Business

Caterpillar's great depression ended three months ago, when in March following a record 51 consecutive months of annual declines, its global retail sales posted the first, if modest, monthly increase growing by 1% on the back of a surge in Chinese and other Asia/Pac sales. Since then the trend has accelerated, and in May the company reported that Asia Pac sales soared by 49%, the highest since April 2011, while maybe more notably, retail sales in the US rose by 2%, for the first time since May 2015.

As noted yesterday, Bloomberg trading commentator Richard Breslow refuses to jump on the bandwagon that the Fed is hiking right into the next policy mistake. In fact, he is pretty much convinced that Yellen did the right thing... she just needs some help from future inflationary print (which will be difficult, more on that shortly), from the dollar (which needs to rise), and from the yield curve.

When we previewed yesterday unexpected announcement that Argentina would join Mexico, Ireland and the U.K. in issuing a 100 year bond, just one year after emerging from its latest default, we said "we expected the potential yield of 8.25% to come down as the offering will likely be many times oversubscribed." It was.

Oil dropped to the lowest in seven months, with both Brent and WTI sliding to prices not seen since November, following a burst of volume just after 6am, amid a revival in output from Libya and rising volumes of fuel held in floating storage, although today's move was likely yet another hedge fund capitulating and liquidating long positions. As a reminder, Pierre Andurand was down 17.3% through end of May.

European stocks were flat after starting off strongly earlier, dragged lower by energy stocks. Asian stocks, U.S. futures little changed as oil tumbled with Brent tumbling as low as $45.85/bbl to the lowest intraday since November 30 and taking out a 38.2% Fib support, after a one-minute spike in volume to a day-high 5,208 lots just after 6am, with WTI mirroring Brent's momentum, and falling as much as 98c to $43.22, lowest since November 14.