If yesterday’s selloff had a specific catalyst, namely some of the worst consumer retail earnings seen in years, it merely undid the Tuesday rally which levitated global risk with no fundamental driver, aside for a 200 pip spike in the USDJPY.  Some central bankers may even say it was a “magical” levitation. (Recall: A Central Banker Officially Loses It: “We Are Magic People”).  Fast forward to the overnight session when following a muted Asian session, it was once again up to the “magical” USDJPY to send stocks well into the green without any actual catalyst whatsoever, but what merely appears to have been another “magical” intervention session by the BOJ.

In addition to rising European stocks and S&P500 futures which were 0.6% higher at last check, oil prices also rose after the International Energy Agency softened its forecast for a global supply surplus. Curiously, while the IEA said that it expects OPEC April crude output to rise 33k bpd to 32.76mln bpd, the highest since August 2008, and noted that Iran output rose to pre-sanctions levels in April while Iraq output rebounded on near-record southern exports, it offset this surge in output with hopes that non-OPEC supply would decline by 100k bpd citing outages. Which is ironic because with every $1 higher in WTI more shale companies restart production. It also expects a smaller global surplus on stronger global demand.

A good summary of recent oil price action comes from Angus Nicholson, analyst at IG, who said that “we have had a lot of reasons that have supported the price over the past week, the Canadian wildfires, Nigerian supply disruptions and then a surprisingly bigger inventory pullback. At the moment, oil has been trading very tightly within a range of around $43 to $47. We need a key breakout of that trading range to decisively say which direction the price is going.”

With oil trading 1% higher at $6.60, it seems we are about to break out of this band any moment.

Meanwhile, the abovementioned USDJPY levitation helped the Stoxx Europe 600 Index reverse a drop of as much as 1%, overcoming a drag from companies including LafargeHolcim Ltd. that posted lower earnings.  Because when all else fails there is always central-bank driven “magical” multiple expansion.

Market Snapshot

• S&P 500 futures up 0.6% to 2069
• Stoxx 600 up 0.2% to 335.4
• Eurostoxx 50 +0.4%
• FTSE 100 -0.1%
• CAC 40 +0.4%
• DAX +0.3%
• IBEX +0.6%
• FTSEMIB +0.4%
• SMI -0.2%
• Nikkei 225 up 0.4%
• Hang Seng down 0.7%
• Kospi down 0.1%
• Shanghai Composite down 0%
• ASX down 0.2%
• Sensex up 0.7%
• Euro down 0.12% to $1.1412
• Dollar Index up 0.13% to 93.95
• Japanese yen down 0.52% to 108.98
• Brent Futures up 0.6% to $47.9/bbl
• Gold spot down 0.6% to $1269.4/oz
• German 10Yr yield up 1bps to 0.14%

Global Top Headlines

• Donald Trump Is Considering Newt Gingrich for Vice Presidential Role: according to multiple people familiar
• Brexit Dominates Agenda as Bank of England Unveils New Forecasts: economists predict officials will leave key rate at 0.5%
• French Government Faces Confidence Vote After Labor-Law Revolt: rogue Socialist lawmakers blocked government labor bill
• Norway Keeps Rate at Record Low as Oil Wealth Spending Jumps: Norges Bank says rise in oil price may mean higher growth
• ECB Can Still Pull Rabbits Out of the Hat, Council Member Says: Lithuanian central bank governor speaks in Bloomberg interview
• Boeing Mulls Price Cuts, to a Point, in Quest for 737 Share Gain: planemaker bid used jets against C Series in Delta contest
• Lockheed Martin Stands to Get $3 Billion Order From Denmark:

Looking at regional markets, Asia stocks traded mixed after initially following the losses on Wall St. amid disappointing retailer earnings and the worst day for consumer discretionary stocks in 3 months . Asia bourses were dampened from the open, although ASX 200 (-0.2%) found some mild reprieve following gains in commodities after WTI crude futures rose to 6-month highs and iron-ore snapped a 6-day losing streak. JPY, earnings and auto names initially drove price-action in Nikkei 225 (+0.4%), with Toyota shares slumping on weaker results and outlook, although downside was limited by gains in Takata and Mitsubishi Motors before the index recovered in late trade. Chinese markets (Shanghai Comp. flat) shrugged off opening losses stemming from debt concerns stoked after Yingli Green Energy Holding expected to default on CNY 1.7bIn of debt maturing today. 10yr JGBs traded marginally lower despite the risk-averse tone in Japan, with demand dampened following a weaker 30yr JGB auction in which b/c decline from prior and lowest accepted price fell below expectations.

BoJ Summary of Opinions stated that Japan’s economy is likely to be on moderate expanding trend and that QQE with NIRP has already produced its effects which will steadily spread to economic activity and prices. The summary also noted a member said they would add stimulus if necessary, while a member also stated that price stability target should be seen as flexible.  BoJ Gov. Kuroda said they will not hesitate to ease if necessary and could utilise any of the three methods. Kuroda added that BoJ now sees 2% inflation goal to be achieved in his tenure and it is not appropriate to say the exit could start within his term.

Top Asian News

• Nissan Buying 34% Stake Hands Lifeline to Scandal-Hit Mitsubishi: Nissan reliant on Mitsubishi Motors for Japan minicars
• Sharp’s Losses, Liabilities Highlight Foxconn Revival Challenge: Net loss 256b yen for fiscal year ended March 2016
• Singapore Charges Two Men With Insider Trading on Two Stocks: Charges relate to trades in Qualitas Medical, Leeden in 2011
• Qihoo Buyer Group Said to Hit Impasse With Chinese FX Regulator: Chinese consortium told it can’t move money offshore in one go
• KDDI Profit Forecasts Lag Analyst Estimates; To Buy Back Shares: To repurchase up to 1.53% of shares for as much as 100b yen during May 13 to Sept. 23
• Takata Predicts Return to Profit Despite Costs; Shares Surge: Stock soared as much as 24%, most on record
• Japan Posts Its 21st Straight Monthly Current-Account Surplus: March current-acct surplus 2.98t yen vs est. +2.97t yen

European equities have spent much of the morning trading in negative territory, albeit trading mixed heading into the North American open. Financials initially led the way lower, with some attributing the downside to fears of US and French governments issuing substantial fines in relation to the Panama Papers, as well as the earnings report from Credit Agricole (-4.0%), which saw declines in profits. On the upside, energy is one of the best performers today as WTI continues to extend on gains seen in the wake of DoE inventories seen yesterday as WTI Jun’16 futures trades above USD 46.50/bbl for the first time this month.
Fixed income markets saw initial upside at the open, benefiting from the aforementioned downside seen in equities, however Bunds failed to hold onto gains , moving into negative territory, with the German benchmark also impacted by the supply from Italy and Ireland and after-market US 30yr Bond Auction.

Top European News

• Banks Pricing Dong Face $8 Billion Valuation Gap as IPO Planned: Dong announces intention to float, will sell at least 15%
• Credit Agricole Quarterly Profit Falls on Decline in Trading: profit at the LCL network drops 32% to EU85m
• LafargeHolcim Profit Falls on Lower Indian Prices, Brazil: adj. operating Ebitda declines 22%, missing estimates
• Zurich Insurance Net Beats Estimates as Overhaul Continues: Net income fell 28% to $875m vs est. $745m
• BMW to Introduce Electric, Self-Driving Flagship Car in 2021: New iNext model to feature new interior, digital connectivity
• RWE First-Quarter Profit Beats Estimates on Trading Gains: shares rose the most this month
• Hapag-Lloyd Said to Plan to Finalize UASC Merger by Mid- June: according to a person familiar with the matter
• Daily Mail Names Boston Consulting’s Paul Zwillenberg as CEO: succeeds Martin Morgan, who retires from May 31
• ITV Says Revenue Growth Continuing; Sees Good 1H Profit Growth: has confidence for for full year and into 2017
• Generali Profit Drops After Year-Earlier Gain Isn’t Repeated: Net income declined to EU588m from EU682m a year earlier
• Tata Steel’s U.K. Unit Said to Attract Hebei Iron & Steel: company may compete with Liberty House, Excalibur, JSW

