Before I broach the subject of earnings lotto, does anyone have a succinct explanation as to why there is a massive spread between WTI and Brent sweet crude?
Early this morning, it appears Mother Market will punish guys like me for misbehaving, demonstrating excessive amounts of hubris without caution. If anyone deserves to lose money, it’s me. I will be the first to tell you: “I’ve had it good for too damn long and deserve a good correcting, a regular talking to.” Should I lose heinous amounts of coin, everyone wins. You win by default and I win by being placed back into a corner. Long term readers know that I am not happy unless my world is crumbling before my eyes. I enjoy adversity because there is something wrong with me.
WFMI had kickass earnings; but I can’t buy that decadent shit up here. CSCO and AKAM are being dismantled by fairies in pink velvet pants because they suck. If I am not mistaken, both AKAM and CSCO miss earnings with great regularity.
If you are investing aggressively, it makes no sense to compound risk by holding stocks into earnings. I realize the long term thesis and that entails riding out earnings announcements. However, considering the run we’ve been on, you stand to lose too much (MOTR boated) on a miss. At a minimum, buy puts to hedge or pare down positions prior to release date.
Will the market stay down all day?
Probably not. However, we are due for a few down days. It’s worth noting, new equity partner in iBC, ChessnWine, played this inflection point nicely, currently short a variety of high beta names.
Okay, it’s time for me to scurry along, prepare for the shit heading my way.
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Anything to do with rumors of King Abdullah dead?
Had a heart attack while arguing with The One (Obama)?
http://en.rian.ru/world/20110210/162538374.html
Wow, talk to the Big O and then you die (supposedly) – maybe he is The One?
I wonder who is on his speed dial next – Hillary, Glen Beck, Sarah Palin?
I think it has to do with the EURO/DOLLAR Spread. WTI and BRENT are ready to move up now.
The US has an abundance of oil as evidenced by the weekly rises in the stocks. The rest of the world’s market is a tighter.
Cold snap across areas that use Brent crude for heat (The USA has been cold, but Europe, Russia, and Asia have too and use a greater proportion of heating oil to warm themselves).
Might also be someone knows/suspects something about upcoming Suez concerns.
I haven’t heard anything about widespread Nigerian unrest (or elsewhere) but it seems that something is up somewhere.
Not very useful or succinct.
Why is no one talking about the continued decling in emerging markets since the new year…Brazil, Korea, India, Hong Kong, Mexico – and what is causing it? Is it inflation running amok?
Quint – I’m thinking that had something to do with the 71% indirects on the 10 year yesterday?????
I think the 71% indirects was a result of those market’s weakness…but my questions are 1)why are those markets so weak, and 2) why is no one talking about it?
Agree on the 10 yr – Egypt hit emerging mkts – flight to safety. Central & South America have just been thrown out with the rest.
Similar to when somebody asks “what part of Mexico is Puerto Rico in”
I have gotten absolutely crushed…down 10%+ for the year due mostly to FXI and EWZ.
Already record high inventories in Cushing are being fed by a recently opened (new) pipeline into the hub (a heavier grade but inventory nonetheless). Further, there are issues with delivery from the hub.
Beyond that, Hetco has been fucking with Brent supply & trying to gain influence in that mkt – in Jan they took 30% of Brent Feb supply off the market and fucked a lot of shorts.
Brent reacted to Egypt faster and more aggressively with the Cushing supply issues, Hetco, and heavier European exposure to supply disruption.
321 Crack spreads at 22.23 are insanely high (has only been higher once in 5 yrs – May ’07) and WTI/Brent spreads are nuts.
In short – refiners have almost never had it better.
Fly,
Concur with being against earnings lotto. Made that mistake painfully in the past. Having said that, post earnings bounces can be played. CSCO may have missed and got hammered. Since I didn’t own it yesterday that doesn’t matter. Some of these frequent earnings losers tend to have a bad week or so and then start climbing back up. CSCO is down 11+% AKAM down around 15%. If CSCO gets below $19 or AKAM gets below $40 do either or both become attractive for a bounce even half way back?
the spread is getting embarrassing, putting the US to shame against Brent which has become the go to global benchmark for now. the spread will persist as long as the stocks at cushing,okl. are at all time record levels and climbing. until that bottleneck is resolved WTI will remain flat to slightly down. Any draw down in EIA weekly stocks will give us a nice big pop….
