Big gaps lower in all the markets from the Coronavirus EXTREME panic the first few minutes of trading.
Make that huge gaps!
Crude touched $30 Unbelievable.
Unleaded was down to $1.12 Unbelievable.
NG got a few ticks below its previous, amazingly low, contract low at 1.639.
Dow futures/Stock market index was down over 1,000 points and at new lows for the move.
That is a collective right cross to the chin
Thanks Jim,
This is not totally unexpected, though the extreme price plunge in the energies this low tonight is a surprise.
However, panicked markets ALWAYS over react.
The message I've posted several times(including on up days last week), so that traders/readers would anticipate this for the rest of the month:
https://www.marketforum.com/forum/topic/48579/
Started by metmike - March 5, 2020, 12:55 p.m.
Re: INO Morning Market Commentary
By metmike - March 5, 2020,
Stock market: Getting hammered again today..........no surprise. CV reports are, with absolute certainty going to explode higher/exponentially this month.........based just on the science of transmission and how many people are out there spreading the virus. Until we reach the inflection point...............where the slope of the increase starts decreasing and we have experts telling us that it looks like the worst might be over............the stock market is going to be very vulnerable and no way can it recover completely with this huge and growing black cloud hanging over it.
The natural gas weather may be turning more bullish(though its getting late) with potential for much colder later this month but Coronavirus news and reactions will count much more.
When crude is down almost $10 for instance, like it was earlier, ng is going to have a hard time generating aggressive buying.
If you threw out the Coronavirus affect entirely, NG would likely be more than 2,000/contract higher than the current price.
yes, looks like a double or triple whammy tonite. The corana overhype is bad enough and now we have Russia and the Saudis having a hissy over crude. I still think this stuff is over done but we still have to deal with the hysteria and the dems "opporunity" to hurt Trump as they themselves call it.
"Russia has just sparked what may end up being among the ugliest oil price wars in recent history. And Saudi Arabia is firing back. As the two oil superpowers face-off, American oil companies may end up as the biggest victims.
Russian President Vladimir Putin announced on Sunday that present oil prices were sustainable for the Russian economy. Adding that Russia had the tools to react to any adverse results of the spread of the coronavirus on the global financial climate.
"I want to stress that for the Russian budget, for our economy, the current oil prices level is acceptable," Putin explained in a meeting with Russian energy officials.
Now some oil analysts are anticipating barrel prices as low as $20 within the year. Some experts have suggested that Russia's move is intended to counter U.S. shale producers and hit back against the U.S. for targeting the Nord Stream 2 gas pipeline connecting Russia and Germany.
Saudi Arabia blasted back, in kind. Sunday morning, Saudi Arabia dropped its own oil weapon. Its latest plans will not only reduce its unrefined price to Chinese consumers by as much as $6 or $7 per barrel, but it is also reportedly looking to increase its daily unrefined output by as much of as 2 million barrels per day into an increasingly oversupplied international market."
Much lower energy prices are a gift to the economy. Massive drops in fuel prices reduce costs for transportation as well as for consumers.
The markets, however are certainly not looking at it that way right now.
The Dow futures are at new lows, down around 1,100 points.
Grains are obviously going to gap lower on the open.
This is why everything is down hard not because of the "virus" on the openings tonight. Hope the Russians like the price of oil now. IDIOTS
"This is why everything is down hard not because of the "virus" on the openings tonight."
I disagree with you bcb. The market's biggest problem is the Coronavirus.
The Dow futures would not be down a near record amount over 1,200 right now on just Russia oil news.
If this doesn't bring on a recession can anybody say depression
I would say Russia is best positioned for economic down turn
I also think we have to wait at least a week and watch the markets
The Fed will try PPT but will it be enough
The Fed is the only thing between tonites market and depression
On boy
I been wrong for a yr but I did not want to be this much right [stk market]
If you have paper gold sell it as there is much more paper than physical
When push comes to shove you may not get your money
If you get your money you can always re-invest in physical
In the after noon the talk was crude oil was going to open down $8-9 lower on the Saudi news of 10 mil increase and thus pressure price against Russia on no agreement for a decrease. China will be the winner with low energy prices since they import almost all of there needs.
The "virus" didn't cause this opening.
Thanks bcb! Yes, the crude news is extraordinarily bearish.
Dow down around 1,700, was down over 2,000 when it spiked lower after the open.
OK, down 1,600 now. Crazy!
Interesting that after feeling the complete, 100% polar opposite for decades about Opec and the price of oil.........that they are constantly trying to manipulate higher and cause the world to pay more for oil than it/we should, everyone is upset at them and Russia for causing the price to go way down.
Up has become down and down has become up.
Actually, with the Coronavirus scare..........everything seems like down.
A massive drop in crude and its products is worth billions in savings to our economy and consumers from fuel costs plunging.
If we are paying $1/gallon less for gasoline(which is on the high side but hypothetical), multiply that by 143 billion gallons of gas that we consume/year. That would be fuel savings to consumers and transportation cost for businesses of $143,000,000,000.
Saudi Arabia CUTTING prices sounds like they are doing this to HELP not hurt. I have 0 doubt about whether Trump had a discussion with them on this issue, which is of paramount importance to the collapsing global economy.
They announced CUTTING oil prices after the discussion. What does that tell us?
https://www.eia.gov/energyexplained/gasoline/use-of-gasoline.php
And the absurdity of blaming Russia for low oil prices is mind boggling. Low oil prices in this environment WILL BE helping to RESCUE the world from a potential catastrophic collapse of the global economy!
The one thing to help the most right now, is lower fuel costs.........the absolute life blood of all developed countries economies.
Down is up and up is down and everything that Russia does is always evil.