In FX, it has all be about the USDJPY once again, which set the overnight risk tone following a 100 pip “magical” ramp on no news (and in fact following the soaring trade surplus, the Yen should have risen if anything). The latest drop in the Yen led to a strong push higher in European and US risk assets just as fears were growing that a December replay would materialize. In Europe, it has been an expectedly cautious morning of FX trade this morning, predominantly in GBP as the triumvirate of BoE rate announcement, minutes and QIR are all due at midday today. Early on, we saw some softening in the Cable rate, but another dip into the low 1.4400’s has been met with fresh demand, with dovish expectations now at risk of being overdone. Elsewhere, AUD/USD has retested .7300 this morning, as inflation forecasts came in a touch below expectations, but we would/should have anticipated this to a larger degree given the recent CPI shock . The figure level has held well, with the oversold status suggested a stronger correction. Oil pushing up to new highs with WTI now challenging the previous peak just shy of $46.75. CAD is back through 1.2850, and eyeing a test on pre-1.2800 levels . Large EUR/USD strikes in and around 1.1400 rolling off today to provide some near term support here.

In commodities, Brent and WTI have both risen following yesterday’s surge on the back of an unexpected drawdown in DoE crude oil inventories , with WTI breaking previous wave highs and currently at USD 46.58/bbl. Gold prices have seen some pressure this morning and has broken the USD 1270/oz support level to the downside. Elsewhere, metals in Shanghai are up roughly an average of 1.5% with Zinc rising the most by 2.6% and aluminium close behind at 2%. Iron ore also joined in up 2.2% to USD 55.40 and steel rebar was one of the only metals to fall, down 0.8%.Yesterday we saw base metals rise an average of 1.1% after recent sell offs and in terms of average volumes that was at 5,966 lots slightly higher than yesterday’s 5,556k.

In other oil the IEA says that OPEC Apr’16 crude output rose 33k bpd to 32.76mln bpd however what is pushing oil higher is that at the same time the IEA also cut 2016 non OPEC supply estimate by 100k bpd citing outages. Nigeria’s oil output is down 600k bpd to 1.4mln bpd due to attacks, with the Gov. oil revenue massively diminished according to Nigerian oil minister.

Taking a look at today’s calendar, today in the US we’ll get the April import price index reading and also the latest weekly initial jobless claims print. We’ll also hear from Fed officials Mester (4.00pm BST), Rosengren (4.45pm BST) and George (7.15pm BST) today.

