two and twenty

market vibes

November 14 …) 

“Too bad all the people who know how to run the country are busy driving cabs and cutting hair.” George Burns,1979 .. a man before his time.

In the news PPI this morning … SSDD.

In oil

(Bloomberg, November 14) -- “Global oil markets face a surplus of more than 1 million barrels a day next year as Chinese demand continues to falter, cushioning prices against turmoil in the Middle East and beyond,” the International Energy Agency said. 

Yesterday the DOE released its weekly report on the US oil industry production, refining, imports, exports, inventories and… demand which as you can see below hasn’t varied at all on average in 20 years. Considering the expansion of population and steady growth of GDP since Y2K, zero growth in this measure implies a severe hedonic decline in US demand, both in adjusted dollars for inflation and per capita consumption.  

In addition, US exports (next chart) have averaged ca 3 to 4+ mm bpd for 2 years (often 5 mm bpd) and US imports have fallen 50% from their highs in 2005 of 12 mmbpd to ca 6 mm bpd, often lower. Last week’s low export number of 2.85 mm bpd was an outlier. These industry trends will continue as the Trump administration gets underway, imo.  

Fixed income

CBOT 30 year treasury bonds hit another record high in open interest yesterday. This is pro-trend development looking for confirmation with new lows. Big money on this.

FX: Here’s the meat in the sandwich: next chart.

The dollar is in vertical ascent again this morning. I think this must be devastating for external usd debtors and there are likely to be unknown implications for global credit swaps. Someone has to lose money and these losses and profits are stunning. The most disturbing part of it is no one is talking about it, which means the Yen carry is making vulgar sums of money. Therefore, it will go on.