Thank Draghi It’s Friday

One Trillion Euros!  

It sounds like a lot of money but, already today, it's worth $40Bn less than it was on Tuesday.  Since Draghi's QE program doesn't begin until mid-March, at this pace (-$20Bn a day) by March 20th the whole Trillion will be gone – how's that for a magic trick?

Of course we don't think the Euro will keep falling to zero over the next 50 days but losing 2% per day of your entire net worth, even for just a couple of days, is bound to have some investors jumpy about their Euro-denomiated assets.  That's why the Euro continues to slip towards parity today ($1 per Euro), hitting $1.11 this morning, after opening yesterday at $1.165.  

Our mighty Dollar flew up to 95.77 this morning as investors flocked to safer harbors.  It's really the US or nothing now as Abe has desroyed they Yen and China's Bad-Loan Ratio jumped 10% in Q4, now making up 1.29% of outstanding debt and forecast to climb to 1.6% by the year's end.  

The 0.13 percentage-point increase in the bad-loan ratio was the biggest since the regulator began compiling quarterly data in 2004 and another 0.31% by the end of 2015 will, of course, make this the worst year on record.  

Nonetheless, we are back on a bullish run in the Global Markets as everyone loves free money.  Well, everyone who's rich, anyway – and anyone else doesn't matter, so party on people!  

As I mentioned in yesterday's post, we were long in the morning, then flipped short after Draghi's announcement gave us an initial pop and then we flipped long again at 10:28 in our Live Member Chat Room and you can see how well those calls went for the day.

Those of you who read us regularly know that our long line for Natural Gas Futures (/TF) is $2.825 and we got anoter entry there yesterday as well with a very nice $750 per contract run back to $2.90 yet again (and up over $1,000 this morning at $2.925).  

We had another opportunity to go long on oil (/CL) at $46 this morning, which was surprising at Saudi's King Abdullah died yesterday and, USUALLY, any uncertainty in the Middle East is a boost for oil.  There's very little that's uncertain about the transition to the Prince but still, it's certainly not a negative for crude – so this one should be free money into the weekend.  

Oil is going to be VERY interesting to play this month as 500 MILLION Barrels of FAKE!!! orders have been placed at the NYMEX for March delevery.  

Those contracts are FOB to Cushing, OK – a facility that can only handle 50Mb/month, if they weren't already completely full.  

To put it into perspective, the ENTIRE US Commercial Oil Inventory is 380M barrels, so this would be (if it were real) like delivering 130% of the entire country's oil supply in 30 days.  This is not just FAKE!!!, it's ridiculous.  Write your Congressman, demand an investigation and, when nothing happens – VOTE HIM OUT OF OFFICE!!!!

This is how the price of oil is manipulated in this country.  Fake contracts create the impression of fake demand but the last thing they want is for all those barrels to actually be delivered so they will cancel all but a few million barrels worth over the next 30 days (Feb 20th) and we'll keep tabs on it but we've done it before and no one is questioned, no arrests are ever made – it's a friggin' joke! 

Fortunately, at Philstockworld, we don't care (other than our moral outrage) IF there is manipulation, as long as we can understand HOW something is manipulated so we can play along.  In the case of oil, the $46 line is defended so far and the best thing we could do for America is to buy all 500,000 contracts ($23Bn) and take delivery in March.  That would drop oil to $20 in no time and we'd lose $13Bn BUT imagine the boost for the economy!

Since we don't have $13Bn to blow on making America energy independent for the rest of the decade, instead we'll buy a few contracts at $46 and sell them at $46.50 for $500 per contract.  If we buy 500,000, we'll only make $250,000,000, but at least we won't mind paying a little more at the pump.

Have a great weekend, 

– Phil