The new pipeline in can deliver 4.1m bbl per week – they say the slightly heavier grade will only displace supply from other sources and will not impact overall inventories – isn’t that always the story…
3.7m bbl per week of that is already under contract.
The COP/Encana joint venture from 2007 spent (I believe it was $10 billion) to upgrade the borger and wood river refineries to accept large volumes of Canadian heavy dil-bit and syn-bit varieties. If you want to play crack-spreads, Cenovous or COP are reasonable options.
Crack spreads have very little to do with the price of crude feedstocks. I don’t understand what you are trying to say about brent vs. WTI, or how you think crack spreads are affecting feedstock prices. Please elaborate Rookie.
I cant believe the TZA i am holding is not budging one bit….this market is fucked up.
Brutal selloff – Apple down $0.66, the horror, the horror.
Just went crazy long on ES minis. You cannot stop this train. Probably close green again.
If it was a Friday I’d agree with you, but it’s not. We’ll end the day down, either 30 or 130, then wait for the Friday morning selloff as the Egypt fears start anew. That’s the dip you want to buy.
Army is telling protestors over & over, “ALL of your demands will be met”
Mubarak gives up military powers to head of military!
Indeud. Shorts fucked again!
AEO is takeover tgt by KKR around $20 – bot 14.80
out half AEO 15.12
Lol. Bernanke is bowling on u fuckers
HOG looking at going private abv $50
Pretty much all of my stocks are up. Pomo
Did you really think people were not going to buy a down 50 open? The dip buyers are overdue to get smacked down a little, then you’ll get some real selling.
I think we’ll see it this afternoon.
Shorts potentially making same mistake they made in summer-shorting US indexes without considering bounce potential in Brazil EWZ India EPI and China FXI
The EEM emerging markets index broke the “egypt panic” lows. But, Is now sitting at strong support at the “N Korea” panic lows. It would take some serious short firepower to break those lows, without the participation of a new down leg in USO.
That being said, id only go long anything on a scalp daytrade basis. This market is always one headline away from the next overnight flash crash.
Were you referring to the new form of torture called Motor-boarding ?
BORN is not optionable..So I guess you are swinging for the fences here?
attempting to go long EUR/USD
sold half here for +20 pips
why has china forsaken me
You mean the lead-infused melamine baby bottles you bought? The cyberattacks against your military and businesses? The missile launch off the coast of California? Are you from Tibet? Did you go to China and espouse any kind of political/economics idea? Did you not get a medal in the olympics despite being on “team China”? Did you create 150000 pieces of space debris with a careless ASAT demonstration? Did you have a pet river dolphin? Did you have to breathe Beijing air? Are you referring to the crap you bought at walmart? Did you bet against China’s ability to stockpile all metals, oil, and food at increasing rates despite higher prices forever? Did you find a grasshopper in your chicken-ball at the food court?
check out contango in brent and wti, last time the contango blew out this hard wti took a 20%+ swan dive. I don’t see how with inventory this high and contango blowing out it doesn’t exert a downward effect on crude spot prices
Fear not Dr. It probably will go down (in the short-mid term).
Wow, just loaded Google Chrome – this site looks so much better….I even get the advertisements now.
Brent is not owned by a lot of OIL etf’s like WTIC. The roll on ETF’s was just happening. SInce 9 out of ten investors have no clue what this means they do not understand the punishment they are taking and sell. Then WTIC goes down no matter what. Anyone smart is not buying WTIC during the rolls. THe leverage effect compounds it.
oil etf’s have minimal and short term effect on pricing.
Always lots and lots of fuckery into the roll though
And this is the time. It rolls a lot of contracts. Then you have HOU and HOD besides all the rest of them. USO rolls just under 2 billion dollars of oil a month in just a few trading seesions.
http://www.unitedstatesoilfund.com/uso-holdings.php
USO is never a buy unless there is a large move coming.
NILE is crazy up but volatile today.
