POV roller coaster

Oil And Equity Volatility (These Aren’t The Curves That Should Worry You)

WTI Crude oil has catapulted 19% from its intraday low Thursday, booking its strongest four-day winning streak since January 2009.  While the rebound has been steep, not everyone is anticipating recent gains will stick.  Most think the surge is only temporary and oil could fall even further — potentially sliding below $30 before the market balances out.”  Dr. Ed says that despite a 24% decline in US oil rigs over the last four months, “oil field production actually rose to a new high of 9.3mbd during the week of January 23.”  Furthermore, “oil market participants may be starting to price oil based on future shortages caused by today’s low price.  Everyone in the commodity pits knows that low prices are the best cure for low prices, just as high prices are the best cure for high prices.”  Meanwhile, analysts at Credit Suisse say that oil inventory data is having a larger than normal effect on daily volatility in equities: “daily volatility in the stock market throughout the day has been on the rise for months…Volatility typically peaks during the first half hour of trading, before tapering off and then rising again during the final hour before the 4 p.m. close.  One noteworthy change in January, however, was the spike in volatility at 10:30 a.m., coinciding with the weekly release of U.S. oil inventory data.”  Furthermore, the dispersion of equity returns is pretty uneven so far this year.  “The average stock is basically unchanged, up just 0.13%.  However, as you can see from the chart there are plenty of winners and losers.”  Some people are seeing all this volatility and calling for a stock picker’s market.  Eddy Elfenbein has a different perspective: “If we combine all the [S&P 500] days with moves greater than 1.17%, it nets out almost perfectly to zero.  In other words, all those high volatility days add up to nothing.  The market’s entire gain comes on days when the S&P 500 rises or falls less than 1.17%.  The rest is just noise.”


Approaching An Inverted Yield Curve (Here You Go)

“The yield curve is historically steep, but I have already seen research claiming that were it to invert as the Fed raises rates over the next couple of years and the term premium shrinks, it would not mean the same thing it always has: a harbinger of recession.  In other words, this time is different.  (It’s always different until it’s not.)…Its track record, should it invert for whatever reason, in forecasting recessions is impeccable.  Bending the curve to fit the forecast has never been a fruitful exercise.”


USA: Staples, Office Depot Deal Break Fee Signals Little Antitrust Worry

“This investigation isn’t going to be about where you and I can buy a stapler.  It’s about where a company can buy 10,000 staplers.”


Global: The Illusion Of Monetary Policy Independence


USA: Disney’s Tent Pole Strategy Is Alive And Well


USA: Massive IBM Layoffs Rumors Are Still Rumoring About


What: Argentina Is Insane


C’mon: Greek Finance Minister Yanis Varoufakis He Who Shall Not Be Named


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