Forex Response to Doha Failure

The dollar is losing pace v the yen, off by 0.5%. But that’s more of a side effect of risk off than crude related.The Australian dollar and

The Australian dollar is off by  1.05% v the dollar.

The Canadian dollar is getting poleaxed v the dollar, off by 1.3%.

Finally, the dollar is up 2.1% v the Russian ruble.

It’s worth noting, the dollar is unch v the Saudi Riyal.

This is hardly what I’d describe as ‘tumultuous’. If the desired outcome of the chatter leading up to Doha was to put a bid under the price of crude, consider this excursion into idiocy a great big satanic success. All of the House of Saud members are celebrating tonight’s mild 5% drop in crude at their harems, as they sashay from one room of decadence to the next.

Over here in the states, S&P futures are off 9ish, all very boring indeed. In order to get me excited, I’d need to see crude down 10% and SPY futs off by 3% to get me out of my seat. There is nothing desirable about the current state of crude. But the bulls seem to be intent on holding it up for a little while longer.

God willing, as the night matures, true sellers of an ominous nature take control of this cartoonish response and enact punitive measures against all of the green-shooters littering the markets with pestilent buy orders.

This week inside Exodus, the algorithms went apeshit for crude, suggesting in the strongest of terms that crude oil was overbought and a sundry of crude based ETFs were overdue for a sharp rebuke.

Having made a commitment to follow the algorithms to the strictest of terms in 2016, by the end of the week I found myself 125% exposed to the market, of which 100% of my assets placed in a short position against XLE.

Naturally, the algos had no idea that oil talks were to be held in Doha. It only detected a very perverse bullishness in crude oil, supported by scores of overzealous traders. Should the talks in Doha fail, there is a strong chance that the recent rally in oil will be unwound and the trades suggested by Exodus proved inexorably correct.

The above were my blogs inside Exodus for the week which has passed. Below are the unprecedented oversold signals in the inverse ETF DUG.

My preference, of course, is to be short XLE, as it poses far less risk through a marked deceased volatility thanks to the mega cap status of its members.

It’s worth noting, this is the boldest position of mine for 2016. Having 100% of my assets short XLE and another 25% long TLT, it’s fair to assume the tone and measure of my performance, for the first half of 2016, is going to be defined and sorted out over the next two weeks.

We all knew this would be the outcome to these preposterous meetings, did we not? It was concocted by an immature 30 year old Saudi Prince, after all. This is a young man, who grew up with palatial privilege, totally unfamiliar with how to deal with hard men who’d rather blow themselves up in Doha than to cede power to a monarchy of self-righteous, greedy, boys.

As such, the talks have ended without an agreement.

The summit in the Qatari capital, which dragged on for more than ten hours beyond its initially scheduled conclusion, finished with no final accord, Nigeria’s Petroleum Minister Emmanuel Kachikwu told reporters. Discussions stumbled over whether the agreement should extend to other producers such as Iran, which wasn’t present, according to a person familiar with the matter. The inability to reach consensus will lead to a “severe” drop in prices, Citigroup Inc. predicted before the meeting.

Brent crude, which sank to a 12-year low in January, has climbed almost 30 percent in the past two months as Saudi Arabia and Russia worked on the plan to cap crude production. While analysts doubted that any accord would have a significant impact on the global oil surplus, the inability to agree on a limit undermines any prospect of coordinated action to solve the oil crisis.

“The Doha meeting was an opportunity for OPEC to polish its tarnished image,” Miswin Mahesh, an analyst at Barclays Plc in London, said on April 15. “After the failure of OPEC’s December meeting, the market was uneasy about its cohesion and Doha was a chance for the group to reassert its relevance and build a circle of trust.”

Unlike many others out there, I don’t think the price of crude will drop much when futures open for trade. These talks never stood a chance to begin with and it’s not like freezing production at all time highs was ever going to have a meaningful impact on the oversupply situation that plagues oil prices.

If oil should drop, however, I’ll be pleased–as I am leveraged short XLE.

Thus far, the 18 nations attending the Doha meetings have managed to scarf down lots of harissa and kunafa; but very little progress has been made in the field of making a deal for proposed oil production levels.

It’s worth noting, Iran hasn’t bothered to partake in these meetings, for they are too busy drilling for oil–attempting to steal Saudi market share.

Ministers started talks after 1230 GMT and were still debating the draft more than two hours later.
The prospects of a comprehensive deal, which would be the first between OPEC and non-OPEC countries in 15 years, looked slim.

“I am not sure you can call it a freeze,” one OPEC source said.
A senior oil industry source said: “The problem now is to come up with something that excludes Iran, makes the Saudis happy and doesn’t upset Russia.”

Failure to reach a global deal would signal the resumption of a battle for market share between key producers and likely halt a recent recovery in prices.

“If there is no deal today, it will be more than just Iran that Saudi Arabia will be targeting. If there is no freeze, that would directly affect North American production going forward, perhaps something Saudis might like to see,” said Natixis oil analyst Abhishek Deshpande.

The good folks from OPEC have been deal-less (extra Trump) for about 10 hours now. The clock is ticking and crude futures will open in about 5 hours.

This is called extortion, in the criminal world. Naturally, the Obama administration is lobbying congress to stop a bill that would implicate the Saudi government in being complicit in the 9/11 attacks. It would pave the way to allow the families of the victims to sue the Sauds. This is an inconvenience the Kingdom would like to avoid.

