Morning 4-21

Deflation worries have Commodities, Stocks down and treasuries Higher

  Expiring May Crude Oil Is bouncing overnight, trading negative $4 but +90%, Front month June -21% traded down to $11.79. The worls is literally running out of places to store Oil All on land storages area close to capacity, if oil isn’t in storage the free space is accounted for. Sea Bourne storage is close to 250Million barrels so thus anyone Long oil doesn’t want to make delivery, so they are liquidating positions. This is obviously accentuated as expiration approaches, but it isn’t a feature that will be cleared up soon, thus the drop in June prices close to a single digit handle. Talk that one of the biggest and oldest oil trading firm in the world based out of Singapore hid close to $800 Million in oil loses (BBG).The Fed stepped in to provide a backstop in credit markets  they may have to increase the size because oil companies are in trouble and it’s getting worse.

   Deflation is a general decline in prices for goods and services, typically associated with a contraction in the supply of money and credit in the economy. During deflation, the purchasing power of currency rises over time       In particular, deflation can harm borrowers, who can be bound to pay their debts in money that is worth more than the money they borrowed, as well as any financial market participants who invest or speculate on the prospect of rising prices.(Investopedia)

 Out Of France “Auto Demand to drop 10% in China and 25% in Europe” (BBG) palladium sole use is in Cars palladium -11%, Silver -5%, Copper-4% and surprisingly very surprisingly Gold -1.9%. European stocks being led lower by Oil and gas and basic resource sector   Dax -2.98%, Stoxx 50 -2.8% Mib only down 2% SPX -1.8% and Nasdaq -1%.

 Ultras +5 handles, Locked   limit up for a bit earlier this morning  only 3 handle limit which is peanuts Bunds +80 ticks, Bonds +2 handles  If Inflation is the bane of Fixed income investors then the opposite holds true for deflation thus the strength in fixed income.5 year yields touched record low

News:

  • Trump to close boarders to all legal immigration
  • North Korea’s Kim may be on Death’s Doorstep according to reports
  • 10% of the U.S. hog Slaughter capacity is offline due to Virus. Bullish pork prices at store bearish Lean hogs which we trade
  • A few rumblings that China may experience a second wave of Virus outbreak
  • Georgia says it will reopen Gyms and a few other businesses on Monday
  • No deal yet for latest stimulus package

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