Fed Uncertainty and Major Layoffs Spook Wall Street  

Posted by Kelly Burke on Sep 24, 2015 3:18:26 PM

Stock market numbers

Stocks are getting pummeled today in anticipation of Fed Chair Janet Yellen's scheduled 5 o'clock speech on the economy and Fed policy re: rate hikes. (Deja vu anyone?). 

Today Caterpillar announced that they will be both revising sales projections down and cutting 10,000 jobs by the end of 2018. That announcement is really crushing stocks, because Caterpillar is seen as an indicator of strength or weakness in the industrial and manufacturing sectors given their size and dominance in the sphere of heavy equipment. To the traders on the Street, less demand for Caterpillar implies fewer large scale construction projects coming online, which is obviously not good news for the economy.

Their announcement is also not a good sign for diesel usage increases, either,  which we need in the face of oversupply and the resultant continually dropping prices. 

On the other hand  - first time jobless claims were up 3,000 to 267,000, not a bad job market indicator, and new home sales beat estimates, both of which are positive signs. 

Ironically, what some analysts are saying is that these positive indicators signal that we can withstand an increase - and the panicked selling off is essentially coming from a concern about why we did not see the Fed move forward with the anticipated rate hike last week. If the market looks like it can accept it, then not passing the rate hike essentially implies the Fed is concerned about economic strength despite positive signs, and this is apparently making traders very nervous. 

On the commodities side, the EIA report out Wednesday showed inventory draws of 1.9mmb on Crude, draws of 2.1mmb on distillates, and a build of 1.4mmb on gasoline. We actually saw drops at the close however, despite the inventory draws, with WTI settling at 44.48 for November (Brent at 47.82), ULSD for October delivery closed out at 1.5056 (-.0264) and RBOB was down (-.0348) to 1.3816. 

Today, the NYMEX was mixed throughout trading - up on diesel, down on gas, neither straying too far from the open. At the close, ULSD settled up (+.0181) to 1.5237, and gas settled out (-.0164) to 1.3652.

Expect another possible crazy day tommorow, depending on how the Fed Speech goes, and how traders and analysts interpet its likely short term implications. 

Stay tuned!

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Topics: Jobless numbers, Wall Street, stock market, brent, wti, fed

Job Reports, Inventories & International Issues Keep Volatility Going

Posted by Kelly Burke on Apr 3, 2015 1:27:07 PM

Line charts depicting the stock market scattered on a table

It's been a while, so while the markets closed today, lets take a quick look back at whats been happening (some "light reading for your Friday afternoon)

The economy -

After positive reports in February, the March jobless numbers released today were something of a dissapointment. Only 126K jobs were added, which broke a 12 month streak of 200K+ jobs per month being added. This raises some eyebrows on the state of the economic recovery but some analysts are blaming the extended winter, arguing that the normal pick up in seasonal and construction industry jobs is simply delayed because of the cold. 

This lackluster jobs number, however, will once again probably have Wall Street see-sawing over speculations on the Fed interest rates, its probably unlikely to happen soon (I know, deja vu) given the weakness of the report. With the market closed today though we won't see what if any impact this will have until next week.

Commodities and Pricing

This weeks EIA report for the week ending March 27th showed Crude Inventories at record highs for the 12th straight week (+4.8mmb to 471.4mmb). Gasoline dropped 4.3mmb, way over analyst predictions of a less than 1mmb drop. We've seen stronger than expected demand in gasoline, particularly in January and thats sort of underlying its volatility at the moment - if you recall, RBOB jumped .0612 Wednesday on the report, but then pared the gains on Thursday, closing out -.0699 to 1.7613.

The main underlyer on the volatility over the past few weeks is more politically driven - we saw jumps on the NYMEX when it was announced that Saudi Arabia had begun airstrikes on Yemen. Additionally, the Iranian nuclear deal has some traders and speculators on edge, and continuing issues with ISIS and the ongoing strikes against them are keeping Middle East tensions higher than we'd all like to see. Luckily for the most part, days we've seen spikes on international turmoil have usually been reversed with a few days. It's likely this will continue unless there's some real movement or resolution on any of the aforementioned issues. Til then, hold onto your hats and enjoy the ride!

 

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Topics: Iran, Jobless numbers, EIA Inventories, saudi arabia, yemen

Monday Puts the Brakes on Friday's NYMEX drops

Posted by Kelly Burke on Oct 6, 2014 3:06:28 PM

It's Monday :( overlaid on asphault

Monday strikes again!

Friday saw Brent Crude drop to almost a 27 month low, dropping to $92/bbl, and WTI for November trading at its lowest level since April 2013.