Even though I have banned myself (since the fly jumped the shark) i would just like to report to all my loyal subjects that LMLP will be $6.00 next quarter….and bubbles loves sucking horse cock…
sold the rest of AEO 15.20 for +.40
I turned on Program Alpha in the morning today to buy the dips.
What’s ChessnWine doing with all those high beta shorts he had on this morning?
Watching RTH very closely – so far it’s a double top, but needs more downside to confirm.
Egypt change is not as clean as it sounds on TV:
Mubarak will not be live tonight – his message was taped yesterday (source SkyTV)
Military is infighting as they decide the next steps.
Military has “secured” the Suez and is escorting all ships.
Muslim Brotherhood is concerned at the coup – they are not involved.
Military says Mubarak will not transfer power to VP – they (military) are in power.
sounds like a junta
Ruh-roh…sell Mortimer, sell.
see how the 30 yrs go off today – prob more like the 3’s than the 10’s
not bad for a 30 yr – higher indirects again
The Revolution will NOT be Televised!
Army now says they will “act” if protestors refuse the “plan”
Fly – you still own this BBRG?
TMoe buys April 80 puts on OPEN
Shorting some CTXS
well, I was pondering it at my diary, where I sit alone and ponder the market…this is what I wrote when I saw the spread so wide……Trading_Nymph 3 days ago
Also on the China coming back strong Bet is Brent Oil, yes egypt too. But there is a widespread between WTI (USA) Oil and Brent (North Sea), normally it is our stuff that is more expensive because it is better quality and heck we are USA. But now shorting WTI and going long Brent is the play of the day. Yet, historically it is like a Magnet and the two sources like to pull together in price. Therefore, either USA starts using a whole more oil or china uses less…but one side has to break pretty soon to bring Brent and WTI together again…btw, Oil drops, USD normally gets stronger… The two most widely used and traded crude oil bench marks are West Texas Intermediate (WTI) (to be delivered at Cushing, Okla.) and Brent (delivered at Brent in Europe). WTI crude is the U.S benchmark and used for 40-50% of the world’s crude oil. Brent crude is made up of different types of crude oil found in the North Sea. Brent is the European benchmark for 50-60% of the world’s crude. Both of these crude oils trade as futures on the Nymex and the ICE
Brent is actually better quality. North Sea, much of Africa is closer to Brent chemistry too. But good on ya for thinking all this 3 days ago.
Brent is most definitely not better quality than WTI.
NY Fed to issue new purchase schedule at 2pm – expected 105-115b
yep, waiting for that…no POMO today too, which is nice.
If Jake is right in his guess that the Wikileaks revelations are not what they seem– that they are actually a massive CIA disinformation program– then this revelation below
http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks
would mean LOB in both kinds of crude.
Time will tell.
VCLK’s Earnings are on the 15th…..
Apple down $7! Is Steve Jobs going to Egypt to replace Mubarak?
Put a new iPad plant in there, solve their unemployment problem.
Hey LMLP I said next quarter…not today….hahahahahaah (mental patient laugh)
1.35 million for sale @ 6 ….come get it bitch
“Someone has to feed the whores” C. Bennett
Home > Markets > Open Market Operations
Tentative Outright Treasury Operation Schedule
Across all operations in the schedule listed below, the Desk plans to purchase approximately $97 billion. This represents $80 billion in purchases of the announced $600 billion purchase program and $17 billion in purchases associated with principal payments from agency debt and agency MBS expected to be received between mid-February and mid-March.
lower than expected – last was $80b & $32b
“I enjoy adversity because there is something wrong with me.”
actually i think thats exactly whats right with you.
Succinct answer: Brent represents a much tighter market than WTI. I see no fundamental reason why that should change any time in the foreseeable future. Put away the charts and historical relationships – they no longer apply.
A longer, more helpful answer was provided by Izabella Kaminska a few weeks ago:
http://ftalphaville.ft.com/blog/2011/01/19/463296/oil-shock-2-0-or-the-benchmark-wars/
As for Sadad al-Husseini being a CIA mole – Jake, Jake baby, come back to earth! Sheesh.
China Slowing is one darn good fundamental reason for Brent to tank.
The revolution WILL be televised. This….is CNN.