Market Currents – August 3, 2015

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The usual suspects are loitering on this first trading day in August to plunder crude prices lower, as dollar strength swirls and Chinese weakness weighs heavy like concrete boots. In addition, Greek woes and Iranian rumors are only adding to this bearish tilt.  Brent crude is back to levels not seen since January, while WTI seems intent on re-testing the lows made in March, with China kicking off a mixed bag of manufacturing data overnight.

The final print for the Caixin China Manufacturing number came in at a 2-year low, well into contractionary conditions and also worse than its preliminary print from the end of last month. The official China PMI – released on Saturday – came in shy of expectations but right on the nose of equilibrium at 50.0 (below 50 = contraction).

In Europe, better-than-expected prints from Germany and Italy offset a soft Spanish number and ongoing contraction from France to drag the Eurozone manufacturing print higher on the aggregate. It has been Greece, yet again, to grab the headlines, however.

The chart of the day surreally shows the precipitously-diplodocusly long month-to-month fall in its manufacturing sector. It makes the recent rout in commodities look rather meek. The Greek stock market has opened its doors today for the first time in five weeks, and is getting absolutely shellacked – down 23% at one point.

Greece PMI

The bombastic stat of the day comes from Iranian oil minister, Bijan Zanganeh, who is quoted as saying oil production can increase by 500,000 barrels a day within a week after sanctions end, and by 1 million barrels a day within a month following that. Meanwhile, as this article shows, Middle East imports of refined oil products are on the rise, in tandem with refining capacity:

oil imports and refining capacity

In other news, the White House is set to reveal further details about the Clean Power Plan today, with a more aggressive target for lower carbon emissions than previously expected. This will be achieved by focusing on reduced consumption of coal and natural gas, with a greater emphasis on renewable energy (aka, wind and solar). In related news, coal miner Alpha Natural Resources is set to file for Chapter 11 bankruptcy today.