From Alhambra
Why aren’t more people talking about
this? It’s a huge development and nary a peep anywhere. The mainstream
media is filled with baited expectations for 3% wage growth on Payroll
Friday. All eyes are on the labor market, which is a lagging indication,
instead of on the oil market, which is forward looking.
As of this writing, the futures curve for WTI has expanded this current selloff. The level of alarming contango has continued to widen, in both amplitude as well as frequency, in just the past few days.
The question at the front was
rhetorical. The reason everyone wishes to focus on the labor report is
obvious. The wage data in particular outwardly though misleadingly
conforms to the idea of an economic boom, at
least in the US. The crude market isn’t just saying “wait a minute”, it
completely refutes that very thing.
Furthermore, the oil curve had only
been in backwardation less than a year. It flipped toward that positive
economic signal, which was widely covered, exactly one year ago today.
We’ve seen this all before. The oil
curve shifted to contango last on November 20, 2014. It was ignored
then, too, and after catching some reluctant notice immediately
dismissed as a supply glut in favor of data showing the “best jobs
market in decades.” The payroll reports four years ago were just too
lovely to set aside for this impossible, according to Economists,
ugliness.
Guess which one proved more valuable in assessing the way the global economy was headed, US most definitely included:...MORE
Oh noooo! Now I've got that
song about curves in my head.
Jingle Bells à la Klein
Rolling down the curve
With my Eurodollar strips
Making tons of money
‘til the Fed hikes 50 bps!
...MORE
