More Irrationality, Less Risk Appetite?

The star of the day has to be Singapore’s STI index. A whoppy 22% in 5 days. If there is any bigger representation of irrationality anyone, pls let me know. SFOT is also puzzled by the strength of this island state’s currency. Surely a massively export dependent country cannot live long with a currency that strong? Well well, another day, another confirmation that fundamental investment in this climate can only give you pain, more in brain cells than p/l wise for some.

Back to oil, the behaviour in the past few days in oil replicates on-goings in equities, fx and gold. Hence in terms of direction, SFOT sees no point in taking a fundamental view point. Rather, he would go with the flow and trade the miserable range. Vol looks cheap compared to the past few months, however the realized short term vol has fallen off a cliff, making implied look a touch expensive to be long of.

Refining margins has been holding up well of late, mostly supported by gasoline and heavy fuel oil. Baring any major surprise in DOE numbers later today, SFOT doubts there will be any significant movements attributed to the set of numbers. This move up recently has been accompanied by a sudden strength in crude timespreads, particularly in the 2010/11 area. There could be a little bit of producer activities lately depressing the curve. Any larger flow will surely stop the market from going higher as volume seems to be on the light in recent sessions.

Accompanying this post is a little contribution from a reader/colleague taken from the bbc website. What is he thinking of??

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