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Help me understand this drop of 87% since listing in 2001. Is it primarily because of the global financial crises, and therefore the whole sector is affected; or is it because of bad business deals by Gelncore itself?

Glencore used to make all its money through trading i.e. buy copper in Zambia, pay some people to get it transported cheaply and smoothly to Dar Es Salaam, pay some more people at the port, freight it to China using cheap freight options, and then sell it to a Chinese buyer for a huge profit margin. Along the way they would hedge the underlying price  of copper in the futures or options market i.e. they didn't really care about the underlying price. Traders like big volatility swings because it allows them to arbitrage on price, location and quality differentials. In that regard Glencore's assets were how much transport, refining, freight and other basis optionality they had, as well as how many people and contracts they could control in the value chain.

So things like Richards Bay Coal Export Allocation were very important. That is why they bought Optimum Coal i.e. they were prepared to lose money on the Eskom supply contract because export coal prices were high and they got a whole bucketload of export allocation optionality. Now that export prices are really low (even in Rand terms) that coal export allocation is worth far less and now the company is not prepared to lose money on their Eskom coal contract. I guess that's called having your cake and eating it whenever you like. Glencore repeated this type of low quality asset purchase many times as they expected the assets to give them trading optionality. Now that all of that trading optionality is effectively gone (thanks to low prices and margins) they are realising that having low quality, high cost mines is not really a good idea.

So all of that debt that was accumulated to buy these assets is weighing heavily on their balance sheet and the assets are having a hard time paying off the debt by themselves without the margins from trading. Plus there is a massive amount of working capital employed on existing physical and financial positions in the market, some of which could be very far out of the money. But you would think that a serious player like Glencore would "mark-to-market" all of their derivative positions and this should therefore be reflected in their results.

Seems like Glencore has had the bloodbath. The market is definitely fearful. Seems like the big, slow money is starting to get scared as well. The market now wants the FED to raise rates. Read the below analysis for a great insight. We're not out of the woods yet. Wish I could get my timing right and not always call things too early.

The herd is getting restless
Stock markets have not done well this year. They are well off the highs, some meeting the technical definition of correction and others creeping into bear territory, but there has never been a sustained heart stopping sell off. We are due for one, not simply because father time tells us so but because the drip, drip, drip of negative news will bring the ceiling down at some point.

The mood towards QE for example is turning. The drug is becoming less effective and the voices warning of a timebomb in the making are getting louder. Even stock market bulls can see that QE and low interest rates are artificial aids that can only work for so long before the side effects outweigh the benefits. Zombie companies are kept alive, risk is mispriced and savings and pensions devastated. Central banks are desperate for inflation to take hold. It is, but it is the wrong sort, consumer price inflation is desirable, asset inflation is not. Share prices are being hyped by share buybacks and M&A activity, not by thriving revenues and rising profits.

Europe make no mistake is in crisis. The Greeks will not implement their reforms and the Catalans may have wounded Spain's recovery after yesterday’s vote. The migrant crisis has opened up huge divisions within the EU. The Hungarian prime minister accuses Germany of "moral imperialism". President Hollande has all but invited Slovakia, Hungary, the Czech Republic and Romania to leave the EU saying that "Europe is a community of values. Those who do not share these values and principles have to question their presence in the EU". How about those countries with an aversion to paying taxes Francois, do you put them in the same boat?
Angela Merkel offering to take 800,000 refugees may win her humanitarian plaudits and prizes but it will not win her popularity amongst European electorates. It is the height of arrogance to make such an offer without consultation with the Schengen agreement in place. Germany may take 800,000 but once registered in the EU they can freely move elsewhere, hence we saw border restrictions imposed last week. This is another lady whose water walking abilities are beginning to fail her.
The French and Germans may agree on how to respond to the migrant crisis but they are at loggerheads on fiscal union and it came out into the open again last week. French economy minister Emmanuel Macron speaking in London said that the eurozone will fall apart if Germany does not give up its opposition to fiscal union and transfers to poorer regions. He sees the battle lines as between Calvinists who he describes as those "who want to make others pay until the end of their lives" and Catholics. The gloves are off.

There will he argues be no convergence without fiscal transfers and if that does not occur the currency union might as well be dismantled. Difficult to argue with and as there will be no fiscal union without political union, and political union is inconceivable in the current nationalistic climate, there is only one conclusion to be drawn about the future of the eurozone. It will either limp along in its current format, rupture completely or shrink to a group of core zealots countries.   
The last thing the European economy needed on top of everything else was a home-grown VW engineered corporate and sector crisis. Then there is China delivering another poor PMI as did Japan; Norway and Taiwan cutting interest rates; emerging market currencies at record lows against the dollar and the UK recovery faltering. The bulls have been restless for quite some time, nervously grazing but still inclined to buy dips. There is a scent in the air of a change in direction, of a stampede in the offing.

On Friday European markets rallied 3% after Janet Yellen signalled an interest rate increase is still on for this year. That means monetary divergence and a weaker euro. US stock markets were far less happy at the prospect of a stronger dollar eating into exports. The search for growth has come down to the dangerous game of robbing Peter to pay Paul. For the week as a whole stock indices for both regions were down.

