TheChek News Flow

The more things change in the oil market, the more they stay the same: The agreement Tuesday between Saudi Arabia, Russia, Qatar and Venezuela to freeze oil output falls somewhere between symbolic significance and no change at all.

So it shouldn’t be a surprise that Brent crude, which had rallied to north of $35 a barrel as reports of a meeting in Doha surfaced, quickly gave up its gains Tuesday.

The shock-and-awe value of any agreement, after nearly a year and a half where Saudi Arabia had quashed any suggestions of coordinated action to support oil prices, was blunted by several factors. First, a market hungry for cuts got only a freeze at January’s production levels.

Second, this freeze is coming at a particularly high-water mark. Russia is producing at a post-Soviet era high and, given natural decline at some fields, output was expected to be about flat this year. Others are already squeezing what they can out of their oil infrastructure: Qatar is producing at capacity, according to the International Energy Agency, and Venezuela is close. Saudi Arabia has spare capacity but likes to keep it that way: its flex is its source of market power.

Third, the agreement to keep a lid on production is contingent on other big producers playing ball. Iran, in particular, seems highly unlikely to agree to curtail the ramp up of its output following the lifting of sanctions.

The country is exporting about 1.3 million barrels a day, notes Barclays, and intends to increase that to north of 1.5 million barrels a day in about the next month and to pre-sanctions levels of about 2 million barrels later this year. Saudi Arabia’s sudden strategic rapprochement with other oil producers certainly puts its regional arch-rival in an awkward position.

That Saudi Oil Minister Ali al-Naimi called Tuesday’s step “the beginning of a process” feeds hopes that more dramatic action is to come. But that Saudi Arabia at the turn of the year hiked domestic fuel prices for the first time in decades still suggests the country is committed to its market-share strategy, rather than looking for a quick out.

In fact, the softening of Saudi Arabia’s stance could be read as reflecting heightened worries that oil demand, which after last summer’s bumper driving season is showing definite signs of weakness, isn’t responding as advertised to low prices. That arguably gives Saudi more scope to engage with its producing peers eager for coordinated action, without risking a rally that throws a lifeline to beleaguered U.S. shale producers.

Tuesday’s agreement was a curt reminder to oil-price bears that Saudi and other producers can still spring the odd surprise. But Saudi’s big freeze doesn’t yet mean oil bulls can come in from the cold.

article speculates that a pesticide called pyriproxyfen may be responsible for birth defects rather than the Zika virus. Pyriproxyfen is a larvicide that targets the Zika-spreading Aedes aegypti mosquito, and is produced by Sumitomo Chemical, which has a weed management collaboration in Brazil and Argentina with Monsanto

- Congress should consider breaking up large banks; Fed should study solutions to end too big to fail

- should consider turning banks into regulated utilities and taxing leverage to reduce financial risks

1. Investors long cash: FMS cash @ 5.6% = highest since Nov’01 = unambiguous “buy” signal

2. Investors want capital preservation: Feb rotation to cash, utilities, bonds & telcos; out of banks & stocks

3. Global growth & profit expectations both negative for 1st time since Jul’12; weakest China growth expectations since Dec’08

4. Fed 2016 rate hike expectations: no hike 23%; one hike 33%; two hikes 34%

5. Baby bond bulls: 20% think 10y yields lower next 12 months…up from 4% last July

6. Investors remain long stocks: equity OW fell from net 21% to 5%

7. Paralysis not panic: limited investor capitulation in US$/EU/JP/Tech long positions

8. Big stubborn short positions in Energy, EM, Materials, Commod, Industrials continue

9. Most "crowded trades": long US$ 30%, short oil 25%, short EM 16%, long FANG 12%

10. Capitulation in momentum as outperforming style factor; preference for quality, large cap, yield

1. FMS says SPX 1800 "floor” holds/tactical counter-trend rally in risk e.g. SPX back to 1950 “ceiling”; but FMS does not say great cyclical “entry point” back into risk assets (in 2002, 2009, 2011 investors went UW stocks first)

2. FMS says investors have "reset" expectations for macro & markets lower and see default/recession as risk rather than reality

3. FMS says another bout of risk-off more -ve for US$/EU/JP/Tech thanEnergy/EM/Materials/Commodities/Industrials ...nb US$ "most overvalued" since Nov’06...right now investors are much more worried about what they own rather

than what they don't own

Groupe Renault unveils plans for Alpine

Monte Carlo, Monaco - At the home of the world-famous Monte Carlo Rally and on the Col de Turini, site of some of racing’s most memorable moments, Groupe Renault today announced plans for a new Alpine sports car, and unveiled the Alpine Vision show car.

The show car Alpine Vision combines sensual design with outstanding agility, true to the great Alpine A110 Berlinette loved and admired by enthusiasts around the world. Alpine Vision is powered by a new 4 cylinder turbocharged engine, built by experts at Renault Sport, and its low weight will allow the car to achieve 0 to 100 km/h in less than 4.5 seconds - the target for the future production model.

Alpine will be managed by a small team of passionate experts within Groupe Renault, with one sole mission – to meet and exceed the expectations of the demanding sport premium customer. Michael van der Sande will lead as Alpine managing director, and Antony Villain will head Alpine design.
Alpine will draw on the extensive resources of Groupe Renault, and Renault Sport.

“All of us at Alpine are proud to have been entrusted with the task of bringing back Alpine to sports car lovers around the world”, said Michael van der Sande, Alpine managing director. “Our job is to faithfully re-interpret famous Alpines of the past and project Alpine into the future with a beautifully designed, agile, high-performance sports car. Our Alpine Vision show car is immediately recognizable as an Alpine yet resolutely modern. We look forward to revealing the production model later this year.”

Over the next 12 months, the Alpine team will focus on building an outstanding car, very close to today’s show car in terms of design, weight, handling, agility and attention to detail. Priorities will also include building out the team and the network, and finally, to pursue racing. The current Signatech-Alpine Racing Team has already won two European endurance championships, and won the LMP2 class in the World Endurance Championship last year in Shanghai; and this year, the team will enter two Alpine LMP2 cars in the World Endurance Championship, including Le Mans.

Made in Dieppe, France, the new Alpine will go on sale in 2017 initially in Europe, followed by other markets worldwide.

- Reports 2015 business loans +11.6% y/y, mortgage loans +97.1% y/y-