Trannies Trounced Most In 10 Months As Commodities & Bond Yields Bounce

Some very significant volatility intraday today. The Dow Transports lost around 2.7% today - the most since early January - as Airlines slipped (though held half of Friday's panic-buying gains). The Dow outperformed - but closed red - thanks to strength in Chevron and Exxon (adding 35 Dow points alone). All major US equity indices are red from pre-Thanksgiving's meltup exuberant close with Trannies and Small Caps worst. Momo names were hit, as was AAPL. All of this was driven, it appears, by a somewhat staggering (dead cat or not) bounce in commodity markets off overnight flush lows. Gold and silver screamed higher and oil gained 7% off its lows to close up 4.8% from Friday. Treasury yields also turned around notably intraday from down 1-2bps to closing up around 6bps at the long-end (after ISM beat). VIX briefly tested below 14 but the 330RAMP went the wrong way with VIX rising and stocks closing not off the lows.

Spot The Odd One Out

While we have focused on the decoupling between US equity markets and their high-yield credit and US Treasury yield peers, today is perhaps most notably for the widening seen in investment-grade credit markets - the most in 2 months - as oil-complex concerns squeeze liquidity across all credits.

Crude Crash Slams Venezuelan Bonds To Close At 5-Year Lows: 21% Yield

It is no wonder Venezuela is suffering... Venezuelan bond prices have collapsed around 51 - the lowest close in at least 5 years as yields surge to around 21% yield. The market is pricing in extremely high probability of default (around 63% over 2Y, and 80% based on 5Y CDS) which, as Bloomberg reports, is surging as "every $1 drop in oil is around $770 million of lost revenue, so their ability to pay has taken a big hit."

How Apple Lost One American Airlines In Market Cap In Under A Minute

Earlier today, just after the market open, the one company that everyone had once again piled into, and which as of September 30 was the most held company by the hedge fund community with at least 175 "smart money" institutional fans based on expectations that with every other stock and asset becoming increasingly illiquid, at least this one would preserve its liquidity come hell or high water, flash crashed. The company is Apple, So what happend? Between 9:49:54 and 9:50:43 Eastern, AAPL plunged from nearly 6%, from $117.69 to $111.27, a moved which wiped out one Transcanada (or one Travelers, or one Lukoil, or one Carnival, or one Christian Dior, or one Hyundai Motor Company, or one Takeda, or one State Street) in market cap.

The Oil Price Decline - In Pictures

The decline in oil prices is a clear message that "something is awry" globally and investors should take heed that risks of a market decline have risen markedly. While I am not saying that the economy is about to slide off into a recession, previous declines in oil prices of the current magnitude have been associated with poor outcomes for investors. Caution is advised.

Obama Planning To Increase Funding For The Militarization Of America's Police Force

Since 2006,MRAPs, helicopters, machine guns, and night-vision-goggle have been increasingly evident across America as the good ol' yankee copper morphs into a full-metal-jacket-looking killer (even as the FBI admits the threats to police have not escalated as much as the media would like). So it isjust 'lucky' that Ferguson has reignited a narrative that enables President Obama "to discuss federal programs and funding that provide equipment to the state and local enforcement agencies," in a series of meetings today at The White House. We suspect funding will increase (for your own protection) and a new SWATification Tzar will be unveiled.

"You've All Gone Mad" - The S&P Is More Than Double Its Historical Valuation Norms

"As was true at the 2000 and 2007 extremes, Wall Street is quite measurably out of its mind. There’s clear evidence that valuations have little short-term impact provided that risk-aversion is in retreat (which can be read out of market internals and credit spreads, which are now going the wrong way). There’s no evidence, however, that the historical relationship between valuations and longer-term returns has weakened at all. Yet somehow the awful completion of this cycle will be just as surprising as it was the last two times around – not to mention every other time in history that reliable valuation measures were similarly extreme. Honestly, you’ve all gone mad."

