WTI/RBOB Jump After Biggest Crude Draw Since September

Libya production updates and weak economic data weighed on crude ahead of the API print tonight but as the data hit showing a bigger than expected crude draw (8th week in a row), both WTI and RBOB jumped higher. This was the biggest crude draw since Sept 2016.



  • Crude -8.67mm (-3mm exp)
  • Cushing -753k
  • Gasoline -1.726mm (-1.5mm exp)
  • Distillates +124k

If this holds for tomorrow's DOE data, this is the 8th weekly crude draw in a row (and this week's 8.67mm draw is the largest since Sept 2016)


We suspect month-end squaring also weighed on markets today but the bigger than expecte draws sent both WTI and RBOB higher in the after market…

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Face Off : Stocks Vs. Bonds & The Economic Outlook

Authored by 720Global's Michael Lebowitz, via RealInvestmentAdvice.com,

There is a healthy debate between those who work in fixed-income markets and those in the equity markets about who is better at assessing markets. The skepticism of bond guys and gals seems to help them identify turning points. The optimism of equity pros lends to catching the full run of a rally. As an ex-bond trader, I have a hunch but refuse to risk offending our equity-oriented clients by disclosing it. In all seriousness, both professions require similar skill sets to determine an asset’s fair value with the appropriate acknowledgement of inherent risks. More often than not, bond traders and stock traders are on the same page with regard to the economic outlook. However, when they disagree, it is important to take notice.

We created the Trump Range Chart a few months ago to easily track a number of asset classes, gauge the durability of post-election market moves and monitor divergences. In the May 23, 2017 update to that chart, we noted that some indicators such as the Treasury yield curve, regressed to levels observed prior to the election. At the same time, many of the popular equity indexes continue to power ahead to new record highs. The bond market seems to be telling us that the probabilities of the reflation trade have dropped considerably. Meanwhile, the stock market appears to remain convinced that the prospects for growth and reflation are alive and well. Can they both be right?

Given our opinions on the severe economic headwinds facing economic growth and steep equity valuations, we believe this divergence poses a potential warning for equity holders. Accordingly, we thought it appropriate to provide a few graphs to demonstrate the “smarter” guys are not on board the growth and reflation train.

The graph below shows that the U.S. Treasury 2-year/10-year curve which, having gapped almost 75 basis points wider following the election, has reverted back to pre-election levels. Alongside the yield curve is the S&P 500, which continues reaching new highs since the election. The election date in this graph, and all graphs that follow, is highlighted with the vertical dashed line.

The U.S. Treasury yield curve has been a reliable predictor of recessions in the past. As shown below, the popular 2-year/10-year U.S. Treasury yield curve spread has inverted prior to all recessions (gray bars) since at least 1980.

Currently the yield curve is not close to inverting, but the flattening trend is quite the opposite of what one would expect if bond traders and investors were expecting a boost to economic growth and higher inflation.

The following graphs reflect the deteriorating economic expectations implied by bond markets as juxtaposed by the persistence of the equity markets.

5-Year Breakeven Inflation Rate: Measures market-based inflation expectations over the next five years.

10-Year Breakeven Inflation Rate: Measures market-based inflation expectations over the next ten years.

5-Year x 5-Year Implied Inflation: Measures market-based 5-year inflation expectations in 5 years (e.g. inflation in the years 2022-2026).

Inflation Premium: Measures the 10-year yield premium (discount) that investors require over the rate of inflation.

S&P 500 and NASDAQ Equity Markets

Data for all graphs courtesy: Bloomberg and St. Louis Federal Reserve (FRED)


Given the divergences shown between bond and equity markets, logic says somebody’s wrong. Another possibility is that neither market is sending completely accurate signals about the future state of the economy and inflation. It is clear that bond traders do not buy into this latest growth narrative. Conversely, equity investors are buying the growth and reflation narrative lock, stock and barrel. To be blunt, with global central banks buying both bonds and stocks, the integrity of the playing field as well as normally reliable barometers of market conditions are compromised.

This divergence between bond and equity traders could prove meaningless, or it may be a prescient warning for one or both of these markets. Either way, investors should be aware of the divergence as such a wide gap in economic opinions is unusual and may portend increased volatility in one or both markets.

