{"id":16597,"date":"2016-01-17T17:44:26","date_gmt":"2016-01-17T22:44:26","guid":{"rendered":"http:\/\/olduvai.ca\/?p=16597"},"modified":"2016-01-17T17:44:26","modified_gmt":"2016-01-17T22:44:26","slug":"what-just-happened-with-oil","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=16597","title":{"rendered":"What Just Happened With OIL?"},"content":{"rendered":"

What Just Happened With OIL?<\/a><\/h3>\n

Yesterday, we\u00a0reported exclusively<\/a>\u00a0how the Dallas Fed is pulling strings behind the scenes to conceal the fallout from the oil market crash.\u00a0As Dark-Bid.com’s Daniel Drew notes,<\/a>\u00a0by suspending mark-to-market on energy loans and distorting the accounting, they are postponing the inevitable as long as possible.\u00a0The current situation is eerily reminiscent to the heyday of the mortgage market in 2007,\u00a0<\/em><\/strong>when mortgage defaults started to pick up, and yet the credit default swaps that tracked them continued to decline, bringing losses to those brave enough to trade against the crowd.<\/em><\/p>\n

\n

Amidst the market chaos on Friday, a trader brought something strange to my attention. He asked me exactly\u00a0what the hell was going on with this ETN he was watching<\/strong>. I took a closer look and was baffled. It took me awhile to put the pieces together. Then when I saw the story about mark-to-market being suspended, it all made sense.<\/p>\n

Here is the daily premium for the last 6 months on the\u00a0Barclays iPath ETN<\/a>\u00a0that tracks oil<\/strong>:<\/p>\n

\"\"<\/a><\/p>\n

Initially,\u00a0Dark-Bid.com’s Daniel Drew<\/a>\u00a0thought this was merely a sign of retail desperation. As they faced devastating losses on their oil stocks, small investors turned to products like oil ETNs as they tried to grasp the elusive oil profits their financial adviser promised them a year ago.<\/strong>\u00a0Oblivious to the cruel mechanics of ETNs, they piled in head first, in spite of the soaring premium to fair value. After all, Larry Fink is\u00a0making the rounds<\/a>\u00a0to convince the small investor that ETFs are indeed safer than mutual funds.\u00a0Because nothing says “safe” like buying an ETN that is 36% above its fair value.<\/strong><\/p>\n

Sure, there are differences between ETFs and ETNs, particularly regarding their solvency in the event of an issuer default, but the premium\/discount problem plagues ETFs and ETNs alike.\u00a0Nonetheless,\u00a0widely trusted retail sources<\/a>\u00a0of investment information perpetuate the myth that ETNs do not have tracking errors.<\/strong><\/em><\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

What Just Happened With OIL? Yesterday, we\u00a0reported exclusively\u00a0how the Dallas Fed is pulling strings behind the scenes to conceal the fallout from the oil market crash.\u00a0As Dark-Bid.com’s Daniel Drew notes,\u00a0by suspending mark-to-market on energy loans and distorting the accounting, they are postponing the inevitable as long as possible.\u00a0The current situation is eerily reminiscent to the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[1838,1907,4333,3730,200,1705,5412,11774,303,305,4073,11775,501,588,592,4318],"class_list":["post-16597","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-barclays","tag-credit-default-swaps","tag-crude","tag-dallas-fed","tag-default","tag-energy-stocks","tag-etf","tag-etn","tag-fed","tag-federal-reserve","tag-mark-to-market","tag-mark-to-fantasy","tag-market-crash","tag-oil","tag-oil-price","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16597","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16597"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16597\/revisions"}],"predecessor-version":[{"id":16598,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16597\/revisions\/16598"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}