Brent-WTI Spread Signals Descent Into Chaos ~ The Risk Averse Alert

Friday, February 04, 2011

Brent-WTI Spread Signals Descent Into Chaos

Major indexes forming a "rising wedge" off late-June 2010 bottom all to varying degrees possess upside room available for wave c of 5 to complete. Wouldn't you know it, too ... today's trade suggests that, the five waves forming wave c of 5 could carry the market still higher off last Friday's late-day bottom when wave c of 5 began unfolding...

NYSE 5-min

Whether the fourth wave of these five waves up from last Friday completed today remains to be seen. Bottom line, time is a commodity more precious than gold these days. In light of its short supply every minute still available to batten down the hatches is a blessing. Yet for those whose position is hopeless nothing but hope can and will be ventured until the awful consequence of being caught in a debt trap sweeps them away.

Now, the sight of a former OMB director (David Stockman, Reagan administration, 1981-1985) unapologetically bashing the Fed (@ 8:00) naturally lends reason to believe that, the one-and-only means for returning sanity to American capitalism (and by extension, the globe) — Glass-Steagall — probably is gaining traction in a U.S. Congress whose present "leadership" widely conjures images of a once great nation turned into a debt-laden scrap heap incapable of creating jobs enough to "insure domestic Tranquility," let alone "provide for the common defence" (9/11 being the ultimate insult).

Team Fraud's trouble here, though, probably is not so much any impending threat of legislative action ending the bailout swindle, but rather a consolidation of support for this objective once the Great Greenspan Bubble invariably destabilizes further ... and this probably at some not-too-distant hour, judging by panic-stricken lunacy masquerading as policy-making throughout the trans-Atlantic these days.

Thus, too, the manner in which destabilization inevitably unfolds might effectively neutralize this impulse toward returning sanity in policy promoting the American System of Political Economy. Needed is something elevating the objectives of multi-national interests whose tools on Wall Street already have splendidly compromised the solvency of the U.S. Treasury — say, some venture lending a shred of "legitimacy" to those sorry excuses for leaders in Congress, that these might further prove useful yet again in obstructing sane policy and keeping the nation on a path ensuring its increasing impotency as a sovereign power.

Made to order, then, is growing instability in an area of the world where a lot of oil makes its way to Western destinations.

One wonders, too, whether impending energy market chaos is leading the Brent-WTI spread to blow out — a matter about which a recent research note from Barclay Capital said: "Currently, WTI spreads are so far away from any sustainable equilibrium that they imply a mounting degree of market breakdown."

Another analyst suggests, "Such adverse conditions stem from the 'financialization' of the energy markets ... with the spread following financial market volatility that, combined with speculation, spells chaos for the energy market."

It wouldn't be the first time these past forty years that, energy market instability provided cover while public-private partnerships promoting the spirit of fascism were solidified.

Fast Money
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