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Hillary Clinton Says She Takes Responsibility for Her 2016 Decisions, But Blames Russia, Far Right for Loss, Philippines President Blasts Chelsea Clinton, Florence Mayor Hosing Down Church Steps to Keep Lunching Tourists Away: P.M. Links

  • The former FBI director, James Comey, will testify in the Senate next week about his meetings with President Trump. Elon Musk says he’ll resign from his White House advisory council posts if Trump withdraws from the Paris climate agreement.
  • The White House press secretary, Sean Spicer, says the president and a small group of people know “exactly what he meant” by last night’s now deleted “covfefe” tweet.
  • CNN has dropped Kathy Griffin from their New Year’s telecast after controversy over a Trump beheading photo. The president said his 11-year-old son Barron Trump was having a hard time with it.
  • Speaking at a coding conference in California, Hillary Clinton says she takes responsibility for every decision she made in the presidential campaign, but that Russia was the reason she lost.
  • Philippines President Rodrigo Duterte lashed out at Chelsea Clinton after she criticized comments he made that he would defend abuses by his soldiers even if they “raped three women.” Duterte asked if Clinton reacted the same way to allegations about her father, President Bill Clinton.
  • Authorities in South Africa warned that protestors were wrong about foreigners being behind child abductions.
  • The mayor of Florence says the city will be hosing down church steps to prevent tourists from eating lunch on them.

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Nasdaq Shrugs Off Commodity Carnage, Retail Crash In May For Longest Win Streak Since 2009

US Macro data at its worst since Feb 2016, 2017 lows for EPS Expectations, Record Highs for Nasdaq… "inconceivable"


With 5 months down this year, Gold is the biggest winner and 'no brainer' banks are in the red…


May saw US Macro data collapse for the 2nd month in a row – the biggest sequential drop in US economic conditions since May 2011 – which was when QE2 was in full swing… (NOTE: Soft Data was the biggest driver of the drop in macro data)


But it's not just 'Murica that is struggling with 'real' data,  the entire world's economic data is collapsing…


Bonds beat stocks in May..


"Sell In May" for some… but definitely not Nasdaq…

  • Nasdaq 100 up 7 months in a row – longest streak since Sept 2009; Gained 20% in those 7 months – best since April 2012
  • Nasdaq Composite up 7 months in a row – longest streak since May 2013; Gained 20% in those 7 months – biggest rise since April 2012
  • FANG up over 7% this month (cap-weighted) – best since Oct 2015; up 6 months in a row.
  • Small Caps worst month since Oct 2016

Nasdaq was ramped into the green for the week…


Banks are down for the 3rd month in a row but the barbell trade is now well and truly in place with Utes and Tech surging together (as Retail crashes – worst month since Jan 2014)…


JPMorgan and Goldman Sachs were the worst performers…big banks worst month since Jan 2016


May saw a non-stop slide in market breadth…


VIX dared to rise above 11 briefly today…


Alphabet made a run for $1000 around the open, but failed…Today was FANG stocks' worst day in 2 weeks (first losing day in 2 weeks)


Treasury yields extended their decline post-FOMC Minutes…


Treasury yields ended May lower (apart from 2Y's modest 1bps rise)…


With the yield curve (2s10s) flattening for the 6th straight month – and its lowest monthly close since September 2016…Trumpflation is over


NOTE that since shortly after the initial chaos of Trump's election, G3 central banks have been throwing money at the problem as never before and that is lifting stocks (Nasdaq highest beta) and bonds (yield curve collapsing)…


The Dollar Index tumbled today…


To close at its lowest since Nov 4th 2016…


May was a bloodbath for commodities…3rd monthly drop in a row (most notably China-related ones)


Crude fell for the 3rd straight month (and gold gained for the 5th straight month)


It's been an ugly few days for crude…


And finally, Bitcoin surged 76% in May – its best month since Nov 2013…


Bonus Chart: This has not ended well…

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Florida Man Jailed 180 Days for Not Giving Police His iPhone Password

Yesterday a circuit court judge in Broward County, Florida, sent 41-year-old Christopher Wheeler to jail for 180 days because he wouldn’t give police his iPhone password. Wheeler, who is charged with aggravated child abuse, insisted that he did give them his password. But the cops say the password he provided doesn’t work, and that Wheeler therefore hasn’t complied with their request. This, the judge decided, put him in contempt of court.

Meanwhile, another Florida circuit court judge—this one in Miami-Dade County—issued a rather different ruling in the case of a couple accused of extorting a social media celebrity over a sex tape. They would not be held in contempt of court for failing to share a phone’s password, the judge decided, because there’s no way to prove that they couldn’t remember their password.

These are just the latest episodes in a broader debate about how Fifth Amendment rights apply to a relatively new technology. Do passwords count as “testimonial evidence,” where protections against self-incrimination apply? Or is it more like a field sobriety test or a DNA swab?

