Let me try to understand why rates should go higher.
Do you want to raise rates because our jobs market is doing well? Might I remind you that the oil and gas industry is in tatters and will be laying off hundreds of thousands people within the next 6 months. I am amazed by the experts on the television who still insist that the Fed will raise rates. HELLO, MCFLY, ANYONE HOME? You have to be a complete idiot to believe deflation isn’t the main risk to the global economy now.
Look, dry bulk prices are in the hole. Iron Ore prices are at 2009 crisis levels. Oil is at crisis levels. Russia’s economy was targeted, post Ukraine, and seemingly destroyed. Their currency is worthless and their main source of income eliminated.
Let’s not kid ourselves. I was on the fence about the reason as to why oil was tanking. At first I though Saudi Arabia wanted to shut the Bakken down. But now it’s clear. This is all an economic war against Russia–because they didn’t bow down to the great Xerxes aka Obama. I don’t know why we even give a shit about the Ukraine. But here we are, in the midst of a developing economic war. Most of us will become casualties. Today’s losers were airline stocks and consumer discretionary, the very names that should be working in the cheap crude environment.
Very simply, the Fed must forget about raising rates and start another round of QE.
Oh, one last thing before I go: since we are at war with Russia, albeit an economic one, the Fed will not act. This is intentional and designed to afflict maximum pain. Ergo, they are prepared to sacrifice our growth for Russia’s total annihilation.
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Janet just finished having warm milk and cookies with her grand children.
FWIW breadth was good today, especially in oil and gas.
You just nailed and these are my thoughts exactly. i did not want to say it for fear of being labeled a tin foil hatter. Props to you Fly. We are at war. I talked about this summer. The fed has chosen funding the US government over the stock market. Ending QE is a way to destroy all the Bricks who dared de-dollarize. they will know pain. This is scorched earth. cold hard $ cash is king.
There may be a good reason why Russia has been buying gold. Perhaps their next move is to back their currency with it.
Fer fucks sake, I have been saying this since oil started to go in the shitter. I get the Oracle points here goddammit.
In the calculus of the insane neo con/neoliberals, in this war with Russia, every country, every industry and every person on the planet is just fucking cannon fodder. I hope these neo con fucks get it where they like it most..right up their fat asses…same for those Saudi dogs..
I have a number of coordinates ready to upload to your orbital space cannon…
Oh…Keynesianism = War ?
Hm…Yep that’s about right
What’s the bond market say about the chances of the fed hiking rates? That percentage must have changed because of the last couple of weeks.
Mr. Obama, TEAR DOWN THIS WALL!
One thing to keep in mind, the majority of the Russian population has not benefited from the wealth effect over there. They are also used to extreme hardship, they are programmed as such. They are told enjoy while you can because the hard times will come again.
This is far from over, there will be a major adjustment period.
Also, I think the Ukraine is the sideshow. This could also be about the end run Putin Putin pulled Obama last year with Syria. Obama was ready to bomb and Putin stepped up and told Assad to hand over the chemical weapons.
One thing to keep in mind, the majority of the American population has not benefited from the wealth effect over here. They are also used to extreme hardship, they are programmed as such. They are told to enjoy, while the CEO’s and Banksters and Generals and Warmongers loot the shit out of our economy.
Oh: Thanks for the $1.99 gasoline.
All is well. The small pleb will now make up for the banker class in spending and credit creation. That ten bucks they save on gas is all that matters. Sunshine rainbows and fucking unicorns.
Russians do not enjoy the luxury of food stamps/card so they can stand in line at WMT for the balances to be topped up at month end. Clearly, you have never travelled outside your zip code.
Hat tip, great write up.
That last point is a good one. The Fed won’t act because this is coordinated. Stocks, once this becomes known, will stop going down and start going up just because we are winning and because: WE CAN.
Anyway, more to the point: F*ck Gold. Oil is already dead and will remain dead. Where else can the Russians put their money? That is what will be targeted. Gold, for one, which is nothing more than a physical money laundering mechanism. Ruble, dead. Will remain dead. US stocks, bonds? Thank you. European stocks, bonds? Thank you. Japanese yen, it seems, has been favoured. Ok then. Anything not Russian. Done and done.
You are right though, the Saudis are our partners in this. Assuming stocks don’t crash from here, I don’t think they will, we will have traded a pittance for annihilation, in index terms. On a micro scale some things have been destroyed. Many of my shale stocks, for example. Most, rather all, of them actually. But so long as gold is smashed to 1k in short order I would not care if those stocks went to a dollar.
This is a win-win for Obozo.
Starting wars is a sure-fire way to get the obaMAO-hating incoming GOP majorities to back anything Dear Leader wants, and economic mayhem is payback for the voters giving him the finger in the last election.
“This is all an economic war against Russia–because they didn’t bow down to the great Xerxes aka Obama.”
Exactly – what they are forgetting however is that Putin is playing the long con. They wanted a pissed off piss broke Russia and they got it.
Complaining about a stock that went up a few weeks ago on nothing and back down on nothing is ridiculous
More QE? Do you think maybe we’re all a bit too spoiled? Naaaahhhh…
You’re one of those gold bugs/libertarian types who was always against the Fed intervening and craved a hard reset. Your way is the idiot way. I don’t need your approval for what I know to be true.
I hate gold, hold a lot of stocks and I think QE1 was a heroic lifesaver.
QE infinity is probably going a bit too far. Entitlement is on a rampage and I see the subprime mentality everywhere.
Something has to give eventually.
Agree on all points
agree time for more QE. inflation is the least of concerns
And I’d hardly consider -55% for the oil and gas industry a mild pullback from previous highs.
