Meltdown

[ezodisy]

well in all honesty bwv I really don't understand it. It seems very complex, I did not study economics, politics or business in general, and I think you'd need a sound background in this stuff, such as Todd clearly has, to make heads or tails of it. I do like to keep up with it though (I don't think that that's a contradiction).

[ezodisy]

closed crude short under $59 for +600. Looking for long opportunities to $70 on the expiry of the December contract next week. No love for the Americans yet.

[ezodisy]

http://ftalphaville.ft.com/blog/2008/11/12/18123/russia-asking-for-it/

Russia seems to be asking for a speculative attack on the rouble after a shoddy defence of its currency on Tuesday, according to Renaissance Capital. The Moscow-based investment bank is thoroughly unimpressed by the move to try and stem the currency's 17 per cent slide. Bloomberg quotes Rencap analyst Alexei Moisseev's saying the intervention has achieved nothing, just cost $7bn of Russia's foreign exchange reserves.

Investors generally seem to agree.

Russia's Micex Index plunged 13 per cent in response on Tuesday, and was closed on Wednesday. The dollar-quoted RTS, meanwhile, was down nearly 11 per cent at 647.

Just to contextualise the troubles facing Russia, here's a snapshot of the declines on the RTS over a longer duration.

[BachQ]

closed crude short under $59 for +600. Looking for long opportunities to $70 on the expiry of the December contract next week. No love for the Americans yet.

Holy f___.  We might see $50 oil soon, v e r y    s o o n . . . .

LONDON (Reuters) - Oil fell more than 2.5 percent on Wednesday to trade below $58 a barrel for the first time in 20 months as expectations of weaker energy demand more than offset news of reductions in supply.   The move, spurred by another slide on stock markets, extended a fall of 5 percent on Tuesday and analysts said the mood in the market was so bearish that prices could keep falling toward $50 a barrel.

[BachQ]

Now THAT is a graph of DOOM.  You don't see a steep downward slope like that every day! 

[BachQ]

As to the IEA report, I'm assuming that the $200/bbl is in today's current dollars (otherwise it would be useless info); but the full report will be issued in two days (Nov. 12), and we'll know then.  I agree with your other points, and that this $200 prediction is of limited value.

Drogulus, I had promised you that the official IEA report (World Energy Outlook) would be released today; and, lo, here it is:


http://www.iea.org/Textbase/press/pressdetail.asp?PRESS_REL_ID=275

"Current trends in energy supply and consumption are patently unsustainable – environmentally, economically and socially – they can and must be altered", said Nobuo Tanaka [Executive Director of the International Energy Agency (IEA) today in London at the launch of the World Energy Outlook (WEO) 2008 – the latest edition of the annual IEA flagship publication. ].* * * Oil will remain the world's main source of energy for many years to come, even under the most optimistic of assumptions about the development of alternative technology. But the sources of oil, the cost of producing it and the prices that consumers will have to pay for it are extremely uncertain. "One thing is certain", stated Mr. Tanaka, "while market imbalances will feed volatility, the era of cheap oil is over". * * *

The prospect of accelerating declines in production at individual oilfields is adding to these uncertainties. The findings of an unprecedented field-by-field analysis of the historical production trends of 800 oilfields indicate that decline rates are likely to rise significantly in the long term, from an average of 6.7% today to 8.6% in 2030. "Despite all the attention that is given to demand growth, decline rates are actually a far more important determinant of investment needs. Even if oil demand was to remain flat to 2030, 45 mb/d of gross capacity – roughly four times the current capacity of Saudi Arabia – would need to be built by 2030 just to offset the effect of oilfield decline", Mr. Tanaka added.

KEY GRAPHS: (pdf warning)

EXECUTIVE SUMMARY:  (pdf warning)

[BachQ]

Here Comes a Bankruptcy Boom

* * *  The share of corporate bonds in default over the past 12 months, which goes hand in hand with bankruptcies, has been about 3 percent, according to data compiled by Prof. Edward Altman of New York University's Stern School of Business. That's near the historical average. So, the vast majority of corporations have been paying their debts during the early part of this recession.

