The Zero Hedge posted some terrific charts today.
Has this week's market turmoil been a "China only problem"?
Not so says the Saudi Arabian currency, the riyal.
The Zero Hedge notes
Saudi riyal forwards hit their highest level in almost two decades as oil plummeted: twelve-month forward contracts for the riyal climbed 260 points, and set for the steepest close since December 1996 on growing speculation the world’s biggest oil exporter may allow its currency to slide against the dollar for the first time since 1986 (incidentally, Bank of America's "Number One Black Swan Event For The Global Oil Market In 2016").
Should the current pressure be sustained, the USD-SAR peg may break. What happens next? [clue: mayhem]
US stocks were a toast last night. And it's been a bad start so far.
Well, it has not just been a bad start, but for the Dow Jones Industrials the worst since 1900!
As for oil, WTIC closed past $33 last night. But WTIC hit an intraday low of $32.1 which virtually breached the 2008 low of $32.4. Well, as for the OPEC oil equivalent, prices of the OPEC basket plunged to 2004 lows.
Notes the ZH: Amid Saudi price cuts to Europe, the basket price was set at $29.71 today - the first print below $30 since April 2004.
And on commodity shipments, the Baltic index likewise hit fresh lows.
Again from the ZH: Another day, another fresh all-time record low in The Baltic Dry Index as Deutsche Bank's "perfect storm" appears ever closer on the horizon. Plunging 4.7% overnight to 445 points, this is 20% lower than the previous record low in 1986 and as one strategist warns, "It’s a brutal start of the year, there’s just nowhere to hide on the market."
Finally with oil and commodity trade on milestone lows, how about return on commodity investments?
Rate of returns on commodities have hit the Great Depression levels! Incredible!
The ZH: While the "sell in 1973, and go away" plan had worked out for some in the commodity space, the destruction of the last decade has only one historical comparison... the middle of The Great Depression. The 10-year rolling annualized return for commodities is -5.1% - the lowest since 1938...
For commodities, a buying opportunity should arise someday...
So a critical test on the SAR peg, the worst DJIA performance since 1900, OPEC Basket at 2004 lows, fresh lows for the Baltic index and annualized commodity returns at Great Depression levels, PLUS CHINA--do all these suggest bullishness for risk assets or of growing probability of a global financial economic crisis?
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