It is likely just a coincidence that just a month after we reported that China's real consolidated debt/GDP was far greater than the 280% or so accepted conventionally, and was really up to 350% if not higher after the recent record loan issuance surge, moments ago Moody's officially downgraded its outlook of China's credit rating from stable to negative, citing three key risks:
it was just last Friday, when roughly at the same time that Dennis Gartman flipflopped to bullish (just as the rally stalled, and just before turning bearish again ahead of today's torrid rally) we reported that in what came as a surprise to us, that just as Jeff Gundlach was warning about the impending failure of central banks, the lack of a "bullish case for oil", about a bear market for stocks, and about an imminent surge in gold in early February, the DoubleLine manager was buying stocks.
It is often said that on Wall Street there are no guarantees. That is wrong: there is nothing more certain in the realm of big money than carnivorous predators surrounding and tearing apart any hedge fund that bleeds in the water by shorting its longs and forcing a squeeze of its shorts, until and past the point of max pain, which forces the fund to liquidate and hit any bid or lift any offer, traditionally at extremely preferential terms to everyone on the other side of the trade.
Following last week's builds overall and at Cushing, and Genscape's Cushing build warnings, expectations were for a 3.3m build overall (and 700k build at Cushing). API reported a massive 9.9mm build - the largest since April 2015; and a yuuge build at Cushing of 1.8mm (most in 3 months). Gasoline saw a draw but Distilates a notable build. Following today's v-shaped recovery in WTI, and NYMEX close ramp, the API data has sent crude reeling.
API:
Dudley's "Downside Risks" and Draghi's "No Limits" were all it took to trump the worst global macro data since 2012 (JPM Global PMI) and send stocks soaring... Some quick thoughts from (ironically) 1930...