Risk Aversion Back In?

What a day yesterday (Tuesday) was. If only SFOT had put all his posted views yesterday to positions in the market, he would have struck a winner in everything he opened. Life’s not that straightforward i guess. So risk assets have given back some of their gains. Equities took a dive when Alcoa (AA) results disappointed.

Gold got a small bid, Oil tanked but AUD and Rates hardly did much. German imports down this morning means export dependent countries in Asia can forget about a recovery in exports anytime soon. Factory orders in Germany just posted another all time low as well shows how ill Europe is right now. SFOT is watching the S&P 500 (^GSPC) and will attempt to play the downside if 800 is broken.

In Oil, we are hovering the $50 mark in Brent crude, which as readers know is the benchmark that SFOT watches. However, his short position is in WTI where we are well below $50. Inherent in his view is that K9 WTI has significant selling pressure, both against other crude as well as on its own curve, for reasons well documented( fund rolls, landlocked in cushing etc). As in the last week, front line crude prices recovered towards the end of the week. We shall see if it does so again this week but if DOE data today mirrors that of API yesterday, $45 can be taken out today.

May09 WTi-Brent spread

That crude inventories built over 6mio barrel, with demand down 1.4mio bbl is extremely bearish, probably explaining a good chunk of the weakness we are seeing this am. However, distillates drew while implied demand for distillates went up is providing some sort of support for distillate cracks at the moment. We shall wait for DOE to confirm some of these findings but it does not look good for now.

API stocks weekly

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