Police in both cases were following a precedent set in Sarasota County last year, when the sheriff’s department wanted to compel a man accused of video voyeurism to give them his iPhone passcode. A trial judge had ruled that this would violate the alleged voyeur’s Fifth Amendment rights, declaring that the man could not be forced to surrender “the contents of his mind.” But a state appeals court rejected that reasoning, citing the 1988 Supreme Court decision Doe vs. U.S. That case centered around whether the feds could force a suspect to sign consent forms permitting foreign banks to produce any account records that he may have. In Doe, the justices ruled that the government did have that power, since the forms did not require the defendant to confirm or deny the presence of the records. The Florida court decided that the iPhone case was analogous: The password to the phone and the contents of the phone were separate subjects.

The Sarasota case is now headed to the Florida Supreme Court. Wheeler is appealing his case too, and is expected to be allowed to post bond.

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‘Operation Big Bad John’ Used 75 Cops, Six Federal Agencies to Catch 13 Sex Buyers

Every day I could bring you another example of how “human trafficking operation” and “sex trafficking sting” are simply police code for “prostitution bust.” The story never changes: Police arrest sex workers or their clients, slap a catchy title on their efforts, call it a win against “modern slavery,” and blast it out to local reporters, who faithfully frame the whole thing exactly how cops want. To the casual reader, it must seem like law enforcement is doing a seriously good job at stopping sexual exploitation. But all they’re really doing is wasting tons of time and taxpayers’ money to stop consenting adults from having sex.

Here’s a stellar new example out of San Diego. “13 Arrested in Human Trafficking Operation,” the local NBC headline declares. What the headline fails to make at all clear is that not a single one of the arrests were on human trafficking charges, nor was a single trafficking victim recovered. Police simply posed as adult women selling sex and then arrested men who wanted to pay them.

Just how many police officers did it take to take down these 13 nonviolent offenders? According to the San Diego County Sheriff’s Department, more than 75 law enforcement agents participated. The agencies involved included the FBI, Immigration and Customs Enforcement/Immigration Enforcement and Removal Operations, U.S. Customs and Border Patrol, the U.S. Marshals Service, Homeland Security Investigations, and the Internal Revenue Service. (There’s no word on how many immigrants may have been rounded up in the course of the sting.)

The initiative, dubbed “Operation Big Bad John,” also netted some arrests for drug possession. Police seized “more than 17 grams” of crystal meth and a few Ecstasy pills in this “human trafficking operation” as well.

“Human trafficking is a form of modern-day slavery” and “the biggest human rights violation of our time,” the sheriff’s department stated in a press release about Operation Big Bad John—a standard non sequitur for such faux-social-justice stings. Because really, who wants to quibble over particulars when modern slavery is involved? Cops know they can count on lazy reporters and a public that’s been spoonfed human-trafficking hysteria for years to simply nod along with whatever new (or age-old) bullshit they’re up to under an “anti-slavery” guise.

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What Happened The Last Time Wall Street Was Infatuated With “Trillion-Dollar Companies”?

Will it be Apple? Amazon? Alphabet? Who knows; but Wall Street’s current infatuation with the first trillion dollar company has an ugly sense of deja vu to it


h/t @WhatILearnedTW

Of course, it’s probably different this time.

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Watch Live: Hillary Clinton Speaks At CodeCon

“I take responsibiltiy for every decsion that i make, but that’s not why I lost.”

 That is the soundbite du jour so far from Hillary Clinton, who previously blamed both Wikileaks and James Comey for losing the election, and who is speaking at Recode’s CodeCon conference (free for everyone, no need to shell out $250,000 this time), where Kara Swisher and Walt Mossberg pick the brain of the 2016 presidential candidate, who also just uttered the following memorable line: “Q: why did u speak with Goldman? A: They paid me.

Watch live below:

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Wednesday Humor: WaPo Reporter Frustrated Every Space In Parking Garage Taken By Anonymous Source

Fact or Fiction?

WASHINGTON – Circling every level multiple times with no luck whatsoever, Washington Post reporter Philip Rucker was frustrated Tuesday that every space in the parking garage was taken up by an anonymous source.



"I’ve gone around and around, but I can’t find a single spot that isn’t already filled by an unidentified White House leaker,” said an exasperated Rucker, who recalled how easy it was to nab a prime parking place to clandestinely receive privileged information only a few short years ago.


“It’s such a nightmare driving all the way to the very top of the whole fucking structure to hold a secret meeting with an informant and then have to squeeze into a spot reserved for compact cars that another journalist who’s meeting with a whistle-blower is halfway parked in anyway.


Seriously, I have to start scheduling these rendezvous earlier, because as soon as dusk settles in, you can forget it.


