0- $Oil thread. I can’t count the number of morons who posted yesterday to say it doesn’t matter that May collapsed, it’s just one contract. Here’s another fine example. Why it matters? 1- it will affect the whole energy complex 2- it’s a sign of a massive blow-up 3- deflation

1- $Brent is down circa 8% this morning and the whole energy complex is sharply down. The forces that drove May down will drive June and July sharply down. Currently storage is roughly 55% full and should max-out in 45 to 60 days. Here is $Bre t and Cushing stocks

2- There is a big financial institution that is nursing huge losses. No bank risk control system will ever have envisaged a US$58 spread between the first and second month oil futures contracts. Nor would risk control systems have envisaged negative price for WTI. There is blood

3- deflationary forces are now visible. $Oil is not the only commodity collapsing. The whole non-precious complex is. Here is Corn and Sugar

4- What does all this mean for rates in the US. Well, deflation will lead to lower nominal yields and higher real yields, not exactly a positive combination for equities or overall markets. Here is the US 5 years. I’ll be damned if it doesn’t break down and head to 0 or...below