Archive - 2013

Treasury curve flattening continues to gather pace as 30Y bonds rallied their most in 8 months today (even as the shorter-end sold off modestly) but on the week the flattening is dramatic to say the least. Of course, all eyes were on stocks as the Dow and S&P leaked (post European close) to new highs (and the Russell gained back yesterday's losses and some to close the week's winner +3.5%). Gold (and silver) rallied on the day back over $1200 (but closes -3% on the week). VIX followed a similar pattern to yesterday with an early drop followed by a drift higher as it's clear managers are protecting into year-end. Quad witching and rebalancing provided some fireworks into the close as volume rose and stocks slid (as Nanex noted - something broke - lots of micro-crashes/rallies) as CBOE quotes stopped with 10 minutes to go.

It will likely come as no surprise that, despite a 'surging' economy (based on today's inventory-stacked GDP), that CEOs are less than upbeat about the future when one scratches below the surface of 5-second soundbites. As Bloomberg's Rich Yamarone notes, from the most recent quarter's earnings calls, two critical themes emerge as top of mind for CEOs - consumer-related companies remain skittish about the ability of households to spend without a heavily promotional environment and companies cited upcoming healthcare legislation as a hurdle to performance and profitability.

Yields for many staple crops (like wheat) essentially hit a wall about ten years ago. After decades of miraculous gains in the amount of tons, bushels, and kilograms per acre we have been able to extract from the Earth, productive capacity has largely plateaued. In other words, we have maxed out what we can pull out of the soil for now. And the amount of soil per person that’s in production is in serious decline. This spells out an obvious case for investing in agriculture… and even more specifically, to own farmland.

Joy to the New World Order!

Guess Who?

We suspect the word "but" will figure heavily in President Obama's news conference today (his last before hitting the Hawaiian tees) as he addresses all the wonderful things that are occurring in the US - and yet moar needs to be done... oh and have you signed up for Obamacare yet?

A century ago, politicians failed to understand that the financial panics of the 19th century were caused by collusion between government and the banking sector. Today, however, we do know better. We know that the Federal Reserve continues to strengthen the collusion between banks and politicians. We know that the Fed’s inflationary monetary policy continues to reap profits for Wall Street while impoverishing Main Street. And we know that the current monetary regime is teetering on a precipice. One hundred years is long enough. End the Fed.

Despite the absolute assurances (by your friendly local asset gatherer) that a taper would unleash hell in the bond markets, a decidedly one-sided market has seen a tremendous squeeze in the last 2 days. Echoing Operation Twist's effort, the term structure of Treasury yields has collapsed by 5 standard deviations to 3-month flats.

With 75 minutes until the President's news conference - that we suspect would have been chock full of positivity over the 'progress' the Obamacare website has made - Healthcare.gov is down...

RANsquawk Weekly Wrap - 20th December 2013

Chinese demand may once again stem the decline in gold prices. Chinese buyers eagerly scooped up gold at bargain prices overnight after the 4% price fall. Gold volumes for the benchmark cash contract on the Shanghai Gold Exchange (SGE), China’s biggest spot bullion market, climbed to a 10 week high as lower prices led to increased buying.

While a military campaign against Syria (and Iran) on the usual grounds has been postponed indefinitely, two nations in the Middle East have been seething: Saudi Arabia and, of course, Israel. Yet while Saudi Arabia rarely if ever gets its own hands dirty, instead executing its geopolitcal strategy through puppet states in need of its oil, Israel has never had a problem with engaging in offensive wars. And now that the threat of an imminent war, one which would have been largely carried out on the back of the US military, is gone Israel is preparing to do just that. According to UPI, "Israeli generals are preparing for a decisive -- and probably brief -- war against Hezbollah, one of Israel's most implacable foes, with plans to smash the Iranian-backed Lebanese movement's military power, a study says. The Israelis' primary objective will be to eradicate Hezbollah's reputedly massive arsenal of missiles and rockets "for years to come," the report by the Begin-Sadat Center for Strategic Studies in Tel Aviv said."

Overstock to Accept Bitcoin Starting In 2014

Presented with 'shockingly' no comment...

Pleased to announce former US Congressman @BarneyFrank has joined @CNBC as our latest contributor.

— Nick Dunn (@NickDunnCNBC) December 20, 2013

The Fed's announcement Wednesday to begin the tapering of its bond buying program (to our surprise) has been followed by a spike in the US 10 year yield; however, Citi's FX Technical group cannot help but feel that we have seen this dynamic play out before.