Schizo Market Has Biggest Plunge In 6 Months Following Most Euphoric Surge Since 2011

Yesterday's panic buying vertical ramp in stocks - decoupling from everything but the trusty partners VIX and AUDJPY - has been entirely unwound as The Dow drops over 300 points (nearly unchanged for 2014), Trannies tumble and Small Caps slump. Stocks all closed significantly lower - despite a late-day effort to lift - ending the day down from pre-FOMC Minutes. Treasuries closed 0-2bps higher in yield but had ignored equity exuberance and provided the reality check by the close. Real trading volatility ranges are surging in the major indices which historically has not been a good sign. The USD retarced some of the FOMC losses as Draghi chatter pushed EUR higher. Oil prices cratered under $85 as gold and silver rose (despite USD strength). Following yesterday's biggest intrday swing since Nov 2011, the Russell 2000 saw its worst day in 6 months.

Today was the 4th most active (in terms of quotes/trades) ever.

The last 2 days in US equity markets...

Even Bob Pisani knows by now that the European Close seems to create a trend-reversal moment intraday that few machines (and even fewer humans) are willing to fight. Whether this is remnants of short-term cycles found due to POMO or just a drop in liquidity is unclear; but what is clear, it happens, and all too regularly... except today. After a notably weak start to the day, the machines were just getting revved up for the 1130ET reversal to kick in and lift the market back to VWAP when a curious thing happened... "someone" canceled-and-replaced orders for 666 contracts 26 times in the 1130ET to 1200ET period... and selling accelerated lower, no reversal, to close at the lows on heavy volume.

The History of Metals INFOGRAPHIC

Courtesy of: Visual Capitalist

Morgan Stanley raises 2015 Aluminum price forecast by 8%

Morgan Stanley has upgraded the price forecast for Aluminum for 2015 by 8%. The financial service major has also increased the current year’s price forecast by 3%. This is on account of the boost in aluminum usage by the automotive industry around the globe, especially the US. Moreover, Morgan Stanley also believes that supply is most likely to subside further as more producers turn to production cuts.

According to the latest report by Joel Crane, the price forecast for this year has been increased to $1,893 a ton, 3% higher than the previous forecast. Also, Aluminum prices will touch $2,072 a metric ton in 2015, he added. The global surplus of Aluminum will be 620,000 tons this year. But the surplus will narrow down to 310,000 tons in 2015 and 280,000 tons in 2016. The report further states that the global Aluminum market will swing to 230,000 tons of deficit in 2017.

The cut in production coupled with strong demand growth presents a bright future for the metal. The global aluminum demand is expected to grow 6.6% in 2014 and 7.4% in 2015, mainly on the back of increased demand from US car industry and strong consumption growth in China. The increased use of aluminum in F150 by Ford will boost the demand in near term. Another automobile major Toyota has already announced its plans to use more aluminum in 2018 model of Camry.

Global demand will climb 6.6 percent this year and 7.4 percent next year as carmakers, mostly in the U.S., increase use of the metal and growing consumption in China, the bank said. The increased use of aluminum in Ford Motor Co.’s new F150 is a “boon for aluminum demand” and Toyota Motor Corp. plans to use more of the metal in its 2018 Camry, it said.

Morgan Stanley has raised the current year estimates for Nickel and Zinc by 2% each. The 2015 price forecast for copper was cut by 3 percent to $7,176 per ton.

Do you know which is the best among Base Metals?

Societe Generale sees a mixed outlook for base metals as a Chinese economic slowdown impacts metals differently, listing itself as most constructive on nickel. 

Base metals have been on the defensive since summer, hurt by slowing growth in China, the eurozone and US, perceptions of a more hawkish Federal Reserve and other factors. 

SocGen is sticking to their view that increasing copper mining output, which is now well under way, will over time ease the current tightness in the refined market. 

While global copper consumption growth is expected to strengthen this year helped by moderately higher global economic growth, serious structural oversupply in China's housing sector and tightened credit conditions are likely to cap both Chinese and global copper consumption growth. 

There is scope for the other metals to rally to varying degrees on tightening markets coincident with seasonal demand strength typically associated with Q4. However, as ever, much will depend upon China. 

SocGen is most bullish towards nickel. While the refined nickel market remains well supplied at present, this is likely to change from next year. The nickel market has changed dramatically as a result of Indonesia's ban on nickel ore exports, which SocGen expects to be enforced. 

This one factor alone is likely to shift the nickel market from structural oversupply to a balanced outcome this year, with sizeable deficits probable over the coming years.

South Africa plans on declaring copper as a precious metal

 Andries Nel, the deputy minister was concluded in an intense debate in Johannesburg, stating that, the department was anticipating to mark copper as a precious metal, which has been agreed and advocated by many institutions including the state owned, TRANSNET, logistics giant.

At the convention of Association of Municipal Electricity Utilities, the representatives stated that, the government should hurry up and introduce new security measures in order to hold up the increasing number of copper theft, and also trace the whole link of copper cable syndicates.

At the end of last month, a copper theft at Gauteng’s metro lead to THE water crisis, which lasted for at least three weeks. Moreover, that the theft leads to the delay of Gautrain operations which took place last week, between Hatffeild and Pretoria

As the legislation lacks tight laws on the copper theft, it was seldom the copper thefts who were caught, convicted under the law successfully, stated the department

UK court to issue ruling in London Metal Exchange/Rusal case

(Reuters) - The Court of Appeal in London is due to hand down a decision on Wednesday in a case determining whether the London Metal Exchange (LME) can implement tough new rules to reduce the waiting times for withdrawing metals from the industry's warehouse stores.

A three-judge panel will either overturn or uphold a March ruling in favour of Russian aluminium company United Company Rusal that halted a key LME warehouse reform.

The decision is scheduled for Wednesday morning, according to the website of the Court of Appeal.

The original judgment ruled against the LME, the world's biggest industrial metals market, because the court regarded the consultation process as "unfair and unlawful".

The LME's new rules, originally due to take force in April, were aimed at making owners of warehouses deliver out at least as much metal as they take in.

But Rusal, the world's largest aluminium producer, feared the reforms could unleash a flood of supplies onto the market and depress aluminium prices.

Judges "reserved judgment" after a two-day hearing in July which revolved around the consultation process, not the actual warehouse reforms sought by the LME, which is now owned by Hong Kong Exchanges and Clearing Ltd 

Benchmark LME aluminium prices have shed about 30 percent since touching a peak around $2,800 a tonne in May 2011.

Industrial buyers of aluminium, used in transport and to make beverage cans, have had to wait up to two years to get delivery of metal from some LME warehouses and the new rules aim to cut the queues down to a maximum of 50 days.

Americans Should Probably Avoid These Areas Of The World

By way of a Public Service Announcement, 

we highly suggest Americans avoid the following areas of Jihadist operation...