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Strategies & Market Trends : John Pitera's Market Laboratory

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To: John Pitera who wrote (18756)	3/12/2017 6:01:32 PM
From: John Pitera	3 Recommendations Recommended By 3bar roguedolphin The Ox Read Replies (1) of 33421

Hi OX, The GRIM REAPER OF ALL TIME HIGH Crude OPEN INTEREST came to collect his dues...... as we speculated about on Feb 15th......... Message 30987826 The commercials just kept selling forward crude to the big fund Operators and breakeven prices for several of the major US shale fields keeps getting lower and lower. Everyone should be very cautious of energy MLP's if they are long them. Energy Markets1. This week, the oil markets were hit by the “perfect storm.” Once again, this should not come as a surprise to the Daily Shot readers. • For months now, speculative accounts have been increasing their net long exposure to crude oil. • US rig count and crude oil output *continue to recover.* At the same time, US shale production is becoming more efficient. It is amazing how the breakeven numbers of these fields has come down dramatically since 2013. Source: @nolahoubear • The Saudis, who have been compensating for other OPEC members’ cheating, view last year’s cuts as temporary. Source: CNBC; Read full article • US gasoline demand has been soft relative to last year. This weakness in gasoline ended up tightening crack spreads (see #4 here). Refinery inputs fell below last year’s levels. • US crude oil stockpiles rose more than expected last week, … … hitting another post-WW-II record. 2. Crude oil finally broke out of its tight trading range as the massive speculative-long unwind ensued. Some have suggested that there is more selling ahead. The complacency that has permeated the oil markets seems to be ending as implied volatility jumps. However, *crude oil vol is still quite low based on recent history.* 1 Year of WTIC closing on it's low Friday afternoon. 3. Energy shares tumbled. Moreover, we saw some spillover into the credit markets as high yield bonds take a hit. Back to Index Equity Markets1. The broad stock market indices finished only slightly lower, for the most part ignoring the oil selloff. *It’s amazing that the VIX futures curve is now lower than it was a week ago.* 2. Separately, REITs retreated in response to rising bond yields in the US (more on this in the US section). --------------------------------------- Global Developments1. Here is the breakdown of the contributions to the global GDP growth – historical and forecast. Source: Moody’s Investors Service 2. This map shows the expected rate of economic growth for major economies this year. Source: Moody’s Investors Service 3. Below is the forecast for the major developed markets central bank rates over the next few years. 4. Here is the recent history of global trade and productivity growth. Source: Moody’s Investors Service Source: Moody’s Investors Service JP

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