Bulletin Headline Summary From RanSquawk and Bloomberg

• Despite opening in negative territory, European equities trade higher as oil prices continue to support sentiment
• An expectedly cautious morning of FX trade this morning, predominantly in GBP as the
  triumvirate of BoE rate announcement, minutes and QIR are all due at midday today
• Looking ahead, highlights include BoE Bank Rate, QIR and minutes, US Import Price index, weekly jobs and BoE’s Carney
• Treasuries lower in overnight trading amid rise in global equities, crude oil and before today’s Bank of England rate announcement at 7am ET; auctions conclude with $15b 30Y bonds, WI 2.60%, last sold at 2.596% in April, saw biggest stop through by a 30Y since Dec. 2014.
• Brexit is dominating the U.K. agenda and the Bank of England is set to update its take on how the vote is affecting the economy on Thursday; rate setters led by Governor Mark Carney have already warned uncertainty may be weighing on growth
• U.K. Chancellor of the Exchequer George Osborne said the Treasury and the Bank of England are making contingency plans to stabilize financial markets should Britain vote to leave the European Union next month
• U.K. Prime Minister Cameron said the U.K. plans to make financial services companies liable for their employees’ complicity in money laundering and fraud, in an extension of proposed laws against tax evasion
• Euro-area industrial production ended the first quarter with a second monthly drop, weakened by falling output in consumer goods and capital goods. Output declined 0.8% in March from February
• Norway’s central bank left its benchmark rate at a record low 0.5% as the government spends more of its vast oil wealth to keep the economy from slipping into a recession
• Fed officials were optimistic as they entered 2016, projecting four hikes at their meeting in December. But they downgraded that expectation in March to just two moves, now even that forecast is looking doubtful
• A measure of expected price swings in Treasuries dropped to levels last seen in 2014, signaling a growing conviction among traders the Federal Reserve will maintain a gradual monetary policy path
• Soured loans at Chinese commercial banks rose to the highest level in 11 years as defaults spread from small private firms to large state-owned enterprises in a weakening economy
• Brazil’s Senate voted to suspend President Dilma Rousseff from office to face an impeachment trial, ushering in a new government to take command of Latin America’s largest economy
• Wall Street bankers celebrated last year as mergers and acquisitions reached the highest level ever, topping even pre-crash 2007. This year M&A is hitting a more dubious record: Deals gone bust
• Sovereign 10Y yields mixed; European and Asian equities mostly higher; U.S. equity- index futures rise. WTI crude oil rallies, precious metals fall

DB’s Jim Reid concludes the overnight wrap

A generally positive start for markets this week came to an abrupt halt yesterday and rather than oil driving markets, it was some soft earnings reports on both sides of the Atlantic as well as the news of blocked M&A deals which generally dampened sentiment. Indeed in the US the headlines were dominated by the 15% fall in the share price of Macy’s (which was the most in seven years) after the retailer reported weaker than expected revenue numbers for Q1 this year and cut its full year 2016 profit guidance with the stronger US Dollar and weaker performance from some its core categories weighing on earnings. Softer than expected results from Walt Disney which were reported after the close on Tuesday compounded the pain and helped to fuel some steep falls across a large number of retail names yesterday. The consumer discretionary sector (-1.98%) led losses for the S&P 500 (-0.96%) which snapped its run of three consecutive positive days. A reminder that we get US retail sales data tomorrow covering the month of April.

Meanwhile, in Europe the Stoxx 600 ended with a -0.45% loss, it too succumbing to its first loss this week. It was driven by weakness from quarterly reports out of JCDecaux, EON and ABN Amro, while the news that the EU has halted the proposed acquisition of Telefonica’s O2 unit by Hutchinson added to the bad news. EU Competition Commissioner Margrethe Vestager stated yesterday that the Commission had ‘strong concerns’ that UK consumers would be left with ‘less choice and higher prices’ should the takeover take place. Added to that was the news just prior to this out of the US that a District Judge had halted the proposed merger between Staples and Office Depot with similar concerns that a merger between the two could hurt their customers. This news was arguably more surprising with Staples tumbling -18% and Office Depot down a huge -41%. Telefonica was down just -1% during European trading.

So while some of yesterday’s weakness also spread to credit markets (particularly the US where CDX IG finished just shy of 2bps wider) the bigger story continues to remain the unrelenting supply story in the primary markets this week. The big numbers came from the Euro market yesterday where just shy of €19bn was said to have priced across 26 tranches (including corporate, financials and SSA’s). In fact that was the biggest number of tranches in a single day for more than two years while the daily volume was the third biggest this year. Some of the corporate deals which stood out were the €4bn 4-tranche deal from Johnson & Johnson, €1.8bn 2-tranche deal from Kraft Heinz and the hybrid issue from Total. It was an impressive session in the US too despite what was a weaker day for markets. Just shy of $11bn was said to have priced across ten issuers while the announcement that Dell is said to be considering upsizing its announced $16bn debt offering means it looks like there’s no sign of supply or demand abating just yet.

