|Wed, April 20, 16|
|[Stockboardasset] S&P futures +9bps|
|[Stockboardasset] Nikkei +25bps|
Money manger’s long spec inventory is the highest since July’14 for WTI NYMEX. The thesis of the trade was on a false narrative of a freeze or production cut deal. As of prior weekend, the narrative was shredded to pieces as the Saudi’s prevented a deal from occurring. Immediately, the long spec inventory (highest in 2 years) repackaged the thesis of Kuwait’s strike will offset the break down in talks. 48 hours later Kuwait announces the strikes are over and production is back to normal. Saudi Arabia announces it can unleash +1 million additional barrels at moments notice. Russia announces oil output freeze may not be needed in June, and output may rise to 540m Tons this YR. Russia also mentions oil prices will return to lows in 3-4 weeks if producers can’t make a deal. What’s more disturbing is the thesis for 1Q16 of advancing WTI more than +50% was based on the false narrative of freeze deals. Also, the high correlation to US equities boosted some +15% simultaneously. Equities and commodities have advanced modestly on false narratives, but continue to levitate, which seems odd. Equities are in an earnings recession with macro data deteriorating, and the commodities continue oversupply and lackluster demand. So, who is propping prices and what is the end game?