We were looking for better price action in crude oil after this morning’s EIA release, which did confirm last night’s API monster draws in inventories and showed that Cushing inventories at their lowest levels since Nov 2015. But U.S. production continues to ramp.
Very similar trading action to last week’s inventory data dump and about the only positive is it did close off the lows and held some of last night’s gain on the API data. What a freaking widow maker.
The In Her Honor Project
I was best friends with Takeimi Rao, who passed away six years ago yesterday. January 11, 1997-July 10, 2011.
I came up with an idea yesterday to do “Random Acts of Kindness in Honor of Takeimi.” My friends and family have been sharing the small acts that they have been doing, and I would love to get you all involved doing random acts of kindness and participating in “The In Her Honor Project.”
Please share the your random acts of kindness you have created by emailing me at inherhonorproject@gmail.com. I have been handwriting every random act of kindness in a notebook to give to Takeimi’s mother, Aleae.
Yesterday, in her honor, my little sister, spent the entire day doing random acts!! We started off at Valero/7-11. We dropped off $10 at the cash register (and left notes for each person we did something for) and told the cashier to give the money towards the next person who came in to buy gas.
After, we went to buy ice cream, and we paid for the person behind us in the drive thru, the cashier gave him a note as well!
After that, we went to Cold Stone, I bought my coworkers a cake (we LOVE cake,) and a note for them.
Then, we went and bought four pizzas, paper plates & napkins, and hand delivered them to the homeless who live in tents under a bridge by the mall. It was SO humbling, they were so incredibly grateful, and just wanted to talk to us. They went on and on about how sorry they were for our loss, and had the biggest hearts, I wish we could have done more for them. “I love your heart,” was what one man said to us when we left, it broke my heart to know that he would be sleeping on the cold cement that night.
The day before, I went to Fosters, and when I asked the man where his tip jar was, he told me someone stole it; I still gave him a tip, but the fact that someone stole his tip jar stuck in my mind. So, Grace and I bought him a new one and put a few dollars in it. (He was very rude and didn’t accept it, he told us he didn’t want it and he’s better off without it. Lol) It’s okay though, we kept going!!
Grace [my little sister], who is fourteen, bought with her own money, a dozen roses for a dozen strangers. We put them on the dash boards of cars at Lucky’s along with a note!
We ran into a woman who remembered Tiki’s story, she was so incredibly kind and started to tear up when we told her what we were doing in her memory as her granddaughter is 14 and going in to high school. (Our age when we lost her.)
I then met up with her mother and closest friends for dinner.
It was possibly the most humbling experience of my life; I have never felt so good inside and happy to be the person that I am. My little sister, who is 14 now, Takeimi’s age, when she passed, is an amazing sister. She took the time out of her summer, when she could have been out, hanging out with her friends, to come out and do these random acts of kindness with me.
I am asking the community to come together and do random acts of kindness in honor of “Tiki”, it is something that she would absolutely love, and something that would touch the heart of her mother and family.
You can see the link to my Facebook post here, you are more than welcome to use the photo if you end up covering this story!
Thank you so much,
Lexi Evans
This would be the 4th time in 20 years that stocks, bonds and gold all up by > 0.25% on the Fed Chair’s semi-annual testimony. – Sentimen Trader
(TOTD = Table of the Day)
After a monster draw on inventories in the API data released last night, crude oil faces a key test on the EIA inventory release today. If EIA confirms API and the oil price can’t hold its gains, trouble in River City, folks. It likely $42 won’t hold and Goldman may be right that crude trades with a $30 handle.
However, there are some short-term bullish factors at play:
The market is thus set-up for a nice squeeze.
A break above $46.53 takes us to the 50-day moving average and puts in play the key level of the recent lower high at $47.32. If that is taken out, its a new short-term ballgame and could firm up a short-term $45 to $52 trading range.
This analysis will be irrelvant at 10:31 AM after the EIA data is released and the market will do what it is going to do.
Just remember, folks, oil is the new widow maker. Its been a very difficult call and trade for both the longs and the shorts.
.
The political scandal rocking Pakistan, where a Supreme Court investigation found evidence of possible corruption against Prime Minister Nawaz Sharif, has taken the Karachi Stock Exchange down 17.69 percent from its May high, returning almost -10 percent for the year. This compares to the iShares MSCI Emerging Markets ETF (EEM), which is up almost 20 percent year-to-date.
The rupee took a big dive on July 5th, slumping 3.1 percent within hours, its sharpest drop in a single day since 2008, causing panic in south Asia’s-second-largest economy. There seems to a disagreement on FX policy between the country’s central bank and finance ministry. The rupee has reclaimed almost all of its losses, however.
