MBCC Trading Highlights 21st November'22 - markets continue to fall, but Oil and Commodities fall more - why? Where can it go?

We have the Thanksgiving week long holiday weekend which is usually when we see a lot of year end related selling as it is year end for a lot of Funds. Then we have the CPI for November released on the December 12th, followed by a Dec Fed FOMC on the 15th, and of course OPEC meeting in early December. But our view is the same, we think prices need to keep falling as growth is slowing down and we are moving to deflation from inflation. The Fed will NOT and CANNOT pivot till prices come down or inflation comes down. The Fed never pre-empts, it just waits for the data, which means it has to happen for them to think if their work is done or not!

They honestly do not know and the market trying to front run them is a futile attempt as the markets react first, then they move!

How far can the markets drop and what is the time frame and how to be positioned? We discuss below.

Then we discuss the Brent Oil market, see chart below showing how it had a false break as we pointed out last few weeks. The sell side is JUST now catching up, hardly, as we saw Goldman take their q4 numbers lower by $10/bbl. today quoting any narrative to justify their move. These were the same team that was calling for $150-$200/bbl. Oil, remember? Everyone keeps demand flat and extrapolates out to infinity, no one models it as it moves dynamically! After prices fall 40%+, sure then they adjust it downward.

How much lower can Oil go? What is MBCC target and what are monitoring or picking up from our forward looking cross asset demand models?

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