energy

Authored by Gail Tverberg via Our Finite World blog,

"Something is off," warns RBC's head of cross-asset strategy Charlie McElligott in the introduction to his latest market noting that the swing in US fiscal policy optimism is coming at a critical time as the China's liquidity tightening is spooking the reflation story.

SUMMARY:

Despite yesterday's whopping beats by Amazon and Google which sent the Nasdaq to new record highs after hours, and brought Jeff Bezos "this close" to overtaking Bill Gates as the world's richest man, this morning futures S&P futures are little changed ahead of the closely watched Q1 GDP report, European stocks and Asian equities are slightly lower, oil is higher after Russia's energy minister Novak said Russia had reached the 300kbpd oil cut per the OPEC pact, and the dollar was modestly in the red.

Authored by Irina Slav via OilPrice.com,

Last week, U.S. banks boosted the borrowing bases for several independent energy companies, lifting spirits in the industry. The move was taken as a sign that lenders are beginning to share in the optimism that oil and gas producers have been enjoying since the beginning of the year, with prices staying above $50.

The first signs of financial distress often surface when CFO's start to play games with their balance sheet.  First, comes the ballooning of current liabilities as payable balances are stretched out to the max to preserve cash.  Next, the most astute vendors catch on fairly quickly to the gamesmanship and move to COD terms for new purchases.  Once that happens, the gaming CFO typically faces a 'run on the bank' which prompts a full revolver draw and generally, soon thereafter, a bankruptcy filing.