U.S. stock index futures are higher this morning as crude oil prices hit a 12-day high after four of the world's largest producers agreed to freeze output. (Which means absolutely nothing BTW) WTI has fallen off the highs to the mid-29's and appears to be heading south again. The New York Federal Reserve's gauge of manufacturing activity in the region remained rooted in contraction territory in February.
Here is the current market situation from CNN Money
European markets are mixed today. The FTSE 100 is up 0.44% while the CAC 40 gains 0.11%. The DAX is off 0.72%.
DOHA (Reuters) - Top oil exporters Russia and Saudi Arabia agreed on Tuesday to freeze output levels but said the deal was contingent on other producers joining in - a major sticking point with Iran absent from the talks and determined to raise production.
LONDON (Reuters) - Oil prices slipped off session highs on Tuesday after four of the world's largest producers agreed to freeze output at January levels if other major exporters joined the pact, dashing hopes among the price bulls for an outright cut to supply.
AMSTERDAM/LONDON (Reuters) - Mobile telecoms network operator Vodafone and cable company Liberty Global have agreed to combine their Dutch operations to create a stronger package of TV, broadband Internet and mobile, aiming to better take on former incumbent KPN .
SINGAPORE (Reuters) - Pratt & Whitney's new chief says the performance of suppliers is much better than year ago, easing concerns over its ability to execute a $10 billion gamble on a new engine as it seeks to reclaim a once revered status in the jet industry.
As traders slowly (and then quickly) woke up to the fact that a "freeze" at record levels of production is not a "cut", WTI Crude has collapsed over 5% from its hope-stricken illiquid highs of early trading - now back below $30.
As Barclays warns:
OPEC OUTPUT FREEZE WOULD LEAVE 1Q SURPLUS OF 1M B/D: BARCLAYS
OIL UPSIDE LIMITED EVEN IF OUTPUT FREEZE SUCCESSFUL: BARCLAYS
And the reaction to reality...
And this is taking the shine off the equity market exuberance...
As we said last night, the market can now re-focus on the real underlying dynamics: not only excess supply but clearly slowing global demand...
... and U.S. oil land storage, which as we and the market have been warning, is about to overflow. This perhaps explains why after surging in the aftermath of the headlines from the non-deal hitting the tape, WTI is back under $30. As attention now shifts to nearly full land storage, an ...
The world let out a collective gasp of shock last night when the PBOC announced that in January, China had created an absolutely gargantuan CNY3.4 trillion in new total debt (Total Social Financing) - or about $520 billion - more than 50% higher than expected, of which CNY2.1 trillion was in the form of new loans.
The breakdown of that massive number is shown in the table below:
What happened? Here is Goldman's explanation:
January's credit data was exceedingly strong. Part of the demand for new RMB loans is from demand to borrow RMB and pay down USD debt, though banks may have also started to behave differently amid profit pressures. The temporary suspension of local government bond issuance also directed more borrowing to bank loans and other channels. Strong mortgage loan growth also contributed (household medium to long term loans increased RMB 478.3bn in January, vs RMB 292.4bn in December). The window guidance meeting held by the central bank around mid-January to rein in rapid credit growth apparently did not have much effect on the behavior of commercial banks. (January loan supply tends to be very front-loaded; one would have expected there to be a more significant deceleration of credit supply if the central bank was sending a really tough message, hence market expectations were only RMB 1.9 tn even when they knew it was already RMB1.7 tn in the first half of the month.) The pace of January credit growth is likely above the comfort zone of the central bank. Should the lending continue to be as strong in February,
Saudi Arabia, Russia, Qatar and Venezuela said they wouldn't increase crude-oil output above January's levels but the agreement came with a significant caveat: Iran and Iraq must also halt production increases.
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