Oil is Your Master

Oil is firming here, which means equity markets should follow suit. Since we’re on the topic of commodities, I’d thought now would be a good time to inform those who are unfamiliar with the oil and gas debt markets how fucked they truly are.

The commodity landscape is in ruins. As such, the collateral behind the loans is a moving target–down–which at some point will pose as a problem. I’m thinking sooner rather than later. Many of the small time players will simply wash away, never to be seen or heard from again. But the bigger ones will not go so easily, potentionally causing ripple effects in the markets.

Here are the names to look out for. The market, more or less, hates these stocks–mainly due to their debt load and rising debt/eq levels. You will want to watch these ‘canaries in the coal mines’ very carefully. On a bounce, these will be the best performers.

Here is the next layer of risk. These companies aren’t distressed like the above list. However, given enough time with cheap crude and share price depreciation, these can hunt you in your nightmares and make you wished that you had never bought a commodity related stock.

Finally, this is the last list you will ever want to worry about. Because if these companies ever fall into danger of defaulting on their debt, the stock market will be the least of your problems.