Friday the 13th, the Ides of March and oil: stocks plunge

Consumer sentiment numbers, oil, dollar/euro, life in general combine to make this Friday the 13th a picnic for the bears.

Death of Caesar.
The Death of Caesar (1798) by Vincenzo Camuccini. It's Friday the Thirteenth and Wall Street is two days early for celebrating Caesar's downfall by staging its own.

WASHINGTON, March 13, 2015 – And we thought Thursday’s market was bad, up before it was down before it was up. Not only is today Friday the Thirteenth—never an auspicious day to begin with. But it’s the infamous Ides of March this coming Sunday, a day that the spirit of Julius Caesar certainly recalls with regret. This ominous one-two calendar punch is also one investors and traders may have cause to rue after this afternoon’s likely cataclysmic finish to what’s already looking like a dismal week.

As we write this around the noon hour Friday, the Dow is off nearly 250 points, with the S&P down a dismal 20 and the tech-heavy NASDAQ off a whopping 44, no doubt due to Intel’s dismal forecast from yesterday, leading the pundits and blow-dries to pronounce the absolute end of the personal computer. Again.

Making matters worse, allegedly anyway, the euro has muddled back down to $1.05, drawing close to the dollar parity the Royal Smart Guys were saying we wouldn’t see until December. And oil prices have been hacked down below $46 per share for West Texas Intermediate (WTI).

On related fronts, according to Bloomberg, the “University of Michigan said Friday its preliminary index of consumer sentiment decreased to 91.2, a four-month low, from 95.4 in February. The reading was less than the most pessimistic forecast in a Bloomberg survey of economists whose median projection was 95.5.”  Aaaargh!

Message: We’re all going to die!

The Maven’s mods:

  • Yes, we are indeed all going to die. Some day.
  • The sky is not falling.
  • The Ides of March will pass.
  • The market is getting short term oversold.

But perhaps more important: The latest oil price drop has been exacerbated by a number of refineries that have been hampered due to an ongoing strike by the United Steelworkers union (USW), of which the Maven was once a member back in the day. Fortune reported early in the a.m. that

“The United Steelworkers union and oil companies have reached a tentative deal to end the largest U.S. refinery strike in 35 years, the labor group and people familiar with the negotiations said on Thursday.

“The new agreement for about 30,000 workers would last four years, a year longer than previous agreements. The deal, which still needs to be ratified, may not end strikes right away at all refineries that have suffered walkouts as local union chapters could still need to work out pending issues.”

While the affected refineries, especially including those of Royal Dutch Shell (RDSA) were reportedly being operated on a basic level by management personnel and a few outside contractors (i.e., strikebreakers) and therefore not shuttered completely, output was slowed considerably from those facilities. This added to the already expected lessening of capacity that’s typical during winter season refinery maintenance shutdowns. The result: even more excess oil went into storage, putting even more downward pressure on current prices.

With the tentative USW agreement, however, affected refineries should be able to amp up production again, gradually helping clear the accumulated oil backlog. Ditto when those refineries undergoing maintenance get back on line. This won’t be enough to buttress prices short-term.

But with the summer driving season imminent, it will start to remedy the backlog and at least some of the downward pricing pressure. Ditto the fact that some four percent of current U.S. production has been temporarily curtailed, with somewhat more almost certain to follow.

What we’re driving at here is that a bottom is being put in, although it’s painful. It’s sure hit our portfolio pretty hard here, forcing us to dump some of our oil patch holdings at losses simply to stem the loss of our own capital in the short term.

But longer term, the sun will come out, so not to worry unduly.

In the meantime, it’s best to stay out of the way of this supremely nasty downward juggernaut, which is taking on the look and feel of a short-term correction that will scare—and hurt—a lot of people.

No trading tips today for obvious reasons. Too treacherous. And the Ides of March.

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