Moving on to Asia, markets are following the US lead last night with the bulk of bourses currently in the red. The Nikkei (-0.41%), Topix (-0.50%), Shanghai Comp (-0.58%), Kospi (-0.02%), Hang Seng (-0.36%) and ASX (-0.48%) are all currently lower as we go to print, with credit indices in the region also a touch weaker. Currency markets are a bit more mixed as is the case with commodities this morning. Meanwhile there’s also been more M&A chatter to mention with Mitsubishi and Nissan said to be in talks about a possible tie-up. Both companies have confirmed discussions but no decision has yet been reached.

Elsewhere, there’s nothing to report of as yet in Brazil with the Senate currently still debating the President Rousseff impeachment. The NY Times is reporting that the vote by the Senate could be as late as Thursday morning local time in Brazil so we may have some time before we get confirmation of the outcome.
Back to markets. Yesterday was another strong day for Oil with WTI climbing another +3.52% higher to close just above $46/bbl (at $46.23/bbl to be precise) and in turn surpassing the highest close this year set last month. Brent also had a strong day too and rallied to the tune of +4.57% to creep closer to $48/bbl. Yesterday’s surge in prices came about on the back of the latest US crude stockpiles data from the EIA which was reported as unexpectedly dropping by 3.4m barrels in the week ending May 6th. US crude production was also reported as falling while the fallout from the rebel violence in Nigeria continues with reports suggesting that at least a fifth of Nigerian oil production has so far been shut down. In fact it wasn’t just Oil prices which had a stronger day yesterday. Base metals also firmed with Aluminium (+0.64%), Copper (+0.60%), Zinc (+2.98%), Nickel (+2.01%) and Iron Ore (+0.56%) all quietly up, while Gold also bounced +0.90%.

Away from this there wasn’t too much on the macro front for markets to feast on yesterday. The only data in the US came in the form of the April Monthly Budget Statement where a $106.5bn surplus was recorded which largely matched expectations. During the European session it was all about the UK data where ahead of today’s BoE meeting, industrial production was reported as rising a little less than expected in March (+0.3% mom vs. +0.5% expected). The YoY rate now however has fallen to -0.2% from +0.1% with the Q1 print of -0.4% representing a second consecutive quarterly decline, and therefore implying that the UK industrial sector is back in recession. We’ll get the Q1 GDP print on the 26th of this month. Sterling actually closed unchanged yesterday after paring back that post-data weakness later in the session, while 10y Gilt yields were a basis point lower at 1.390%.

ASIAN AFFAIRS

none today

MEPs Slam Latest Greek Bailout As “Social Armageddon”

EMERGING MARKETS

In a vote whose outcome was largely expected, moments ago the Brazilian Senate concluded a marathon 21 hour session with a 55 to 22 vote to suspend President Dilma Rousseff from office to face an impeachment trial, ushering in a new government to take command of Latin America’s largest economy. Rousseff will be tried on allegations she illegally doctored fiscal accounts to mask the size of the budget deficit.

When officially notified later on Thursday morning, Brazil’s first woman president will be suspended, ending 13 years of rule by the leftist Workers Party, and the “market friendly” Vice President Michel Temer will become acting president during her trial.

As Bloomberg adds, “from the moment she receives the notification, the process of impeachment for the crime of responsibility takes effect,” Senate President Renan Calheiros said after voting ended. She is expected to be notified within hours, and give a press conference at 10 a.m. local time.

Rousseff, a one-time guerrilla fighter, now must step down and stand trial in the Senate, in a process that could by law last as long as 180 days and result in her permanent removal from office. Rousseff will maintain some presidential privileges such as an official residence, a salary, a security detail, personal staff and transportation. Vice President Michel Temer, 75, will take over as interim president. Many expect the switch to be permanent.

“It’s difficult to see a situation where Rousseff would be able to come back,” said Harold Trinkunas, director of the Latin America Initiative at the Brookings Institution in Washington.

Temer’s aides said he will work fast to build support by putting in place an economic team that can revive confidence amid above-target inflation, double-digit unemployment and a near-record budget deficit. He will announce new cabinet members at 4 p.m. local time.

