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

Wild Week on Wall Street & The NYMEX; Everything Keeps on Tumbling!

Posted by Kelly Burke on Dec 10, 2014 5:43:25 PM

Stock market numbers on a digital board

Today was another wild day on the market, with ULSD closing down another .0376 to 2.0464, and RBOB closing out down a whopping .0818 to 1.6418. Analysts are crediting this with an "unexpected" increase in Crude stockpiles. WTI fell -2.60/bbl to 60.94, well below the previous 5 year low.

Monday was down as well, closing out -.0529 on ULSD and -.0668 on RBOB gasoline.

We saw a small jump up yesterday (ULSD +.0291 and RBOB +.0170) - likely just a bump-in-the-road overcorrection to stocks tanking on some bad news from Greece and China. This week saw Greek markets tank worse than they did before the crash a few years ago - obviously not good news for the European economy. 

OPEC also became a factor again with Iran railing against falling oil prices as a "conspiracy" and OPEC cutting its output estimate for 2015 to 2.89 million barrels per day, 300K lower than they originally forecast. However, despite the announcement Crude keeps right on plummeting. 

Wall Street Traders have been shouting about the Dow's inevitable march to 18,000, but today saw it close down for the third day in a row. Continuing pressure on stocks given that Fed rate hikes look like they may happen within the 6 month period doesnt bode well for the 18K mark, especially when you factor the weakness in foreign markets into the equation.

The S&P slumped on energy stocks as well, as some companies came out with plans to move on layoffs, restructuring, or selling shale plays. Despite a few plays going up for sale though, production domestically doesnt seem to be slowing down. However, a slow down in production in countries that have a high production cost is probably inevitable if the price hits a certain level - that includes the US and Venezuela. 

So it was a tough week for Wall Street, but the bright spot was for the average consumers as downward pressure keeps pushing down the price of gasoline. The Energy Department dropped its price forecast for retail gasoline to for next year at this time to $2.60/gallon, the second time its been revised down by over 30 cents a gallon since oil began its slide. Another bright spot domestically was an unexpectedly good jobs report on Friday, which is a good signal for the overall economy. 

 

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Topics: Greece, RBOB tumbles, OPEC, NYMEX, Wall Street

OPEC, Iraq, Inventories & Political Upsets Rattle Wall Street & Commodity Prices

Posted by Kelly Burke on Jun 11, 2014 2:41:06 PM

Line charts depicting the stock market scattered on a table

First the usual news - US Crude Supplies once again dropped (to 386.9 million) and more importantly perhaps, Cushing levels dropped again as well. Cushing stocks are down 49% since the Keystone's lower leg started moving its supply to Gulf Coast Refineries. WTI has been climbing steadily the past couple days, and some analysts are predicting WTI hits $105 soon. (Hopefully not!) We also saw gasoline and ULSD up between 0.6-0.9% throughout the day with the intraday high for gasoline hitting 3.0021 and ULSD's intraday high hitting 2.9027.

Brent was up as well on production announcements from OPEC, and an Al Qaeda affiliated group's seizure of the city of Mozul in Iraq. OPEC kept their production target the same, despite the growing fighting. The obvious concern with Iraq is that increased fighting will further disrupt supply. Currently, all exports from the country (a little over 3 million barrels per day) have to go by tanker through the Persian Gulf - the main pipeline that runs from Kirkuk to Turkey has been closed since March. The capture of Mozul and the uptick in violence in the area has caused repairs to the pipeline to be suspended completely at this point. Further supply disruptions are basically a 50-50 proposition at this point, which is making the European markets understandably nervous, and pushing Brent prices up. 

In Virginia, House Majority Leader Eric Cantor got blindsided by his Tea Party primary challenger in an upset that literally no one saw coming. Bloomberg News noted today that there is some serious concern among Wall Streeters, as Cantor was generally seen as an ally for them in the Republican party - supporting TARP and the Export-Import Bank, etc. Wall Street appears to be concerned about potential gridlock in Washington going forward if this primary is an indication of how November may shape up, especially given the debt ceiling issue looms large again in March. (Incidentally, gridlock in Washington is probably good news for the rest of us!) At any rate, between the political upset, and the World Bank revising growth expectations down (specifically for the US) stocks drew back, with utility, industrial and financial stocks the most impacted. 

 

 

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Topics: Brent Crude, Brent vs WTI, World Bank, Iraq, Eric Cantor, Wall Street

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