Sunday Night Futures Look Sickly

With an ‘all out’ oil war at hand and no good news on the Covid-19 corona virus it looks like Monday could be a really rock start for the week.

At 5 pm central time the DJIA futures are off around 980 points. West Texas Intermediate crude oil is trading around $30/barrel–a point at which we will probably see further cuts to any oil drilling. Of course this will benefit consumers, but whether the aid to the consumer will out weight job losses and knock on effects is a debatable point.

I watch Bloomberg futures here.

I am hopeful the market will ‘get a grip’ before tomorrows opening of trading.

46 thoughts on “Sunday Night Futures Look Sickly”

  1. Agree with Grid . Is not about the 6 % increases in exports by Rusia and the Saudies, but the 80% growth of exports from the USA

    1. Nomad, I hope you didnt buy soybean oil Friday trying to hideout. It is down 4% also tonight. 🙂

      1. Grid, I’ve dabbled many times in commodity futures (mainly metals) and have never looked at soybean oil. Everyone here needs to be diligently patient and know this too shall pass. Invest in what you know and have done your deep due diligence in. I’m looking at many straight common utilities (water and electric) and hoping they give me a temporary opportunity to lock in quality growing dividends for many years to come… Any utility ideas are encouraged and welcomed.
        Stay happy my friends, Nomad

        1. Nomad, I know nothing, though most ute commons appear priced today as though they’re high-growth companies. They might offer a safe low growth opportunity down the road, but we might be a bit early: https://ibb.co/w4zytTh

  2. Skipping oils for now, continuing gradual purchases in banking, agree overall could easily keep slipping, stepping in gradually.

    1. Tim,
      Maybe some banking, but be careful after last melt down. 2ww was saying a bank was offering almost 2% on a deposit, you have to ask yourself why? My guess is the bank needs the money. Offering a Wimpy burger with the promise to pay you back later.
      Maybe a bank preferred, watch NYCB-PA
      Myself, I am watching Pharma stocks. If these come back to earth they would be a good long term hold. Wonder what LME will look like this morning ?
      (London Metals Exchange )

  3. Are we supposed to believe that oil prices will remain at these levels forever? If so, it’s a problem. But isn’t the issue that the Russians wouldn’t play ball with OPEC, and the Saudis are trying to make the point that they can absorb the pain of low prices more than the Russians? I think Putin overplayed his hand this time, and it is just a question of when—not if—the Russians come back to the table to cooperate. How much pain do they want to endure before facing reality? My guess is they come back to the table before the world ends.

    1. Roger, for me the question is does Putin wait until the US debt ridden frackers blow up first? Meanwhile for me, golf season is coming and I am looking for some $1.75 gallon gas to drive to the links on.

      1. Agree with Grid . Is not about the 6 % increases in exports by Rusia and the Saudies, but the 80% growth of exports from the USA

      2. I picked a hell of a time to go away for a month on vacation. Half way through it now so missing most of the fun (if you can call it that) in the markets.

        That said, as someone who used to be heavy into oil and gas trades many yeas ago – there is an old saying in the oil patch. The cure for cheap oil is cheap oil. This too will eventually pass and if there is carnage in quality MLP names or major big oil producers, I will likely be starting to buy some soon. One can profit nicely playing the boom and bust cycles in this sector. Seems the Saudi’s sent oil the rest of the way to bust – setting up the next future boom

  4. I’m seeing a pattern in the stock market:

    90’s were great
    00’s were poor
    10’s were great
    20’s will be ???

    Mean reversion would lead me to believe that the 20’s will be a rough decade for stocks.

  5. Watch for the AM drop, wait for price to settle down, buy a few things, sell them on the rebound.
    I also helped design the Edsal.

        1. Martin, Dont worry, I dont think anyone is going to feel very wise come market opening. Except for my 82 year old sweet step mom who had me late 2018 lock all of her money into mostly 5 year CDs at almost 4%. She needs to start her own investing forum. 🙂

    1. Holy crap, the 30 yr is right at 1%. I think the last time that happened was in the Depression.
      Also, if you have accounts on one of the 3 platforms that seem to crap out on high volume days….. Put in your limit orders now.

  6. Steady, boys & girls. The world will most assuredly come to an end for each of us, but not, I suspect, tomorrow.

    If the stuff I covet gets down to where I like it, I will buy and let the devil take the hindmost.

    JMO

    1. Camroc, Im not a brave soul on MLP carnage…But just give me a market sympathy IPLDP crash to $22, I beg for it!

      1. LNT has only the Energy in the name, but no exposure to the mad dynamics of crude and gas. The same can’t be said for Crestwood. It seems I did the right thing waiting to add to CEQP preferred.