Today we started with ULSD trending down and gas up slightly, and gas continued to climb through the early afternoon. At the close, ULSD settled up 50 points to 2.6213 and gas shot up +.0347 to 2.4132. Thanks a lot, Monday.  

The dollar continued to strengthen throughout last week, and an unexpectedly good (a relative term) jobs report for the US Friday provided further evidence that the economy is stable to moving forward. The dollar continues to soften commodity futures generally, despite the current geopolitical atmosphere.

Today stocks pushed lower in the US on concerns that the dollar (which actually dropped slightly today) and continued good economic news would push the Fed to raise interest rates. The Fed minutes are due out Wednesday, which should give investors a better idea on the timeline. 

Additionally, supply remains strong and is surprisingly mitigating the factors we almost always see a surge in premium and volatility with. 

There is concern among some analysts slash talking heads that a drop to below $90 per barrel on Brent will spook OPEC into pressuring the Saudi's to cut demand. However, OPEC production hit a 2 year high in September (31 million bpd) and thus far, as discussed, the Saudi's have vowed to hold production targets. We also saw rising production in Russia and Libya, so despite a potential benchmark issue there appear to be no issues on the horizon on the supply side (knock on wood).

 

 

 

 

 

 

 

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Topics: Futures, Dollar falls, Jobless numbers, OPEC, NYMEX

Commodities and Stocks See-Saw on Sanctions, EIA Numbers, Unemployment, and Tech Dissapointments

Posted by Kelly Burke on May 9, 2014 1:18:03 PM


Line charts depicting the stock market scattered on a table

Wednesday's EIA report showed that the API projected Crude drops come to fruition, falling 1.78 million barrels. As we all saw this pushed up Crude & ULSD prices on the day, with ULSD closing up .0398 to 2.9275, and Crude up to 100.81, once again hanging by the new (unfortunately) benchmark of $100 we've all been hoping to drop from for quite some time now. 

Brent ticked upwards this week as well on EU discussion of stricter sanctions on Russia. Putin had announced earlier this week that Russian troops had withdrawn from the border, but no such withdrawal happened according to everyone else in the area, so more sanctions are back on the table it appears. Economic sanctions on the world's second largest energy exporter are, unsurprisingly, not great for downward price pressure. 

In contrast to Crude - US Natural Gas inventory was up 94 bcf and prices dipped slightly. That sounds like good news after the supply crunch (not to mention spiking prices) of this past winter, and it is, but bear in mind prices are likely to remain relatively high for nat gas in the foreseeable future. Why? Because even with a build of 94 bcf, supplies are close to 45% lower than they were just a year ago today and the only demand control as supply limps back up is the price level, unfortunately. 

In the broader stock market, the S&P is poised for a weekly loss, largely due to drops in energy & utility shares. The DIJA dropped 4.1 percent in 5 days over tech stock dissapointments (ahem, Twitter & Groupon), and the Nasdaq dropped almost 2% as well. Last week stocks were up for the week minus a Friday drop off, which was a little unforseen because the weekly jobs report was strong (at least on the headline level).

April's Job numbers showed unemployment dropped to 6.3%, the lowest in 5 years. However, the margin of error for revision is pretty large on these reports of late, so there may be some hesitancy in the market until the "real" numbers materialize. Additionally, the work force participation rate dropped to 62.8%, tying the all time worst record from 1978 (also October and December of 2013).

There's been a lot of contradictory indicators as of late from different segments -  real estate, manufacturing, labor participation, and Jobless claim numbers, for example, that make it difficult to get a good overall picture of the economy. As they say, the truth likely lies somewhere in the middle, but who knows where that is.   

 

 

 

 

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Topics: Brent Crude, Inventory report, Jobless numbers, Crude draws, russia, ukraine,

Crude Continues to Drop on Supply Estimates & Manufacturing Speculations

Posted by Kelly Burke on Apr 1, 2014 1:44:21 PM

Crude - both Brent and WTI - continued to drop today on speculations of another inventory build on tommorows EIA report. According to a Bloomberg survey, tommorows report may show increases of 1.8mbl up to 2.5mbbl. The prior weeks report (the tenth increase in a row) indicated US Crude inventories climbed to 385 million barrels, the highest on hand since November, with PADD 3 numbers (Gulf Coast) hit over 200 million barrels, the highest since 1990. 

Additional domestic factors in the market drop is an anticipated failure of US Manufacturing increases to meet projected gains. Internationally, China is showing a drop in manufacturing index to below 50, signaling a contraction in the sector. Euro zone manufacturing is expected to show stagnant to weak numbers as well. Overall, global economic indicators are not very confidence inspiring, and in combination with increasing supply, and the impending end of the heating season in the US, we should see the market continue a downward trend, assuming EIA reports back speculative numbers. 