But like many good things of the past few years, that's about to end. The latest data from Altman suggest that by this time next year, the corporate default rate will be somewhere between 8.5 percent and 11.1 percent. That means there could be three to four times the number of corporate bankruptcies we've seen over the past year. And each one of those will probably involve layoffs. As a result, Altman predicts, the unemployment rate could peak as high as 9.5 percent, which would represent a net loss of jobs for 3 million people beyond those who are already unemployed today. "It could hit autos, builders, retail, a lot of areas with a lot of employees," Altman says. "It's going to be rough."

[BachQ]

Credit Markets Dip Into Absurdity

To judge from the crystal ball of debt markets, next year will bring some incredible calamity, maybe a depression, maybe worse. Bond prices suggest nearly one in five companies with high-yield debt could slip into bankruptcy with certain loans fetching just 70 cents on the dollar. The differences between corporate bonds and Treasurys now stretch beyond some investors' beliefs.  "Spreads are more than ridiculous," said David Kotok, chairman of Cumberland Advisors in Vineland, N.J. "Either we have dysfunctional credit markets evidenced by absurd pricing, or the market pricing is accurately forecasting the Great Depression of 2009, '10, '11, '12 and '13."

[BachQ]

US firms likely to sell 50% of assets to Tarp

[BachQ]

WASHINGTON - The US economy is entering 'the steep part' of what could be the worst recession since World War II, said a member of the panel that gauges American recessions and expansions. Mr Jeffrey Frankel, part of the business cycle dating committee at the Cambridge, Massachusetts-based National Bureau of Economic Research (NBER), said in a Bloomberg Television interview on onday: 'We're in for a pretty serious recession.' 'There's a chance it'll be the worst post-war recession,' he said. (continued)

[BachQ]

Financial Sense (11-10-2008) -- The Debt Culture

*** We have now reached a crisis where consumers and business are unable or unwilling to add more debt. As the economy slides into what looks to be a very severe recession, our federal government is now expected to bailout consumers, businesses and state governments to the tune of untold trillions of dollars. *** As the world's largest debtor, the US must borrow or simply print the trillions we will need to keep our economy afloat. This has unfortunate consequences. With very negative real interest rates for US Treasury bonds, foreign investors will eventually demand significantly higher rates, or simply stop buying our bonds. And the printing of money, wildly in excess of a country's growth rate, never ends well. While the dollar is currently the beneficiary of global fears, as well as global de-leveraging, the longer-term fundamentals for the US dollar are extremely ominous. It all comes back to our culture of debt and the piper now pounding on the door.





(continued)

[ezodisy]

Holy f___.  We might see $50 oil soon, v e r y    s o o n . . . .

LONDON (Reuters) - Oil fell more than 2.5 percent on Wednesday to trade below $58 a barrel for the first time in 20 months as expectations of weaker energy demand more than offset news of reductions in supply.   The move, spurred by another slide on stock markets, extended a fall of 5 percent on Tuesday and analysts said the mood in the market was so bearish that prices could keep falling toward $50 a barrel.

yeah I know, it'll probably happen soon, but options and futures and the end of contracts create crazy times and I'm expecting a perhaps short-lived surge. The support around $58-$59 looks intentional and resolute to me which is one reason why I exited. I expect to see c.$70 by end of next week. We will see how close my prediction is. Key here is to ditch your straight, heterosexual friends and learn to "swing both ways" 

[BachQ]

yeah I know, it'll probably happen soon, but options and futures and the end of contracts create crazy times and I'm expecting a perhaps short-lived surge. The support around $58-$59 looks intentional and resolute to me which is one reason why I exited. I expect to see c.$70 by end of next week. We will see how close my prediction is. Key here is to ditch your straight, heterosexual friends and learn to "swing both ways" 

NYMEX WTIC @ $56.92 and falling. 

We'll have to wait and see about $70 by the end of next week!

[BachQ]

Mexico is going to be one hurtin' unit by 2010.

