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Commodities: Weekly Quant

Commodities: Weekly Quant - chart1 divergences

Commodities: Weekly Quant - chart2 deltas

Commodities: Weekly Quant - chart3 USD correls

Commodities: Weekly Quant - chart4 volume

Commodities: Weekly Quant - chart5 open interest

Commodities: Weekly Quant - chart6 volatility

Commodities: Weekly Quant - chart7 sentiment

 

Ben Ryan 

Analyst


Oil Rig Count: Early Look at the Damage

Bottoms are in fact processes, and a combination of project delays, cap-ex cuts (25% in the E&P sector), and drilling stoppages are moving to provide INCREMENTAL support to oil prices. In any time series we contextualize each new data point on the margin (acceleration or deceleration in the current trend.)

 

The marginal changes in the table below are very clear with regards to the production outlook for U.S. producers. Of note is that we are showing crude oil production because of the 135 rigs that have come off in the last two weeks, only 19 of those were purely gas-based. The regional data is released monthly while the aggregate data through today is represented in red.

  • Crude oil production in the U.S. is increasing at a DECELERATING rate
  • Production per rig has been in an upward TREND since 2011, mainly because of technological advances, but the delta-positive TREND is now DECELERATING
  • In aggregate the Baker Hughes Rig Count in the United States is decreasing at an ACCELERATING rate with the two largest oil-producing plays already following this trend through the December data release of the EIA’s Drilling Productivity Report 

Oil Rig Count: Early Look at the Damage  - Chart1 Rig Count

 

History often rhymes, and we have once again confronted the reality that in a capital intensive world, supply/demand imbalances are not corrected overnight.

 

While the world was much different in 2008, E&P companies are very sensitive to oil prices under any circumstance. WTI declined 77% from July 3rd , 2008 to December 19th 2008. The oil rig count topped almost exactly 4-months after the July highs on November 7th , 2008 before being cut in half by June of 2009 (6-months after oil bottomed in December).

We haven’t seen quite the rout in WTI, but we expect the TREND of rigs coming offline to continue at least through the first quarter.

While the macro process is signaling the pressure on crude oil remains, we want to call out our incremental absorbtion of an important data point that has remained a central theme in our macro view since moving into QUAD#4. Communicating the process is everything. 

 

WTI is testing the top end of our Immediate-term TRADE range within a BEARISH TREND/TAIL set-up. A model that contextualizes macro across durations provides a check from reversing our process with each new piece of information. Relying on human nature alone to make consistent, clear decisions gets hairy.

 

Oil Rig Count: Early Look at the Damage  - chart2 levels chart

 

Ben Ryan

Analyst   


The Week Ahead

The Economic Data calendar for the week of the 19th of January through the 23rd of January is full of critical releases and events.  Attached below is a snapshot of some of the headline numbers that we will be focused on.

 

The Week Ahead - 01.16.15 Week Ahead


Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

The Best of This Week From Hedgeye

Here's a quick look at some of the top videos, cartoons, market insights and more from Hedgeye this past week.

HEDGEYE TV

McCullough: This Is The Uber-Bull Case For Gold

In this excerpt from Wednesday's Morning Macro Call, Hedgeye CEO Keith McCullough responds to a viewer's question about recent moves in gold and outlines what he believes could make the "uber-bull" setup for gold moving forward.

 

Hedgeye's Morning Macro Call Replay: Is JPM Set Up Worse Now Than 2011? 

On a special extended edition of the Morning Macro Call (from Wednesday), Hedgeye CEO Keith McCullough gives his global macro rundown, welcomes in Financials Sector Head Josh Steiner to talk JP Morgan after they missed earnings, and announces Hedgeye's Market Marathon, an all-day live streaming event that will air on January 27. 

 

To sign up for the Market Marathon, visit live.hedgeye.com/market-marathon

 

McCullough to Underperformers: Stop Whining

In the Q&A portion of Tuesday’s Morning Macro Call, Hedgeye CEO (and Mite Hockey Coach) Keith McCullough discusses the drastic performance divergences in early 2015 and offers his insight for investors who are under-performing early in 2015. Keith also reveals where he has received the most pushback on the 1Q15 Macro Themes and why the bond market is refuting those concerns.

 

McCullough: Why I'm in No Hurry to Buy Energy Stocks | RTA Live

In this excerpt from Monday’s Real-Time Alerts Live show, Hedgeye CEO Keith McCullough responds to a question about one stock in the energy sector.

 

Subscribe to Real-Time Alerts for access to the full show, plus all of Keith's signals, #timestamped and sent right to your inbox -http://www.hedgeye.com/pages/individuals#real-time-alerts

 

CARTOON

RETAIL SALES DECLINE

The Best of This Week From Hedgeye - retail decline 1.14.15

Retail sales suffered their largest decline in nearly a year, down 0.9% in December.

 

PASS THE DRAMAMINE

The Best of This Week From Hedgeye - sectors 1.13.15

As the new year begins, it's a fair wind for some sectors and a perfect storm for others.

CHART

CENTRAL PLANNING, SWISS STYLE!

The Best of This Week From Hedgeye - swiss

Editor's note: This is a brief excerpt from Thursday's Morning Newsletter by Hedgeye CEOKeith McCullough.

 

*  *  *  *  *  *  *

While I probably don’t deserve a Ph.D. (or a perma bull II vote) for this, I’ve always said that un-elected central market planners would perpetuate the next crisis. That’s #on this morning – follow the interconnected risk:

 

  1. SWISS – there’s CTRL+Print, then there’s panic – and this is rightly A) freaking people out and B) equating to a massive margin call on levered FX trades – Swiss cut by 50bps (to neg -0.75%!) and cut the wire loose on their exchange rate? (Richemont -11.2%, Swatch -8.5%, UBS -7.2%, Adecco -7.9%, Credit Suiss -8.2%, Julius Baer -7.5%, ABB -7.4%) #nice

 

WHAT IF JOBLESS CLAIMS (ENERGY STATES) BREAK OUT TO THE UPSIDE?

The Best of This Week From Hedgeye - wti

 

POLL OF THE DAY

WILL OIL PRICES DROP BELOW $30 AT ANY POINT THIS YEAR?


We wanted to know what you thought.

 

 


Cartoon of the Day: Mo "Mo-Mo", Mo Problems...

Cartoon of the Day: Mo "Mo-Mo", Mo Problems... - Momentum cartoon 01.16.2015

It ain't easy being a mo-bro these days. As Hedgeye CEO Keith McCullough recently wrote, "Don't be a momentum-chasing long only monkey." One moment you and the mo-mo monkeys are on top of the world, the next moment you're all sitting alone on a dirty sidewalk, talking to a dog.


Hedgeye’s McCullough: The Great Central Planning Experiment Is Destined To Fail

Hedgeye CEO Keith McCullough appeared on Opening Bell with Maria Bartiromo this morning to talk volatility, central planning, and deflation. With bond yields plummeting and global tensions rising, Keith thinks that the U.S. jobs market and Europe are now vulnerable as well.

 

 

 


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.30%
  • SHORT SIGNALS 78.51%
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