As such, reported by the NY times, they sent a hatchet man to Washington to inform them that if this were to occur, they’d scorch the fucking earth we walk upon, sell off American assets ad hoc, and release a firestorm of financial pain upon us never scene before in the history of man.

Adel al-Jubeir, the Saudi foreign minister, delivered the kingdom’s message personally last month during a trip to Washington, telling lawmakers that Saudi Arabia would be forced to sell up to $750 billion in treasury securities and other assets in the United States before they could be in danger of being frozen by American courts.

Several outside economists are skeptical that the Saudis will follow through, saying that such a sell-off would be difficult to execute and would end up crippling the kingdom’s economy. But the threat is another sign of the escalating tensions between Saudi Arabia and the United States.

The administration, which argues that the legislation would put Americans at legal risk overseas, has been lobbying so intently against the bill that some lawmakers and families of Sept. 11 victims are infuriated. In their view, the Obama administration has consistently sided with the kingdom and has thwarted their efforts to learn what they believe to be the truth about the role some Saudi officials played in the terrorist plot.

“It’s stunning to think that our government would back the Saudis over its own citizens,” said Mindy Kleinberg, whose husband died in the World Trade Center on Sept. 11 and who is part of a group of victims’ family members pushing for the legislation.

President Obama will arrive in Riyadh on Wednesday for meetings with King Salman and other Saudi officials. It is unclear whether the dispute over the Sept. 11 legislation will be on the agenda for the talks.

A spokesman for the Saudi Embassy did not respond to a message seeking comment.

Saudi officials have long denied that the kingdom had any role in the Sept. 11 plot, and the 9/11 Commission found “no evidence that the Saudi government as an institution or senior Saudi officials individually funded the organization.” But critics have noted that the commission’s narrow wording left open the possibility that less senior officials or parts of the Saudi government could have played a role.

Suspicions have lingered, partly because of the conclusions of a 2002 congressional inquiry into the attacks that cited some evidence that Saudi officials living in the United States at the time had a hand in the plot.

Those conclusions, contained in 28 pages of the report, still have not been released publicly.

The dispute comes as bipartisan criticism is growing in Congress about Washington’s alliance with Saudi Arabia, for decades a crucial American ally in the Middle East and half of a partnership that once received little scrutiny from lawmakers. Last week, two senators introduced a resolution that would put restrictions on American arms sales to Saudi Arabia, which have expanded during the Obama administration.

Families of the Sept. 11 victims have used the courts to try to hold members of the Saudi royal family, Saudi banks and charities liable because of what the plaintiffs charged was Saudi financial support for terrorism. These efforts have largely been stymied, in part because of a 1976 law that gives foreign nations some immunity from lawsuits in American courts.

This didn’t win any oscars or accolades from the catamite Hollywood crowd. This is just batshit crazy Mel Gibson and his hell bent mission for revenge and the $70,000 that is rightfully owed to him.

After all, he stole it fair and square.

This is the pinnacle of revenge action movies. Behold the glory of peak Gibson.

When your business is predicated on accessing the debt markets to scam your way towards cash flow, you’re bound to fail. Such is the case with SUNE. The fall from grace is complete, taking famous hedge fund managers with it, such as David Einhorn.

The company said it needed about $310 million to stay in business, estimating a cash shortfall of $260 million by mid-June. SunEdison said it expected to secure the financing by pledging assets.
In the filing, the company said challenges to its business started developing in the middle of last year, when it pursued acquiring Vivint Solar Inc and it worked on an initial public offering for TerraForm Global, a so-called “yieldco” company it created to hold renewable energy assets.

The company has $12 billion in debt and might pose a problem for a few creditors in the near term.

The aftermath of the great energy collapse of 2015 is born. The ramifications will be grim.

Prince Mohammed, the 30 year old in charge of the fucking world, discussed his Kingdom’s position on the current state of oil markets.

“If all major producers don’t freeze production, we will not freeze production,” said Prince Mohammed, 30, who has emerged as Saudi Arabia’s leading economic force. “If we don’t freeze, then we will sell at any opportunity we get.”

Fifteen countries are involved in the Doha negotiations, where the great satans will discuss ways to transfer dollars from west to east. The one wrench in the wheel is Iran. Post Obama friendship, they’re permitted to sell crude on the world markets and they’re doing so with a vengeance of 10,000 Monte Cristos.

Iran has boosted oil production by 600,000 barrels per day this month and have zero regard for Prince Mohammed and his stupid oil freeze scheme.

It was a slow spring Friday and markets were a snoozefest. But, don’t look now, as the meetings in Doha loom, men who now live in oil barrels because they’ve lost all of their money in the great oil bust of 2015, are facing a rather perilous circumstance.

None of the OPEC members really want to cut production. They’re like the aliens from Mars Attacks. As soon as the other guy turns around, they’ll drill like fucking mad–flooding the market with the sweetest crude available.

As you can tell, I am somewhat of a cynic regarding these meetings.

As for me, I take it some of you took the opportunity to see inside Exodus for the afternoon, perhaps view our live demo. I am, inexorably, short XLE–with all of my lifeforce–currently and presently 125% invested, of which 100% is in XLE short.

Have a great weekend. Don’t crash your ridiculous cars into steel structures.