Business

Authored by Nick Cunningham via OilPrice.com,

As pessimism sweeps over the oil market, a few prominent voices are unbowed, arguing that the market is well on its way towards balance.

In late 2015 and early 2016, as oil crashed, a curious divergence emerged: as crude was dropping, junk bonds crashed with a far greater beta to the drop in the underlying commodity than equities, which remained persistently sticky, stubbornly refusing to drop to a "fair value" implied by oil. The same phenomenon was even more obvious on the way up, as once oil had found a "bottom" energy stocks surged, at times approaching record forward P/E multiples.

If you are a stock bull, congratulations, you’ve unwittingly bought the market base don abject currency manipulation and nothing else.

Stocks have been propped up via abject manipulation of the $USD/ Yen pair and nothing else.  The two are been moving lockstop via one of the greatest market rigs in a history: a 10-day period in which stocks refused to move even 0.2%.

Put simply, you’re not actually a stock bull, you’re a Yen bear. Thank the Bank of Japan for it.

"Probably nothing..."

This morning's disappointing inflation and retail sales data (hard data) more than offset any gains in the soft data (modest rise in UMich confidence), crashing Citi's US Macro Surprise Index to its weakest (and most negative) level since May 2016...

What happens next?

First it was non-GAAP adjustments, then it was stock buybacks, then it was fudging the effective tax rate; and now, in the most creative way to "boost" one's earnings, Dicks Sporting Goods admitted it blatantly fabricated its Adjusted EBITDA. But it's ok: it was a simple calculation error, and now everything is "fixed", the company reported in an 8K filed this morning.