The country is struggling with a growing current account deficit, more than doubling to $8.9 billion between July 2016 and May 2017 due to weak exports and the real appreciation of the rupee.
Nevertheless, according to the Times of India, the fate of the Sharif government may rest on a Microsoft Word font,
On page-55 of the investigative team’s final report submitted on Monday, it says Maryam’s [the PM’s daughter] documents had on them sentences typed in the “Calibri” font which was not available before January 31, 2007, said The Express Tribune report. The documents themselves, though, were from 2006. – Times of India
On average, U.S. refineries produce, from a 42-gallon barrel of crude oil, about 20 to 19 gallons of motor gasoline, 12 gallons of distillate fuel distillate fuel, most of which is sold as diesel fuel, and 4 gallons of jet fuel. More than a dozen other petroleum products are also produced in refineries. Petroleum refineries produce liquids the petrochemical industry uses to make a variety of chemicals and plastics. – EIA
(COTD = Chart of the Day)
Politico out with a piece tonight citing souces that National Economic Council Director and Goldman alum, Gary Cohn, is the leading contender to replace Janet Yellen next January. Interesting timing as it comes on the eve of Janet Yellen’s two-day semi-annual testimony before Congress.
We have heard rumors, but our priors were that Trump would pick a more rules-based chairmain, such as John Taylor of Stanford. Kind of surprising, but most presidents prefer easy money policies.
Cohn will be the first Fed Chairman who isn’t a trained economist since Jimmy Carter’s appointment of G. William Miller. Miller was replaced after only 17 months as inflation raged out of control and was replaced by the super hawk, Paul Volcker in August 1979.
The Politico piece states that if Cohn doesn’t take the Chair, the most likely pick will be former Fed governor, Kevin Warsh, who is now at Stanford’s Hoover Institution.
Upshot? Easy money to continue.
It will also be kind of refreshing to have a non-academic as the Fed Head. One downside is that Cohn’s strong personality and policy making skills will be missed in the White House, which will only empower the nationalists. Bad news, in our opinion.
Sources: Cohn is Trump’s top candidate to replace Yellen at Fed
– POLITICOMoney quotes:
- “It’s Gary’s if he wants it, and I think he wants it,” one Republican close to the selection process said.
- “He would be easily confirmed,” this person said. “Most of our conservative members like him.”
- Another front-runner for the top job at the central bank, former Fed governor Kevin Warsh, also has industry experience and, though he is an academic, does not hold a Ph.D. in economics.
- Cohn is also mentioned as a potential future White House chief of staff and may decide he would prefer that job to leading the central bank.
- The risks involved in the Fed job now, some analysts say, make it somewhat less appealing than when the central bank was dumping money into the economy and driving the stock market to record highs.
- Cohn does not have a track record on monetary policy. But he is viewed as closer to Yellen’s preference for gradual rate hikes.
- People close to Cohn say he would strongly consider the job if Trump offered it and if he felt he’d completed his work on tax reform. However, Cohn’s status as the leading candidate could change, particularly if efforts to reform the tax code falter.
- Senior aides in Trump’s orbit often rise and fall in the president’s estimation. And Cohn’s nationalist rivals in the White House, led by senior adviser Steve Bannon, could try to sway the president against selecting the NEC director for the top Fed job.
- Other names mentioned as possible candidates for the Fed job include Stanford’s John Taylor, Columbia Business School Dean Glenn Hubbard, current Fed governor Jerome Powell, U.S. Bancorp Executive Chairman Richard Davis, and former PNC Financial Services Group CEO Jim Rohr.
–Automation means wells need only five workers, down from 20
…Rigs have gotten so much more efficient that the shale industry can use about half as many as it did at the height of the boom in 2014 to suck the same amount of oil out of the ground, says Angie Sedita, an analyst at UBS Corp. Nabors Industries, the world’s largest onshore driller, says it expects to cut the number of workers at each well site eventually to about five from 20 by deploying more automated drilling rigs.
…That means an engineer can design an oil well at his desk. With the press of a button, an automated system would identify the equipment needed from a supplier, create a 3D model and send instructions for building it out into the field, Hashmi says. “That is automation.”
“It used to be you had a toolbox full of wrenches and tubing benders…Now your main tool is a laptop.” — Donald McLain, who worked as a rig hand for 25 years
QOTD = (Quote of the Day)
Click on table to enlarge and for better resolution
Global Macro Monitor 