Last week's jobless numbers saw an unanticipated drop of 10,000 initial jobless claims. It will be interesting to see what this Friday's numbers look like - a continuing downward trend would be a positive economic sign, but time will tell what the overall impact will be. 

 

U.S. crude oil stocks graph

(Image Credit: EIA.gov)

 

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Topics: EIA, Brent Crude, Brent vs WTI, Jobless numbers, US Manufacturing Data, WTI Crude

Futures Firm After Almost 2 Week Correction

Posted by Mark Pszeniczny on Jan 10, 2014 4:58:00 PM

NYMEX values appeared to find support just above the 2.90 level on front month HO after a long cold stretch.  The Polar Vortex that gripped a large portion of the Country, and plagued us in the Northeast with long terminal lines, appears to be subsiding.  Many of us are getting a well deserved breather as we return to somewhat normalcy.  

The recent correction has shaved off roughly 18 cents on Heat and close to .20 on RBOB.  Bulls returned as new unemployment figures were released showing that while the actual rate was down to 6.7%, the economy failed to add the expected 200k jobs in the last month.  Many point to the loss of December seasonal workers and the fact that more and more Americans have simply stopped looking for a job.  This caused the greenback to fall, thus pushing Commodities higher.  The new talk will ultimately put immediate pressure on new FED Chief Yellen and her stance on any new rate changes.  Strong foreign import data also put supported markets as China was said to have a nearly 14% increase in Crude over the last 30 days.  Look for next week to be a choppy session with HO testing and ultimately bouncing off the 2.90 mark.  

 

At the Close, Crude added  1.06 to close at 92.72, RBOB closed up .0265 at 2.6691, and heat settled out +.0193 at 2.9407

RBOB Close
                      CLOSE     CHANGE            
FEB   2.6691         +.0265
MAR   2.6797         +.0245
APR    2.8547         +.0217
MAY    2.8511         +.0207
JUN    2.8272         +.0202
             JUL    2.7949         +.0190     
HEAT Close
      CLOSE            CHANGE
FEB   2.9407        +.0193
MAR   2.9234        +.0180
     APR    2.9100        +.0167     
 MAY   2.9019        +.0159 
JUN   2.8968        +.0157
 JUL   2.8948        +.0153

 

 

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Topics: Commodities, Chinese Crude Builds, Dollar falls, Jobless numbers, CRUDE, FED rates, Yellen

Renewed Global Concerns Reverse Tuesday's Futures Sell Off

Posted by Mark Pszeniczny on Nov 13, 2013 2:07:00 PM

We have all been in this far too long to get overly excited when the pits fall a few cents - like New England weather, wait and it will change.  

The recent sell off was primarily pinned to the expectation of growing Crude supplies (released this week on Thursday due to the Holiday), a better than expected Jobs report, and the talk of unwinding the government bond buying program.  That all came to a halt this morning as renewed concerns of global strife, specifically Libya, filled the newswires.  

Brent Crude surged early and brought the US markets along for the ride. Still, I have to give weight to some of the technical aspects, as HO has bounced higher again after touching the 2.85 level.  Recall, this has been the much talked about seasonal support level that has yet to be broken for more than a session.   

Heat still remains comfortable trading in the wide range of 2.85 to 3.05, with small breakouts to either side.  One would expect RBOB to get more volatile as global demand expectations have recently been revised higher and the current values appear to be relatively inexpensive.   

At the close, Crude gained .84 to $93.88, RBOB closed up +.0416, and HEAT settled out +.0445

 

RBOB Close
                      CLOSE     CHANGE            
DEC   2.6280         +.0416
JAN   2.6131         +.0387
FEB    2.6180         +.0359
MAR    2.6304         +.0337
APR    2.8004         +.0323
      MAY   2.7990         +.0344      
HEAT Close
      CLOSE            CHANGE
DEC   2.8977        +.0445
JAN   2.9014        +.0434
     FEB    2.9041        +.0419     
 MAR   2.9024        +.0405 
APR   2.8988        +.0393
 MAY   2.8955        +.0386 

heat chart 2013 november

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Topics: Brent Crude, Jobless numbers, Libya, Market analysis, CRUDE, RBOB

