old Civic with a blown muffler.

[Benny Profane]

But somebody is collecting ever rising rent from that condo. And is now looking at much cheaper energy costs for 15. Some disaster.

[Bromontana]

With today's production share around 60% of fracking production is needed to meet demand. Long term fracking production is needed, so the industry will remain regardless of how things play out in the next two years. Question is how quickly capex will start increasing again and heading back in the direction of increased output. Could take a few years to adjust. It should be very choppy until then.

“The market is still very much focused on the supply side,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone today. “It’s interesting to note the strong volumes. There’s a real commitment from the sellers even at these lower levels.”

"Commitment from sellers at low levels" is a reporting euphemism for heavy short selling.

source

[huckbucket]

“It’s interesting to note the strong volumes. There’s a real commitment from the sellers even at these lower levels.”

The fact that OPEC is putting so much pressure on domestic production without a complaint from our govt either means we're somehow in on the game (subsidies? or timing?) or our economists don't see it as a threat. Maybe that's giving our govt too much credit. Maybe SA is really worried that we're buying less and less from them each year.

All speculation.

[iceman]

We're in on it because of the pressure it's putting on the Russians, duh.

[huckbucket]

Totally plausible. Did someone tell our domestic producers to just ride it out? Maybe domestic oil production is too big to fail?

[Bromontana]

Conspiracy to drive down the ruble and oil is a fun one. Conspiracy to make money selling oil is a more basic and believable explanation for the shale boom. Total shale debt is $500bln from what I've read, which isn't close to the size of markets imploding in 08.

[Brock Landers]

The fact that OPEC is putting so much pressure on domestic production without a complaint from our govt either means we're somehow in on the game (subsidies? or timing?) or our economists don't see it as a threat. Maybe that's giving our govt too much credit. Maybe SA is really worried that we're buying less and less from them each year.

All speculation.

Supply side isn't the problem (though the us is producing more). Demand projections are troubling especially Europe and China. Japan isn't exactly great. Can see it in global bond yields.

Some of these countries within OPEC need to balance budgets with the amount of oil they're producing even at lower prices. They can't just shut down production. So prices stay somewhat low for now

[jono]

Numbers I hear put annual US spend on gas two orders of magnitude higher than the labor costs of our shale producers. So we save a Lot more from lower gas prices than is lost if all those jobs disappear, and the trade deficit takes a little hit. Obviously not all production is going to stop.

I think SA sees their domestic reserves falling long term and created an opportunity to buy the rights to some US oil in the ground at a big discount as bankruptcies unwind some smaller US producers. Any reason why they wouldn't have shorted those producers' stock or debt before upping production? Politics are one thing, but knowing what they were about to do to the price of oil surely made them a bundle of money, too.