Submitted by Wolf Richter via WolfStreet.com,
“Some very critical things are hidden.”
After the white-knuckle sell-off of global equities that was finally punctuated by a rally late last week, everyone wants to know: Was this the bottom for stocks? And now Moody’s weighs in with an unwelcome warning.
As we said two days ago when looking at the paltry recoveries on their total debt that bankrupt energy debtors are generating in liquidation and bankruptcy asset sales, "the energy bankruptcy party is only just starting." And sure enough, overnight we learned that another company is preparing to throw in the towel following a Reuters report that SandRidge Energy - a shale oil and gas producer in the Mid-Continent region of the U.S. - is exploring debt restructuring options, "as the heavily indebted U.S.
Traders on the NYSE clapped and cheered when the closing bell sounded on Friday as though a couple of green closes somehow made up for the outright chaos that’s reigned throughout the month.
Oil may technically have entered a new “bull” market and the yuan may have momentarily stabilized, but a quick look at the fundamentals for crude and the backdrop for the global economy suggests any respite will be fleeting.
After the biggest two-day surge in oil in seven years, early in the overnight session both Brent and WTI continued their run for a third day, entering a bull market, 20% up from recent lows hit just last week (yet still 15% down on the year) when Saudi Arabia spoiled the momentum party after the world’s biggest crude exporter said it’s keeping up investments in energy projects while diesel consumption in China dropped for a fourth consecutive month, signaling an industrial slowdown.