China Matters
Submitted by Tyler Durden on 01/07/2016 - 13:00
Over the past few days we have repeatedly heard the following statement: "China isn’t that important as it is only 7% of the U.S. economy." While that may be a true statement in relation to the economy, it is a far different matter when it comes to the financial markets. With financial markets so closely correlated, what happens in China has a direct and immediate impact on U.S. markets.
OPEC Basket Crude Price Crashes Below $30 - Lowest Since 2004
Submitted by Tyler Durden on 01/07/2016 - 12:45
With WTI trading with a $32 handle, collapsing below December 2008's $32.40 lows briefly overnight, OPEC's broad basket price for crude has also reached a worrisome milestone. Amid Saudi price cuts to Europe, the basket price was set at $29.71 today - the first print below $30 since April 2004.
Silver Surges To Key Technical Level
Submitted by Tyler Durden on 01/07/2016 - 12:38
While Gold has been grabbing the "safe haven" headlines in recent days, this morning it is Silver's turn. Having rallied 2.5%, Silver just broke its 50-day moving average for the first time in 2 months...
Venezuela's Bizarre System Of Exchange Rates
Submitted by Tyler Durden on 01/07/2016 - 12:20
Venezuela is currently going through its worst crisis in history, replete with an endless list of interesting problems. Foremost among these are severe shortages in even the most basic of necessities. Economists have used these shortages as textbook examples to illustrate the pernicious effects of price controls. Few people, however, are aware that many of the country’s problems are caused by a complex monetary arrangement that makes use of four different exchange rates simultaneously. The result is that Venezuela can either be extremely cheap, or unbearably expensive, depending on the rate used.
Saudi Devaluation Odds Highest In 20 Years, Kingdom Now More Likely To Default Than Portugal
Submitted by Tyler Durden on 01/07/2016 - 12:02
Saudi Arabia, which entered 2015 with virtually no debt and an FX reserve war chest that amounted to around three quarters of a trillion dollars, is now viewed as less creditworthy than a country where a coalition of socialists, left-wingers, and communists just overthrew the government.
"A Sad State Of Affairs" - Two-Thirds Of Americans Have No Emergency Savings
Submitted by Tyler Durden on 01/07/2016 - 11:40
"When 63% of all Americans can’t handle a $500 emergency, and 46% of households making over $75,000 can’t handle a $500 emergency, then they are just plain stupid, frivolous, and incapable of distinguishing between wants and needs. Delayed gratification is a trait almost non-existent among Americans today."
China's Emergency Rescue Is Working: Chinese Futures At Session Highs
Submitted by Tyler Durden on 01/07/2016 - 11:06
Chinese stocks have retraced 50% of their overnight losses following the lifting of the circuit-breaker rule. China FTSE-A50 Futures trading on SIMEX are up over 250 points, trading at the highs of the day but for some context, the index is still down 14% from post-Christmas highs.
2016 Theme #4: The End-Game Of Debt-Fueled "Growth"
Submitted by Tyler Durden on 01/07/2016 - 10:57
It's requiring more borrowed yen/yuan/dollars/euros just to keep the global economy from collapsing in a heap of impaired debt. The costs of waste, fraud and mal-investment are finally coming home to roost, and while near-zero interest rates serve to mask the future costs, near-zero rates cannot stem the rising tide of mal-investment. Rather, near-zero rates have fueled mal-investment, waste and unproductive spending. The diminishing returns on that strategy of "growth" are inescapable.
Why Bank Of America Just Said To Go Long "Cash & Volatility", In Charts
Submitted by Tyler Durden on 01/07/2016 - 10:49
Denmark Hikes Rates As Draghi's "Hawkish" Ease Relieves Peg Pressure
Submitted by Tyler Durden on 01/07/2016 - 10:40
When Mario Draghi “disappointed” markets in December by “only” cutting the depo rate by 10 bps and “merely” extending PSPP by six months while electing not to expand monthly asset purchases, the Riksbank, the Nationalbank, the Norges Bank, and the SNB all breathed heavy sighs of relief. And while we doubt the ECB is done when it comes to going "full-Krugman" (as it were), Mario Draghi’s “hawkish” ease did buy his counterparts some breathing room. Case in point: Denmark just hiked.
Canada PMI Crashes Into Contraction
Submitted by Tyler Durden on 01/07/2016 - 10:13
Canada's Ivey Purchasing Managers Index collapsed from an exuberant and simply unbelievable 63.6 in November to a contractionary 49.9 in December - one of the biggest MoM drops on record and biggest misses on record. On a seasonally-unadjusted basis, this is the weakest print in at least 2 years. From the best data since February 2012 to the worst since February 2015 seems to expose these soft-surveys as practically useless. The huge drop in Inventories suggests a major drag on GDP and an extension of Canada's recession.
Bill Gross Warns Of Demographic Doomsday
Submitted by Tyler Durden on 01/07/2016 - 10:08
"Demographics may not rule absolutely, but they likely will dominate investment markets and returns for the next few decades until the Boomer phenomena fades away. The 1% – in addition to the 99 – will need extra doses of Xanax, or additional slices of cake, to cope."
Copper Futures Crash Below $2 For First Time Since 2009
Submitted by Tyler Durden on 01/07/2016 - 09:54
Dr. Copper is sick. For the first time since May 2009, Copper futures prices traded with a $1 handle this morning ($1.99) as Nomura analysts warn the commodity is likely to see more downside risk over the medium term as the market is expected to remain in surplus through the end of the decade.
China Suspends Circuit-Breaker Rule - "This Is Insane; We Were Forced To Liquidate All Our Holdings This Morning"
Submitted by Tyler Durden on 01/07/2016 - 09:38
Update: *CHINA SUSPENDS STOCK CIRCUIT BREAKER RULE - In Q&A, CSRC insists circuit breakers didn't cause the China meltdown but admits they may have aggravated sell-off.
"It couldn't be worse," exclaims one manager who started his fund mid-year in 2015, blaming China's equity market carnage on its newly-created circuit-breakers (as opposed to the fact that the Chinese market trades at 64x P/E and there are sellers everywhere). "Panic will eventually turn into a buying opportunity," hopes one strategist while another proclaims "poorly-designed" circuit breakers need to be adjusted to 10% (seriously). Blame is everywhere, but it is Chen Gang who summed up the panic best, "this is insane... we were forced to liquidate all our holdings this morning."