          1. I already own it. I wanted to add then I saw each and every MLP killed on Friday so I told myself to wait for the new week.

            1. Im not being critical as I bought myself, and thought it would be a good play. But then it went exD and started sagging so I sold out with something like a huge 15 cent gain including unit payment. But I guess I got lucky with that as I certainly didnt sell from insider info on Saudis going to blow up the oil market. Crazy times.

        1. Gabreile, Just to confirm LNT is just a do nothing shell holding company whose two main subsidiaries are pure utility plays..Interstate Power and Light which has the preferred at subsidiary level and Wisconsin Power and Light which no longer has an outstanding preferred.

  7. I expect to see some market intervention soon. The powers that be (both financial and political) won’t want to let their good deal get away from them. The market will always win in the end but there is no end to craziness that can go on in the short term when we see such a sudden crash – more Fed “emergency” rate cuts, tax cuts for oil industry, buying for the Strategic Oil Reserve, emergency funding for the medical sector, you name it. All I know is that there will bargins soon, and if we wait a little for conditions to settle the entry point may be lower risk.

    1. RJZ, FED may be running short on options. The last emergency rate cut ended with the markets tanking. If anything, FED needs to maintain liquidity. Any signs of funds locking up…that wouldn’t be a good day.

      UST10 just hit 0.499%

      1. It seems very probable the FED will start buying stocks. It makes no sense to buy Treasuries now. In fact they should sell long bonds to re-address the curve issue.

        1. Can they? I don’t think the governing documents allow it.
          They pushed the line with the 79.99% purchase of AIG.

          1. There have been rumors in the market about that possibility. The Bank of Japan is the largest buyer of ETF, then I think all is a matter of will.

            1. The fed cannot buy stocks. They’d need the law to be changed to allow them to do that. I would expect a combination of QE4 and a fiscal response involving actual cash being put directly into the hands of people rather than just gifting corporations and Wall street. Now, where’s my check?

              1. They can loan money to the banks as a repurchase agreement or under some other pretext, then the banks can use it to buy stocks.

                  1. I dont see why there should be anything done. Geez we got 3% unemployment, low inflation, and working class about to get a nice gas cost cut. Why werent they this worried in the early 1980s when inflation was out of control and people needed jobs? Flush out some of this excess and let some zombie companies die, and high yield chasers realize that bad things do happen to over leveraged outfits.

                    1. Because the Fed works for the banks, not the people. Who else would believe falling prices are bad for the people. It’s only bad for debt holders, and that’s only bad because there’s too much debt, which those same economics PhD’s also believed was a good thing.

                      Some say this proves economic theories are wrong, which they may be, but the Fed isn’t following those theories. They’re doing what they want and backfitting the explanations to fit arcane theories. Greenspan in his retirement speech said “If I’ve learned one thing, it’s economic theories WORK.” So apparently he learned nothing.
                      I met Milton Friedman shortly before he died. He had come to doubt his own theories.

      2. We should start learning to speak Japanese.

        I had been hoping that the U.S. would not follow the other countries into the abyss of ZIRP but all things are pushing us in that direction.

        I have always preached that there were just two sets of laws that could not be repealed, those being the laws of physics and the laws of economics. I still believe that to be the case.

  8. It looks ugly Tim. I thought Spx would bounce a little higher. Looks like we are taking a direct path lower though. The fib retracement levels I’m watching are 2748 – 2600. Until you get the Vix below 20 it’s going to be volatile, duh! ATB.

    1. danny–I won’t by anything for now–likely more time for watching.

      1. Agree. Sit and watch seems to make the most sense for the very near term.

      2. What are the breakers, 20%, 10% later in the day? If it gets close I’m on buying spree just before they hit.

        1. First breaker is about a 1,800 point fall.
          2nd one is at just over 3,000 points.
          3rd one is tripped at about a 5,000 point fall.

    2. Buying anything now is just a gamble. Long term this all may look like a blip on the charts, short term though we could go another 20% lower. Markets hate uncertainty and no one seems to have a handle on how much worse things will get with this virus, both from a health perspective and economic perspective. But I do expect QE 4 to go into high gear pretty soon.

      1. I doubt it.
        Economic activity is grinding to a halt worldwide because of the virus.
        And the Saudi’s pulling that stunt over the weekend is going to put states like Alaska, Texas and North Dakota into recession basically overnight.

    3. I had 2 big losers the last time oil unexpectedly dropped. An energy company and a tanker company. The tanker company looked good on paper, the problem was their customers couldn’t pay their bills.

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