Surprise: GAAP S&P500 EPS Set To Decline 1.3% In 2014

As of Q3, when adding the consensus number for Q4 EPS, we find that while non-GAAP EPS is set to rise by a healthy 6.6%, real rarnings, as in GAAP EPS, will actually decline by 1.3% in 2014, meaning that for yet another year, the only upside in stocks has been due to - thank you Fed - multiples expansion.

The Shale Bust Arrives: November Permits For New Shale Wells Tumble 15%

With a third of S&P 500 capital expenditure due from the imploding energy sector (and with over 20% of the high-yield market dominated by these names), paying attention to any inflection point in the US oil-producers is critical as they have been gung-ho "unequivocally good" expanders even as oil prices fell. However, as Reuters reports, new data suggests that the much-anticipated slowdown in shale country may have finally arrived - permits for new wells dropped 15% across 12 major shale formations last month, as one analysts warns, "the first domino is the price, which causes other dominos to fall."

November Was The Worst Month For Crude Since Lehman

November's asset performance can best be summarized in just three words: oil, oil, oil.  "For Brent November was the biggest one month decline since the height of the Lehman crisis in October 2008 whilst for WTI it was the worst since December 2008. Brent and WTI are now 33% and 28% lower versus where it started the year and are now trading at their lowest level since the spring of 2010."

Global Manufacturing PMI Tumbles To 14-Month Low

Is it any surprise oil prices are cratering? With global GDP expectations plumbing cycle lows, JPMorgan just confirmed the global slowdown is accelerating as their Global Manufacturing PMI printed 51.8 - its slowest level of 'expansion' since September 2013.New Orders fell to the lowest reading since July 2013 and New Export Orders to the lowest since June 2013. But the US is decoupling...

Guest Post: Fanning The Flames In Ferguson

The scripted quality of the Ferguson events seemed as formally predictable as an 1856 minstrel show, and the parallel is worth reflecting on because the nation appears determined to explode again in some kind of a civil war — bearing in mind Karl Marx’s advisory that “history repeats, first as tragedy, then farce.” As is the case with many show-biz extravaganza’s of our time the script had many authors. A week after the grand jury decision and the riot that followed, the Michael Brown incident is already disappearing down the national memory hole. Why? Mainly because anyway you cut it Michael Brown was a poor candidate for martyrdom.

US PMI Plunges To 10-Month Lows (Export Order Drop), ISM Beats (Export Orders Soar)

For the 3rd month in a row, US Manufacturing PMI dropped from 4-year highs to 10-month lows. At 54.8, missing expectations of 55.0 (and down from 55.9) for the 5th month of the last 6 as extrapolated hopes fade into the usual cyclical un-decoupled collapse into year-end (but ignore NRF data). Sadly for the bullish decoupling meme, Markit notes, "the principal cause of the slowdown is a renewed downturn in export orders, which fell for the first time since January." So, amid all of this doom, ISM then beat expectations, printing 58.7 vs 58.0 expectations (down slightly from October's 59.0 print) led by - rather ironically - new export orders surging... US data has gone full China.

AAPL Flash-Crashes Over 7%

Did Icahn just cover? Cramer's view: "that's silly" And no - there's no catalyst - this is your most liquid efficient stock market in the world at work...

Gold Surges Over $50 Off Overnight Lows; Commodities Bouncing As Dollar Weakens

After last night's big flush across commodities, they have rallied notably. Gold is now up over $50 from those lows, with Silver, copper, and even crude bouncing hard (after testing below $64 overnight). The USD is notably weaker, stocks lower, and bond yields testing mid-October flash-crash Bullard lows...

What Happened To The Gold Correlation?

The correlation between gold and the national debt was clear for 13 years. It made perfect sense in a free market. You can’t print more gold. It is a relatively scarce metal that has represented wealth for centuries. Fiat currency can be printed at will by corrupt bankers and politicians. Every paper currency ever created eventually reached its intrinsic value of ZERO, as human beings always take the easy way in attempting to create wealth. So what happened in 2013?