The vote has capped nearly six months of political uncertainty since then-lower house speaker Eduardo Cunha accepted the impeachment request. Rousseff’s chances of surviving declined rapidly in recent months as a corruption probe encroached on her inner circle and the worst recession in decades eroded many of the gains that Brazilians enjoyed during the 13 years of rule by her leftist Workers’ Party. What led a majority of Brazilians to back impeachment was the sense that Rousseff both mismanaged the economy and was lenient on corruption. At its zenith, her party combined social welfare and market savvy to earn the envy of the developing world.

Ironically, leading members of Rousseff successor Temer’s Brazilian Democratic Movement Party are under investigation for the same allegations that plagued many of Rousseff’s allies, meaning the public could turn against his administration as well. Sixty-two percent of respondents in an Ibope poll last month said new elections rather than impeachment would have been the best solution to the political crisis. Backers of the Workers’ Party, which has strong ties to unions and protest movements, have already pledged to stage demonstrations and work stoppages to push for Temer’s ouster.

“Temer is going to face enormous polarization and a very angry and incredibly mobilized opposition,” said Matthew Taylor, associate professor at American University’s School of International Service and former instructor at the University of Sao Paulo. “The Workers’ Party will make the current opposition look like a bunch of teddy bears.”

In other words it is very possible that Brazil may find itself in a political crisis as it swings from one extreme to another, unable to form a stable government.

Meanwhile, the markets have been delighted by the impeachment process, sending Brazil’s local stock market soaring in 2016, even as the local economy has slid into a depression. Investors, however, are split over whether Temer, a career politician and constitutional lawyer, can unify Brazil and revive growth. While they welcome his plan to downsize government and to make more room for the private sector, some also fear political turmoil could persist and even intensify as critics challenge his legitimacy and try to block his proposals.

For risk assets the question is whether this will be the long-overdue “sell the news” moment.

Two More Energy Companies Go Bankrupt: Linn Energy, Penn Virginia File Chapter 11

According to data compiled by Haynes and Boone, in just the first four months of 2016 there had already been double the amount of bankrupt energy debt than in all of 2015, with the total secured and unsecured defaults rising to $34 billion, double the $17 billion total for all of 2015.

We can now add two more major names succumbing to the Saudi onslaught against marginal shale producers when overnightfirst Linn Energy announced a prepackaged Chapter 11 deal, followed by Penn Virginia defaulting just hours later.

In the first case, oil and gas producer Linn Energy LLC filed for chapter 11 bankruptcy after reaching a deal with lenders to restructure its $8.3 billion debt load and obtain $2.2 billion in fresh financing. In its bankruptcy filing press release, Linn announced that the holders of more than 66% of its credit facility have agreed to the “broad terms” of a debt restructuring but didn’t provide further details. The lenders also agreed to let Linn Energy spend the cash securing their debt, known as cash collateral, and to help fund a new $2.2 billion term loan.

LinnCo LLC, a publicly traded affiliate, filed for bankruptcy alongside Linn Energy Wednesday. LinnCo was created to help Linn Energy raise additional equity capital and is taxed as a corporation, rather than as a master limited partnership like Linn Energy.

For those wondering if the bankrtupcy would prevent the company from pumping more oil, bad news: Linn Energy said access to the cash will allow it to continue normal operations without lining up new bankruptcy financing. However, the company still requires permission from the U.S. Bankruptcy Court in Victoria, Texas, to begin spending.

Having obtained creditor consents in advance as part of the prepack, we assume that once the existing equity is wiped out, the company will reemerge with a far smaller debt load. However, a problem may emerge if its partnership status with LinnCo poses a problem for investors. As the WSJ writes,partnerships, as opposed to corporations, take advantage of a structure that allows companies to avoid paying corporate income taxes. Investors’ hunger for yield fueled a boom in these partnerships, which pay out their available cash to investors. Linn Energy led a revival of this status among companies pumping oil and gas and was once the largest energy producer operating as a partnership.