Back to your cave, troll.
I was talking about HABT
What do I care about HABT? I have 10 months left of buying and prefer it lower.
Russian people can and have put up
with everything. Russia must have Ukraine’s pipelines, there is no alternative.
What I can’t figure out is why America
wants the Ukraine .
Agree w/ you Fly, spot on, rates are not going up.
First, rates in US are comparatively high. What, are you going to lend to Germany at 80 bps or Uncle Sam at 200?
Rates have to reset meme has been going on since 2011, no one considers we just stay flattish at the low end of the range for the next 5 yrs.
Also, look at my chart of 30yr-2yr yield curve — what does that tell you? Curve is still steep as shit, and incidentally, still big picture bullish for US equities (occasional kicks to the shins notwithstanding).
http://stocktwits.com/message/30317609
—
My take on oil explosion, gold doing poorly, etc may not be popular and is against the Fly’s take, but I think straight up its a flee from hard, no yield assets — NOT deflationary vortex cycle.
Explain further, you say, instead of just making a blog? Sure, I will.
If in fact was deflationary vortex, rate sensitive assets such as stocks and bonds and real estate would be all opposite. Stocks lower, yields up, and real estate down. Instead, its stocks up, yields down RE up. That tells me ppl are not pricing in deflation here, otherwise why the strength in those spaces? (And I know the yelps of the world are in the shitter, I’m talking about just index / exposure to groups broadly)
On the flip side, oil and gold are only useful from asset allocation perspective as purchasing power hedges, since no yield and they have storage costs (or at least the storage cost is built into the pricing of the future over spot). In any event, bc ppl no longer think inflation, no need for this hedge. Don’t think its binary like if no inflation must be deflation bc none of the other larger more relevant asset classes suggest it (stocks, bonds, RE, as explained above).
In conclusion, no rate hike, no deflation, no inflation, run from hard assets, money loking for yield. That (in my mind) neatly explains why stocks up 35% last year, 8% this year, TLT up 25% ytd, RE indices up (didn’t bother to check actual #), while gold and oil are down.
Don’t look now but stocks are no longer going up!
Yay Spyder Crusher! Welcome back, Sir.
Zombie – shall we serenade his return? https://www.youtube.com/watch?v=Q2QtBYR7NJs
HA! We shall!
Another QE? You’re dreaming!
War has casualties you idiots. I have said it long ago, this is a war. There will be damage…hopefully the brain trust in the White House has a decent grasp on what Vlad the Destroyer will do next as a counter move. You don’t get to be head of KGB by being either nice or an idiot.
Poor Vlad. He just wanted to exchange his rubles and retire to a magnificent seaside resort on the Black Sea with his paramour and now all of his plans are ruined. Sigh! President Obama doesn’t seem to have a romantic bone in his body.
Mr. Fly, no doubt you are a talented trader but I think you, like many, are also a QE addict in need of an intervention. QE is the drug not the cure.
Supply of oil outstripped demand. Demand in inelastic. People drive the same cars to the same places for a while. Producers produce all they can at $100/bbl and drill baby drill. Supply increases over demand, prices fall. It’s not all about Russia and Ukraine. It’s not all some kind of plot. Just Econ 101.
Personally I think this is a baller move. Fuck Russia for trying to step. Go put all your rubles downski on some shitty furniture from IKEA, dickfaces. Also, we have to protect Ukraine because they gave us all their nukes a while back and we were like “thanks for the fuckin’ nukes, now we won’t let any body mess with you.”
I just wish Fly got on the right side of this trade when he started blogging about oil. I can only imagine the bloggerie glory (blog-gory?) of two and a quarter months of short oil / short Russia into the hole
I need that QE shit
your/russia’s ace: ISS http://www.nasa.gov/mission_pages/station/main/index.html#.VJDriHtZl68
What keeps us up are the large blocks that trade every day at odd numbers to trigger other algos. Just kidding, those block trades go either way, and are a nice way to day trade, but lest I digress. Oil is going to $40. Crappy stocks are going to 20% of what they were. The cycle will begin anew in 3 months. Have patience.
In a month we will be bitching about something else. Doubt anyone who has been shorting oil is complaining. There are two sides of a trade and most of us have been on the wrong side. In the mean time enjoy lower and heating oil prices.
My very dear Fly, why do you think a failed , incompetent nincompoop like Obama is smart enough to target and take down Russia using oil? Did Obama encourage drilling on Federal lands? Did Obama enthusiastically support the Keystone Pipeline? Did Obama put his bully pulpit behind drilling in the Gulf..or anywhere else? Has Obama provided the leadership which made the US a major exporter of fossil fuel? Hell, no.
Non, monsieur. Obama is Chauncey the gardner in “Being There”.
It was the all knowing market that has pulled down the price of oil. All those individuals that the elite disdainfully accuses of being too stupid to know what to with the wages they earn, acting in their own best interest decided they could do without as much oil – and the goods that oil goes into producing.
Russia is collateral damage – as is Venezuela, Norway, Nigeria and all the oil exporting countries.
No elite – not even one lofted to messiah status by left wing propaganda media – is smarter than the consumer.
Obama has shown he can’t even keep one step ahead of the teleprompter so how can he manipulate the intricacies of taking down Russia using a fuel source he has spent 6 years demonizing and trying to kill?
PS – Deflation is very, very good for savers and families. Not so good for debtors, governments, politicians, banks.
Every trade has a winner and loser, my friend.
Deflation brings the economy to a halt as everyone hangs onto their bucks for appreciation. Commerce comes to a screeching halt in a deflationary environment.