NYMEX Makes an About-Face on Jobs Report

Posted by Mark Pszeniczny on May 3, 2013 5:06:00 PM

After starting the early morning in the red, Markets made an about face mid morning as new economic news hit the wires. The Jobs report showed an additional 165,000 jobs were added last month, above the 148k expected. That pushed unemployment down to roughly 7.5%, additionally the magic pencil revised March and February numbers up by a combined 60k jobs. While these are encouraging numbers for the US workforce, most agree that the World market may not be as optimistic. A well supplied market and growing concern over an already fragile European Zone, which today cut forward growth rates, has limited the upside to the NYMEX over the last several sessions. Additionally, China is expected to report sluggish manufacturing rates next week. As the day went on, distillate markets cooled off while gasoline still stayed strong. Look for next week to be much of the same as positions look to be solidified as we move towards the summer driving hype. At the close, Crude added $1.62 to $95.61, HEAT gained .0289 $2.8844, and RBOB jumped .0448 to $2.8254

 

DAILY HEAT CHART

Daily heat chart

RBOB Close
CLOSE CHANGE
JUN 2.8254 +.0448
JUL 2.8072 +.0418
AUG 2.7817 +.0399
SEP 2.7515 +.0394
OCT 2.6101 +.0392
NOV 2.5867 +.0376
HEAT Close
CLOSE CHANGE
JUN 2.8844 +.0289
JUL 2.8824 +.0291
AUG 2.8884 +.0312
SEP 2.8964 +.0321
OCT 2.9032 +.0324
NOV 2.9072 +.0321
 
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Topics: European Economy, Jobless numbers, Euro Debt Zone, Chinese Industrial Output

Morning Losses Erased with Jobs News

Posted by Mark Pszeniczny on Apr 26, 2012 5:50:00 PM

For the second day in a row, early session losses were erased with strong closes. Todays bullish action came on the heals of a surprise increase in jobless claims and some cautiously upbeat comments the Federal Reserve. Commenting on the role of the Fed, Bernanke said ultra low rates would remain in effect through 2014 and did not rule out additional measures to pump up the economic situation. Commodities are the collateral damage of such news as the dollar again took a hit and caused the pits to show strong gains as the day wore on. Crude settled at $104.55 up .43, RBOB added .0276 to close at $3.1833 and HO took the lead gaining .0333 to $3.1944. Heat has come back with vengeance after touching 3.09 on the prompt month just over a week ago. There is fair amount of commentary out there that we should see substantially lower numbers in the coming sessions. Support for HO looks to be at the 3.15, then a 3.05 level.

Daily Heating Oil Chart

Heat map

RBOB CLOSE
CLOSE CHANGE
 
MAY 31833 +.0276
JUN 31328 +.0137
JUL 30852 +.0066
AUG 30435 +.0028
SEPT 30043 +.0004
OCT 28602 -.0006
HEAT CLOSE
CLOSE CHANGE
MAY 31944 +.0333
JUN 31984 +.0315
JUL 31982 +.0292
AUG 31985 +.0269
SEPT 32006 +.0259
OCT 32038 +.0245
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Topics: Commodities, Jobless claims rise, Jobless numbers, CRUDE

Futures Plunge as Data shows Economy Soft

Posted by Mark Pszeniczny on Aug 18, 2011 9:37:00 PM

I feel like I have said this before, but what a difference a day makes!  With yesterday market making its own reality, today i would say it got kicked in the pants BY reality.   Futures started the session down hard and sold off heavily as a string of bearish data got reported.  First was the July Home sales report that showed sales fell by roughly 3.5%, second was the jobless report for last week which increased by 9000 new claims.  Generally not a good sign with an already weak economy.  Lastly, Morgan Stanley downgraded their outlook for the remainder of the year, and within the report noted that it was cutting GDP estimates by roughly .3%.  So what does all this mean?  "There is Gold in them there hills"...  Generally, news like this would push Commodities higher as equities would absorb the brunt of the sell off, but with values of Crude and products perceived to be overpriced, the selling carried over to the NYMEX.  Keep in mind what we mentioned a few weeks ago,  in order for things to start to improve, it has to start with cheaper fuel prices.  Where that level is, only time will tell.  At the close, Crude fell$5.20 to $82.38, RBOB lost .0871 to $2.7832 and HEAT shed .0868 to $2.8748

heat map

RBOB CLOSE
                 CLOSE       CHANGE 
  
SEP    27832       -.0871
OCT    26652      -.0750
NOV    26299      -.0770
DEC   26131       -.0784
JAN    26146       -.0791
FEB    26256      -.0795
HEAT CLOSE
          CLOSE    CHANGE
SEP    28748    -.0868
OCT   28836     -.0870
NOV    28948      -.0864
DEC   29049     -.0859
JAN   29153       -.0857
FEB   29149       -.0854
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Topics: Commodities, GDP, New Normal, Jobless numbers

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