What To Expect With Oil At $20?
What To Expect At $20 Oil? Ladies and Gentlemen As we saw Oil dip below $30 per barrel yesterday, we have seen somewhat of an overnight reprieve in the Oil trading sessions of Asia and Europe. However, it is very hard to find reasons to be optimistic in current conditions, especially with the over-supply and concerns about China growth. The pain low Oil prices has so far caused for Oil investors and Oil producing countries may just be a taste of things to come as we head to $20 per barrel. We are now confronting $20 Oil and the likelihood is fairly great. Clearly Oil markets cannot maintain these prices (below $30) for very long and the question is for how much longer? The Gulf Economies as well as other Oil producing countries are suffering immensely, such as Malaysia – who are losing $68 million for every $1 decline in the price of Oil. Oil producers too.. EconocoPhillips – losing $2 billion for ever $10 decline and yesterday Petrobras announcing it is lopping $30 billion of it’s 5-year spending plan… Hours late, BP announces that they would slash 4,000 jobs. If there is some sort of optimistic note to leave you on and that was last year China (2nd largest consumer of Oil) imported a record amount of Crude, but that was simply taking advantage of low prices… and if/when prices go up they can start taking advantage of their huge stockpiles. $20 oil just acts to dig an even deeper hole from where you need to be before the markets look to open up again! Best of luck guys! Anish8FX @Atom8.com
The Future Is Bright – The Future Is Silver
The Future Is Bright – The Future Is Silver! Ladies & Gentlemen, As we tick closer to “Lift-Off” from the FED, the Precious Metals continue to remain cursed by the USD bulls. But what will happen after the initial FED fiasco? Will the Markets quickly learn to appreciate reality of US Debt? Will investors flock into the Metals?… I’m not too sure, but I do make a good case to stay long Silver (XAGUSD) for the next 5-10 years. Commissioned from Mr. Hague (SocGen), he has created a propriety model on measuring a move in the commodities in relation to Macro factors, the Strength of the USD, Interest Rates & Market Fundamental (Variables) & from his analysis, it is clear that Fundamentals have taken a back-seat over the past 12 months. The Macro variables are the driving force behind the Markets, covering the environment for Risk Attitude, the Volatility Index & Equities…. This is what (according to Mr. Hague) is moving Silver (chart below): Over the past 2-3 years, Silver has been trading more like Gold & recent moves have been primarily driven by the strong USD and all-round been a strong head-wind for the Metals. With Silver being 60% Demand driven, more for Industrial uses (mainly Electronics).. we begin to see Silver evolve from a Precious Metal to a Base Metal. The long-term outlook for Silver is bright, and a big part could be due to the anticipated exponential use of Solar. According to the IEA’s growth forecasts (on a mass scale) over the next 5-years, they would be using nearly 1 Billion ounces of Silver! This bodes very well for Investors looking at today’s chart, as you finally have (after 12-13 years) Silver Supply declining, especially when you think about the 2011 peak. The longer term Demand sets to pick up and it looks to be setting itself up for a Constructive move. Silver is absolutely everywhere! In your computers, in your phones… & as Emerging Market demand picks up over the next 10 years for Electronics, only naturally should this Market increase in value. So Anish, how do you see the Market shaping for the end of the year?… Well there is not much left for this year as we remain merciful to the FED’s hiking plans but I do expect Fundamentals adding more promise to the Metals market in the Longer term & hope to prove the doubters wrong, as I am personally a big fan of Silver. Best of Luck Anish8FX @ Atom8.Com
So.. You think you can trade like Sarao? #FreeNav
#FreeNav….. (I just want to touch briefly on this…)So as soon as the Sarao story dropped in the media, I had 4 journalists contact me attempting to find out if what he did was possible & if so – how could 1 trader be the causation factor for such a huge crash?… Is this just a cover up for someones fat finger? Why did it take 5 years to uncover him and not 5 minutes? Why was he allowed to take money from his broker?…… What did he actually do wrong? … 350 years for making money trading the Markets??? WTF! Liam Neeson (Ex-Bearings Bank “Rogue Trader” said “No Trader comes into the market to lose money”)….Fact is – NAV Beat the system! This week has been pretty monumental with regards to authorities “stamping out” (scapegoating) high-frequency traders for their (lack of) risk-management algo blips & possibly deterring a lot more HF traders…. These modern day Robin Hoods are a risk to huge institutions and the general order of the markets.. However, with the dynamics of an ECN pool & given available market-depth… Their still lies a huge loop-hole which brokers/banks aim to hedge against. An IOC order is pretty common among API HF traders and 19,000 orders in a blink of an eye is pretty uncommon amongst UHFTs.. HF firms have been making money via these widely available strategies for years. However, this is what strikes me….. Nowadays, (and even back in 2010)… Large institutions have been paying £1ms to Nerds to design risk management algorithms to protect their liquidity pools from being hit….. So why did this not trigger with Nav? We call them “Pirates” in the Broker world as over the past 2-3 years it is has been extremely hard to cater for their strategies… as they aim to continuously hit stale prices with the view of arbing feeds (slower vs faster) & making exponentially high returns. Below is a trading statement of one such client (latency based arbitrage trading – Ultra High Frequency Trading)… THESE GUYS EXIST in numbers (albeit declining)…: There are many others like this….. So how can they get away with this? I will leave this questions up to the #FBI Signing out on a sad week for Traders.
The Spectacular Collapse of Iron Ore
The Spectacular Collapse of Iron Ore Falling commodity prices and a weak outlook for growth have increased the chances for a rate cut by the RBA next week – further applying downward pressure on an already weakened AUD. The ASX 200 fell over 30 points last night, as the prices of Iron Ore continue to feel the impacts – with mining & energy stocks leading the way. BHP has lost 2.2% & Rio Tinto ended the session 1.4% lower today. Iron Ore at 10 year lowsThe recent $13bn purchase of a Chinese owned mine in Australia have most definitely awakened this bear. Dubbed the “Sino Iron Project” it has been heavily criticized by the industry – as the Chinese plan to pump millions of tons or Iron Ore into an already over-supplied market. China in Peru, Africa & now Australia On Tuesday, Iron ore fell to $51 per metric ton. That is the lowest it has been since 2004. This now forces the likes of Rio Tinto & BHP to curtail output to boost prices. However, China is not stopping – as the state owned firm citic are planning a 30 year project expanding Worldwide. Even despite the Chinese GDP slowdown, the country still aims to protect it’s future needs. Realities The iron ore price would have to hit about $30 before the two major corps would risk losing money. Many voices in the industry point towards a wall around $45… but let’s see what happens following next weeks prospective rate cuts. Meanwhile… Iron Ore continues to slide…