As historic events unfold around us, and with markets moving so quickly around the globe, I thought we should try something different today. Hopefully this open thread provides a forum for the free exchange of ideas and opinions as well as headline updates for all the global markets.
My opinion is this:
With overt sanctions against Russia having minimal impact, the U.S. set out on a course of covert sanctions last summer. Among these was a plan to manipulate down the paper price of crude oil as Russia derives nearly 15% of its national income from the sale of crude.
Once price broke $90, the spec algos took over and the growing momentum of the trade has driven price well beyond what the central planners originally thought possible. Now closing in on $50, the decline has imperiled all sorts of economies, currencies and derivatives around the globe.
Chief among those imperiled is the original target, Putin's Russia, which has seen the ruble devalue by nearly 50% in past few months, 20% in just the past few days. The US and NATO are already fighting a proxy war versus Russia in Ukraine. How might these events intensify the battles there?
And there are all sorts of other "unknown unknowns" here:
- The $4T in US TBTF bank commodity derivatives, the majority of which are linked to crude oil.
- The collapsing currencies and equity markets of other crude oil producing nations.
- The US high yield bond market with an abundance of debt issued by energy companies.
- Might even Russia surprise the world by "thinking outside the box", if you get my drift?
So, anyway, please discuss all of this here and be sure to add your own ideas and theories. I'm going to make this a public thread so that anyone stopping by will have the opportunity to explore the collective wisdom of Turdville.
As I close, the US stock market is now UP on the day (big surprise), while the 10-year note and the Long Bond are making new yield lows for 2014. Crude is down but $1.50 off its lows at $55.50 and, of course, gold and silver are DOWN. Again, no surprise there. Silver's actually down 4% and below $16. Funny...I guess I failed to notice how the global fundamental picture for silver has deteriorated by 10% since just last Friday.. Wow, how could I have missed that?