The US is at the moment more or less self sufficient in oil. Lower prices hit the sellers pretty hard, while the much larger number of buyers gets a small benefit per head.
i.e. - My portfolio - Ouch!
Everyone is interpreting it one way...........like you said, looking at their portfolio because of the crashing energy stocks.
Cheap energy prices are a massive gift.
A fact that I have mentioned many times before is that I believe there is MUCH more crude oil in the ground than the industry tells us...........good chance of abiogenic oil from non fossil fuel sources.
Peak oil theory tells us that we will be running out in XX number of years but for decades, they continue to move the goal post and extend that as more and more oil is discovered.
One can understand new discoveries adding to the estimates but after decades of new discoveries, the industry should have a better handle on projecting it, even though there are unknown factors.
So the point is that the industry does not want us to know how much oil there really is in the earth. Creating the illusion that its scarce(scarcer than we know) and not renewable is useful to maximize profits.
The world has been price gouged for the cost of fossil fuels(that are actually pretty cheap when you think of what we get/what they do) based on the actual supplies in the ground.
A drop to $30/barrel for crude here or even lower, is not unjustified based on the above.
One reason energy stocks are crashing and the market is taking it so hard is because oil prices this low will cause shale operations to shut down/go bankrupt.
This will also cause a loss of jobs for thousands in that business..........so there is a pretty big downside that is a justifying concern here.
Dow back down around 1,900 closer to the lows.
This is not going to end anytime soon, even if we don't take out the lows of today.
It will end when the reports of the spread of the Coronavirus, causing the panic, don't seem worse than the previous days.
Come on Patrick you greedy sob. So what your 401 k is 30k, 50k 60k your going to save on gas for the cars.
Given how little we drive, at $1/gallon savings, I'll have made up the difference sometime around the heat death of the universe.
143 billion savings when you add it up bcb.
That would be 143,000,000,000.
The stock market dropping this hard and lost wealth is based on over reaction/panic and emotions tied to the Coronavirus..........that will top out, possibly in April if we're lucky.
Then we go back to sanity and stock prices can start going back up and your portfolio will go back up in value.
The price of gasoline dropping is real money NOT spent every time a person or business buys fuel and as you can see, it adds up to a massive benefit that you get to keep.
patrick, that was very funny. Appreciate the wit/humor.
For those that didn't get it(I did not know much about it myself):
https://en.wikipedia.org/wiki/Heat_death_of_the_universe
For more on the Coronavirus and extreme over reaction/panic:
Coronavirus loony panic
18 responses |
Started by metmike - Feb. 29, 2020, 11:55 a.m.
https://www.marketforum.com/forum/topic/48235/
I will say though, that some measures of over reacting(not in the market) are going to pay huge dividends down the road.
People are now washing their hands like never before and even more than we were supposed to do during the flu season............the incidence of the flu will go down as well as lessening the ability for the Coronavirus to spread compared to us not be petrified of it.
People will avoid contact with others, large crowds, environments that are great for the virus to spread............so the virus will spread LESS because of this and people being petrified.
There will be many, many, many cancellations of events, school closings and so to keep them from being a place where even 1 person with the Coronavirus could spread it to numerous others..........that cause an exponential growth in the spread.
This is what happens with the flu every year. This will cut down on the number of flu cases as well.
So the over reaction/panic now is also dialing in some really bad potential scenario's.
As expectations or fears get more extreme, it means that realities that evolve down the road will have to be really, really extreme to outpace expectations and to get close to worst case scenarios.
Its like that trading too.
If we were having a drought in the Cornbelt for instance(you might forget what that is since there has only been 1, in 2012, since 1988-when the average had been more than 1/decade until the climate crisis caused us to stop having droughts in the Midwest).
So try to remember what the price of corn/soybeans did as the drought got worse. At first, going up slowly but then, when FORECASTS for hot/dry continued, it started painting worst case scenarios in traders heads.
Each added day with hot and dry in the forecast and the market dialed in a higher price to account for the damage done by 2 more hot/dry days.
After a couple of weeks of this over reaction and prices moving up parabolically, at some point its almost impossible for the most extreme supply side, damaging scenario to meet expectations dialed into the stratospheric prices.
And we run out of people doing panic buying at the top..........and often, when the forecast is still getting more bullish.........the price just can't go higher anymore because we already killed the crop and there's nobody left to buy.
So the top usually occurs before the bullish news peaks........since traders already traded news EVEN MORE bullish than what was out there.
With the Coronavirus, we are trading some pretty scary news, way more scary than many of the realities but markets don't always trade realities.............they trade interpretations and expectations of the future and you can bet emotions play into it here.
If a drought caused the price of corn to go from $4 to $8 by mid June with a forecast of no rain for the rest of the month of June, what would it take to go even higher?
If the market has dialed in hot/dry weather for much of July, hot and dry in July might have a hard time doing it at that extreme price.
We run out of buyers when prices get super, mega extreme. A hot July and mostly dry July that featured a couple of ok rain events in this example might cause corn to plunge below $7. What the heck you might say? Yields were still dropping. The USDA August crop report is going to cut production way down!
Yeah but the market dialed the worst case scenario into prices back in June when it hit $8 and maximized risk premium. It then became almost impossible to exceed expectations..........even as crop conditions continued to deteriorate in July.
So too, possibly with the Coronavirus.
For sure it will be getting worse in March. At what point, will the markets have dialed in the worst case scenario and even more bad news isn't enough to phase the markets anymore?
Maybe it was today?
Crude below $28 and RB below $1.10 very early this morning/overnight Sunday.
Dang,
To get lower than that, the news is going to have to get super duper mega bearish even beyond expectations.