Oil caught up in the mix
The atmosphere is febrile and oil is caught up in the mix driven by oil fundamentals one minute and macroeconomic fundamentals the next with cross currents coming from financial sentiment, currency volatility and technicals. Should any credibility be attached to Iran's claim that by the end of the year it will have added 500,000 bpd by the end of the year and 1 mbpd by next Spring? Perhaps not but we have been warned. With global stock levels at all-time highs and a huge ongoing excess of supply over demand now and through 2016 bullish inclinations need to be reined in.

There are positive straws in the wind from four consecutive weeks of Cushing stock draws, from falling US domestic production and from robust US gasoline demand but, whilst encouraging, the crude excess is so high that another substantial price fall cannot be ruled out. Cushing crude stocks for example have drawn by 3.7 million bbls in the last 4 weeks but in the same period total US commercial stocks have risen by 14 million bbls. Product stockbuilds are dwarfing the crude draw. It is significant that the large increase in WTI net speculative length over the last 5 weeks has far more to do with shorts covering than length being accumulated. The positive straws have persuaded shorts to take profit but not to go long.

What is apparent is a growing acceptance that oil prices are going to be lower for a much longer period than first thought and cloth has to be cut accordingly. The CEO of Total told investors last week that "we are preparing the group to face low oil prices for a long time". His policy cornerstone is to cut capital expenditure and costs so that Total can cover an unchanged dividend at $60 bbl in 2017 and at $45 bbl in 2019. Economic production has replaced production at any price as the watchword, which will be music to Saudi ears.

The forward price curve supports this view. At the end of last year the Brent futures forward curve was pricing 2015 on average at $61.73 bbl with 2016 at $68.85 and 2017 at $72.84. At last Thursday’s close the actual average price to date for 2015 was $56.78, only $5 bbl below the Dec 31 futures 'prediction'. However, 2016 had fallen to $52.83 (-16.02) and 2017 to $57.67 (-15.17). The price for 2020 has fallen from $78.89 to $62.96.

Oil prices emerged from last week unscathed, although not without a dip down to $47.70 on Brent and $43.71 on WTI. Gains on Friday left Brent +1.13 on the week at $48.60 and WTI + 68 cts at $45.70. There are clearly local trading issues at Cushing with the Oct/Nov cash roll rising to parity. That does not make any sense with Cushing stocks at 54 million bbls and 33.5 million bbls above last year’s levels, unless most is unsuitable for delivery into the WTI contract, an issue which the CME needs to offer more transparency on. The Nov/Dec WTI futures spread by contrast closed at -49 cts/bbl. The Baker Hughes rig numbers fell by 4 making it four consecutive weeks of small declines.

Gasoline was the week’s winner gaining 3.97 cts/gal with Heat + 3.18 cts/gal. It was the winner not only on price but in the battle with diesel. What price now on forecasts of diesel supply shortages? Peak diesel theories have been punctured by a classic black swan event.

Trying to be short equities is one of the most frustrating trades around. The market has an inbuilt desire to rally and it really looks like it has been supported these last few days, either by the Plunge Protection Team or the possibility of no-rate hikes this year. Which in itself is crazy i.e. the US thinks the global economy is too weak and therefore keeps rates down but equities rally. We really are living in la-la land these days. All of this reminds me of the madness before the dot-com boom where everyone convinced themselves that we were living in a "new normal" before the whole house of cards came crashing down. These artificially inflated markets also feel like a house of cards but hey, as long as they want to rally then it would be foolish to stand in their way....

Ke Nako. It is (almost) time.... Momentum really looking like it wants to break down here....

So far I'm completely wrong about this week being a bloodbath, although I have to say that my predictions are always at least 1 or 2 weeks too early....     Tomorrow is D-day so let's see what happens....

Agree with Patrick, excellent post GCR, for a long term investor that is. I come from a commodities trading background and you trade commodities, not invest in them. So my bias is always going to be towards looking out for the inflection points for others who may have a similar style.

Markets have pretty much pinned everything on Thursday's decision now. I expect quite a bit of volatility still this week. If we see a sell-off we will need to see it later today or before Thursday's announcement at latest. After the announcement I figure all will be calm once more. Classic buy (or sell) the rumour and sell (or buy) the fact.

Could you not have at least let me enjoy my fikkin week end           

Markets ended just fine last week so your w/end should have been good. This quietness is like the calm before the storm.... I think by Tuesday we should have seen the market moving and volatility picking up before Thursday's big data release. If not, perhaps everything will be just fine, everyone will have had their valium and we all keep calm and keep buying....

If this chart doesn't scare the living crap out of you then.... ok, keep calm and put your money into the market as normal.   

The reason is that momentum trend is negative (red line on bottom graph is in negative territory) whilst short term momentum (blue line) is above red line (which means it must turn down again). When this happens it will be in line with momentum trend and we will see the big concurrent moves. At the moment, momentum trend is negative and short term momentum is positive i.e. crosscurrent. This is why we're seeing choppy market conditions, like the chop on the water when the wind blows the opposite direction to the swell. It just so happens that this imminent concurrent move will co-incide with the Fed's decision to raise / not raise interest rates next week. The market is so confused right now that it doesn't know what to do i.e. it goes sideways in a choppy way. So what happens when fear and confusion reign in the market...? People sell to preserve cash. And that creates more negative sentiment which feeds on itself in a vicious downwards spiral, especially when the algo traders and bots get involved.

Expect the market to sell off big time into next week's Fed announcement in a classic "sell the rumour, buy the fact" trade. Markets will recover after the Fed announcement no matter what the result but how much will have been lost before then? Going to be a very interesting week.... Of course I could be completely wrong about all this...