At press time, Rucker was idling his car near the space occupied by a New York Times reporter who had just received a thumb drive and appeared to be wrapping things up.

Source: The Onion

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Senate Republicans Don’t Know What’s In Their Health Care Bill—But They Know It Won’t Repeal Obamacare

Senate Republicans aren’t saying much about what’s in their health care bill, but they have made one thing perfectly clear: They have given up on fully repealing Obamacare. That is not an outsider’s view. It is how Republicans themselves are framing the health care legislation that is now working its way through Congress. And it is one of the reasons why Republicans are continuing to struggle with the legislation now that it has been passed on the upper chamber.

Now that the American Health Care Act (AHCA) has passed in the House and moved to the Senate, Republican lawmakers are being blunt about the limited scope of the legislation they are considering.

The Senate, of course, is still working on drafting its own health care plan, which will reportedly differ from the House plan. No legislative language has yet been released, and few specifics have emerged. The policy and political challenges involved in crafting a bill are significant. And some Republicans are already tempering expectations by saying it won’t be a full repeal of Obamacare.

“You can’t repeal it in its entirety,” Iowa Sen. Joni Ernst said this week. “You’ve got to have 60 votes and we don’t have 60 votes at this point,” said her Iowa GOP counterpart, Sen. Chuck Grassley. Instead, Ernst said, Republicans have the opportunity to “tinker around the edges.”

These are statements about the limits of Senate procedure as much as it is one about the willingness of Republicans to eliminate the law entirely. The legislative filibuster effectively sets a 60 vote requirement to pass bills in the Senate. That’s why Republicans hope to overhaul the health care law using a procedure known as reconciliation, which allows for legislation to pass on a simple majority vote. But legislation passed via reconciliation must meet certain conditions, including direct relevance to the budget, meaning that some of Obamacare’s regulations are likely to remain in place no matter what.

But these statements also represent admissions that the years of GOP promises to repeal Obamacare will not be fulfilled. The procedural limitations are only one reason why. Party lawmakers have strong disagreements about how or whether to subsidize coverage in the individual market, about the role of Obamacare’s Medicaid expansion, and about the necessity of maintaining the health law’s preexisting conditions regulations.

At this point, then, the goal for Republicans is to rewrite the health care law rather than repeal it, which invariably means leaving in place many of its essential structural elements.

It is not clear, however, what sort of health policy improvements the GOP would actually accomplish through rewriting. The final Congressional Budget Office analysis of the AHCA found that it would result in 23 million fewer people covered a decade from now. That is the exact same coverage decline the CBO projected as under simple repeal. The initial version of the GOP actually covered even fewer people than a straightforward repeal, according to the CBO. Under all versions, premiums would rise sharply between now and the end of the decade, and would continue to rise afterwards, though less than under Obamacare.

Some of this may be attributed to the quirks of CBO’s model, which probably overstates the effect of Obamacare’s insurance mandate on coverage, and thereby exaggerates the effects of eliminating it. Even still, it suggests that the health law rewrites Republicans envision would do little to lower premiums or make coverage more accessible. Republicans would not be repealing Obamacare, in other words, and it’s not clear that they would be improving on it either.

That helps explain why the bill now appears stalled in the Senate. Just last week, GOP Senate Majority Leader Mitch McConnell, who is usually businesslike in his optimism about the Republican ability to accomplish legislative goals, admitted that he did not know how Senate Republicans would put together the 50 votes necessary to achieve passage.

That doesn’t necessarily mean that the bill will stall forever (although it might). The House version of the bill looked dead after a floor vote was called off. And House Republicans had their issues with that bill too. Days before the House voted to pass the American Health Care Act, Rep. Dave Brat, a Freedom Caucus member and Tea Party favorite who ousted Rep. Eric Cantor in a primary challenged, admitted that the AHCA was “not the repeal bill we wanted.” Although Brat opposed an initial version of the legislation, he voted for its eventual passage.

But Brat’s disappointment remains instructive. Given the limitations of the process, it’s not too much of a stretch to say that the AHCA was not a bill that any Republican truly wanted. Nor, as McConnell’s comments suggest, is it certain that such a bill could ever exist. Even if the Senate manages to pass something, it will still have to be negotiated with the House, creating more opportunities for disagreement. The only thing Republicans have agreed on about health care over the last eight years is that they want to repeal Obamacare, which they are now admitting they won’t do.

Some Republicans, then, have started to figure out that they aren’t going to fully repeal President Obama’s health care law. But they still haven’t figured out what they want to do—or why—instead.

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