Such partnerships bankrolled the shale boom, buying up the older, more predictable fields that other drillers were trying to jettison to chase new prospects in flashier shale formations. But the partnerships had to keep buying new fields to keep their output—and cash distributions—growing. Many took on heavy debt loads to fund their acquisitions.

Even before the price of oil began to slide in 2014, some critics raised questions about whether these companies would be able to keep their promises of steady and growing payouts. An earlier wave of partnerships went bust in 1980s when commodity prices fell. But proponents of the structure argued that more sophisticated hedging markets would allow upstream MLPs to produce reliable streams of cash.

In an effort to stem the hit to investors, Linn Energy completed an exchange offer last month in which holders of Linn Energy units were given the chance to swap them for stock in LinnCo. Shares in both companies are likely to be wiped out now that they are in bankruptcy, but the swap could address the tax issue for investors.

Following the April exchange, Linn Energy launched a second, similar exchange offer that is set to expire May 23. In its bankruptcy announcement, Linn Energy said it is going to ask the bankruptcy court to allow unit holders to continue to swap Linn Energy units for LinnCo shares.

The strategy is largely untested and many are watching to see whether it proves successful for Linn Energy.

The Linn bankruptcy was not a surprise: the company warned in March that a bankruptcy filing may be “unavoidable,” and said last month that it reached a settlement with bondholders on a restructuring that could take place through a chapter 11 reorganization.

* * *

In the day’s second bankruptcy, energy producer Penn Virginia also filed for chapter 11 bankruptcy protection Thursday.  And just like Linn, the Pennsylvania-based explorer and producer deals said it had reached a prepackaged agreement with holders of 87%, or $1.03 billion, of its total funded-debt obligations to restructure under chapter 11 protection and eliminate long-term debt by more than $1 billion.

Penn Virginia said it expects to emerge from chapter 11 by the end of the summer.

Penn Virginia’s history dates back to 1882 with its founding as a coal concern in Virginia. It shifted to oil and gas in the 1980s, and more recently has pared its natural-gas holdings in favor of oil fields.

“Like many other exploration and production companies, Penn Virginia has been significantly affected by the recent and continued dramatic decline in oil and natural gas prices,” Interim Chief Executive Edward Cloues said. “We believe using the chapter 11 process is the most efficient way to achieve our financial objectives and deleverage the Company’s balance sheet.”

As a result, now that two more energy companies are about to see their interest expense slashed drastically going forward, the only real impact on the company will be that their all in production costs will decline substantially, allowing both to pump more oil at even lower prices, and thus adding to the global supply imbalance, something that will infuriate Saudi Arabia and add even more output to a market that remains chronically oversupplied.

The IEA believes the oil surplus will be lower than usual and thus causes crude to top 47 dollars:

Seriously…

Stocks were mixed today -Trannies and Nasdaq tumbled, the S&P ended marginally red and Dow barely held green.. Stocks were saved in the pre-NYMEX ramp from crude…

The path was insanely schizophrenic as algos have gone wild…(after soaring early, then crashing, then melting up)

The Dow has traveled 1500 points since the Payrolls print…and back red for the week

AAPL ugliness…

Yesterday’s buying frenzy in bonds (and string 10Y auction demand) morphed into panic-selling-ish (as a weak 30Y and overall selling) senindg short-end yields positive for the week…

The USD Index resumed its uptrend today – 7th of last 8 days – as JPY weakened once again, running stops at yesterday’s highs…

The USD ran the world again today…but once Europe closed, everything went up..

Commodities suffered on the day – all smacked as US equities opened – but of course oil BTFD’ers could noty help themselves…

Oil was just manic today also as no matter what the headline (Iraq discussing Freeze – BUY, Iraq increasing production – BUY), crude prices soared…

Charts: Bloomberg

END

US Import Prices Tumble For 21 Months In A Row As China Exports Most Deflation Since 2009

Initial Jobless Claims Soar Most In 11 Years To 15-Month Highs

(courtesy Mish Shedlock)

11 Signs That The U.S. Economy Is Rapidly Deteriorating Even As The Stock Market Soars