Tuesday, March 1, 2016


Equities WAAAAY up today.  Oil up.  Why? Well in the first case there were good car sale numbers followed by not-as-bad-as-we-thought manufacturing numbers, so equities was the place to be.  In the second case, some Russian came out with a report that the Rodina and the Saudis had agreed to freeze production at current levels irrespective of what Iran was planning to do and everybody was ready to jump on board.  Terrific news, eh?  Except that when one stops to think about what was said one realizes that freezing production just at the point where everybody is pumping at max capacity might not be the solution to the problem which as we keep saying is not one of demand but of supply. Then, to compound the silliness, some genius speculates that what the guys are really after is for the U.S. to reduce fracking which caused the mess in the first place.

News flash to the world: the United States does not produce oil; private oil companies produce oil.  The U.S. cannot order private companies to stop producing.  If private companies stop producing, cash flow stops, debt payments stop and bankruptcy becomes reality.  Am I the one who is nuts I keep asking myself when I see this stuff.  Maybe I am as a lot of people want to believe it.

Another reason that was proffered today on the rise in equities was now that the economy seems to be on track, the Fed can continue to raise interest rates.  Huh?  Aside from the fact that for 10 years the stock market has performed because of low interest rate, with the rest of the world cutting interest rates doesn't it seem likely that at some point the Fed might just have to worry about where the dollar would go (UP) and the effect that will have in regard to the export sector (DOWN)?  Does to me.  Poor buggers are still in the box of their own making.  And speaking of boxes, the Japanese today got paid to raise even more debt.  Yep, negative yields on the new on-the-run Yen bonds issued today.    All this would really be fun if it wasn't so nuts.  I think I'll get back to Argentina and their announced plans to raise $15 billion in the markets next month.  I need to shift back to the world of reality.   Later.

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