HOUSTON CHRONICLE -- Ex-official says Mexico may have to halt oil exports

The U.S. could soon find itself scrambling to make up 11 percent in lost oil imports.  Mexico, the third-largest foreign supplier of U.S. oil, faces the real possibility of having to halt oil exports in four years, a former top Mexican energy official was reported as saying Tuesday in Mexico's El Universal newspaper.

Rogelio Gasca Neri, the former head of Mexico's federal electricity commission, blamed the inability of the nation's oil industry to produce enough oil to meet rising demand.  His prediction comes on the heels of the Mexican Congress last month overturning decades of resistance to allowing private and foreign participation in Mexico's aging energy infrastructure.  Neri's comment, made in Mexico at a business forum on reforms in the nation's energy industry, also joins that of a growing number of energy experts who see an end to Mexican oil exports coming soon.

John Padilla, director of finance and advisory for IPD Latin America, argues that with Mexico's oil production falling, and its demand for gasoline and other petroleum products on the rise, Mexico could cease to be an oil exporter around 2010 or 2011.  "Mexico, whether it's 2011, 2012 or 2015, the country is poised to become a net importer," said Amy Jaffe, associate director of the Rice University energy program. "It's a tragedy really both for the country and in general. The tragedy is it's avoidable. It was avoidable and it could be avoidable if they would change their policies."  But "the grim reality is Pemex's production is falling very dramatically," Padilla said this week of the state-owned energy company at a conference hosted by the Center for Strategic and International Studies in Washington, D.C.

(continued)

[BachQ]

UK Independent -- UK Traffic levels fall for first time in decades: Motor firms head for crash

Traffic on Britain's roads is decreasing significantly for the first time since the three-day week of the early 1970s, suggesting the car economy is heading for a crash, official figures revealed yesterday. ... The Department for Transport (DfT) recorded two consecutive quarters where road traffic has decreased year on year – the first time for more than 30 years. If the trend continues to the end of the year, it will hugely undermine the "great car economy" championed by Margaret Thatcher. At the same time, sales of new cars have fallen by 23 per cent and are at their lowest since 1996. The motor industry is suffering across the world, with Volvo, the Swedish giant, selling just 115 heavy trucks over the past few months, compared to 41,970 during the same period last year – a 99.7 per cent fall.

RELATED: Eastern European auto boom said to be over

[ezodisy]

NYMEX WTIC @ $56.92 and falling. 

We'll have to wait and see about $70 by the end of next week!

yeah it's going but not much further. There's historical support at this level going back several years

[BachQ]

yeah it's going but not much further. There's historical support at this level going back several years

12 November: Oil closes at $56.24/bbl, plunging 5.2% to a 21-month low!
``It's hard to see what will stop this slide,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York. ``It's more of the same. The market is moving on continuing economic concerns.'' *** Prices of $80 a barrel are needed to make investment in new supply economic, the IEA's chief economist, Fatih Birol, said at a conference in London today. ``We are already seeing projects be canceled because of the fall in prices,'' Brodrick said.  (continued)

[BachQ]

[ezodisy]

12 November: Oil closes at $56.24/bbl, plunging 5.2% to a 21-month low!
``It's hard to see what will stop this slide,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York. ``It's more of the same. The market is moving on continuing economic concerns.'' *** Prices of $80 a barrel are needed to make investment in new supply economic, the IEA's chief economist, Fatih Birol, said at a conference in London today. ``We are already seeing projects be canceled because of the fall in prices,'' Brodrick said.  (continued)

You've won the battle but the war goes on!!!!! 

It is looking to test $55 now. Come on historic support, I still see $65 within reach.

Nothing except blood pressure's going up so long as the indices keep tanking

[BachQ]

You've won the battle but the war goes on!!!!! 

It is looking to test $55 now. Come on historic support, I still see $65 within reach.

Nothing except blood pressure's going up so long as the indices keep tanking

Lots of red today:

Oil -5.34%
Dow -4.73%
NASDAQ -5.71%
S&P 500 -5.19%

FTSE 100 was down a mere -1.52% (we'll see what tomorrow brings ...)