Business

One recurring theme observed throughout the oil rally since the February 13 year lows, has been increasingly more aggressive hedging action by producers, who are willing to give up upside gains in order to protect from yet another swoon lower in prices. And, as Goldman cautions in its latest note on ongoing imbalances in the oil market, "the rally in long-dated prices has taken prices to levels ($50/bbl in 2017) where hedging activity is ramping up which suggests it will soon stall."

In a word... "yes," VIX is too low based on the fundamentals underlying the economy, according to Goldman Sachs.

In recent days we have witnessed a massive outflow from virtually all holders of stocks. Just last week we reported that retail had just dumped the most stocks in the past 5 weeks since the August 2011 US downgrade...

... confirming a long-running trend observed with BofA smart money clients who, as we also reported last week, have sold stocks for 15 of the past 15 weeks, the longest selling stretch on record.

This has repeatedly prompted many to wonder who is buying.

Over the weekend, we were surprised to read that none other than recent market cheerleader Goldman Sachs had come up with six reasons why its chief equity strategist believes the market is poised for a material draw down (read "big drop") in the coming weeks. Among these were the following:

In the aftermath of Saudi Arabia's explicit threat to sell off US Treasurys (of which according to the NYT it had some $750 billion) should the US pursue legislation that could hold it liable for the September 11 bombings, Wall Street's analysts quickly tried to calculate whether Saudi Arabia had anywhere remotely close to that amount of US paper available for liquidation.