Don't look now, but crude oil continues to surge and there's a chance that war with bullets will derail the war of nerves launched by Saudi Arabia last year against America's fracking industry. The Oil Kingdom's gamble to not adjust production even as demand waned saw crude prices collapse. Consequently, the US rig count also collapsed and capital expenditures were curtailed significantly.

In the most recent tally, another 27 oil and gas rigs were taken out of production, bringing the total to 905 from 1,931 in September of last year. The lowered rig count is finally impacting US crude production, consequentially helping prices rebound.

Yet, lowered production alone doesn't explain the 50% rebound in crude prices. But, what does make sense is the war in Saudi Arabia's backdoor. The situation in Yemen hasn't improved as Houthi rebels continue to spread and even launched rocket fire into Saudi Arabia this week killing three people. The writing is on the wall; it's going to take more than air strikes.

Of course, considering Saudi Arabia's military expenditure, they probably knew this moment would happen. Only three other nations spend more on military, but considering the size of the population and gross domestic product (GDP), Saudis look like they've prepared for Armageddon.

No Renaissance

As we head into the all important government report on jobs this Friday, we got the ADP version this morning and boy was it a disaster. For the fifth consecutive month, total job creation declined and looks like a sequential death spiral.

The biggest blow came in manufacturing which lost 10,000 jobs. Remember when we were promised a manufacturing renaissance? There have been so many excuses for it not materializing including most recently the strong dollar. Ironically, if we allowed our fossil fuel industries to grow, we'd be the envy of the world with liquid natural gas developments and preparations to export crude to fracking in places like New York State.

I just don't get it!

Today's Session

Stocks began the day higher with a huge deal in biotech that will see Synageva BioPharma Corp. (GEVA) pop over 100% as the latest takeover in the space. The experts keep telling us biotech is overvalued, yet these big deals keep happening anyway. I say you must have exposure. In the meantime, four members of the Fed will speak today including Janet Yellen, so that ultimately might determine where the market finishes the day.