Archive - Dec 5, 2014

The DJ Cyprus Total Market Index is at present down 99.71% from its all time high made in 2007, so we would say it is definitely the most oversold stock market in the world in all of history. From 100 euro invested at the peak, a mere 29 cents are left. Let us briefly ponder the mathematics of this wipe-out: when the market was down by 90%, it fell by another 50% at which point it was down 95% from the high. Thereafter, it fell by another 50%, ending down 97.5% from the high. Then it fell by another 50%, at which point it was down 98.75% from the high. Then it fell by 50% again and was down 99.375%. Surely this was bad enough? Nope…it then fell by yet another 50%, landing at 99.6875% down from its 2007 high.

Last week, Zero Hedge first showed a chart so simple, even a Krugman could get it: at this point (and really ever since USDJPY 110 and higher), any incremental Yen devaluation is destructive for the Japanese economy, leading to an unprecedented surge in defaults. And here is Japan Times confirming what we said, with a report that "Corporate bankruptcies linked to the yen’s slide hit a new record in November, highlighting the strains on small and midsize companies as Prime Minister Shinzo Abe campaigns for re-election on his deflation-busting economic strategy."

• JP Morgan 200K
• Goldman Sachs 220K
• Citigroup 225K
• HSBC 230K
• UBS 230K
• Credit Suisse 235K
• Morgan Stanley 235K
• Deutsche Bank 250K

• Marchers again swarm New York to protest death at hands of police (Reuters)
• N.Y. Police Chokehold Evidence to Stay Secret as Protests Spread (BBG)
• Obama to announce choice of Ash Carter for defense chief Friday: White House (Reuters)
• Boehner vows to avoid government shutdown with help from Democrats (Reuters)
• Brent Heads for 5-Year Low as Saudi Discounts Spur Competition (BBG)
• Will Cheap Oil Lead to Big Mergers? (WSJ)
• Bank of Russia Ramps Up Ruble Support (WSJ)
• China Bad-Loan Level Seen Understated After Economy Slows (BBG)
• Uber Snags $41 Billion Valuation (WSJ)

Confused why in the lack of any horrible economic news (unless of course someone leaked a worse than expected November payrolls print which would put QE4 right back on the table) futures are higher, especially in the aftermath of yesterday's disappointing ECB conference? Then look no further than the Yen which has now lost pretty much all control and is in freeplunge mode, rising some 25 pips moments ago on no news, but merely as wave after wave of momentum ignition algos now make a joke of the Japanese currency, whose redline of 123 (as defined by SocGen)is now just 240 pips away. At this pace, Japan's economy, which as reported yesterday has just seen a record number of corporate bankruptcies due to the plummeting yen, may well be dead some time next week. Which, with Paul Krugman as its new and improved economic advisor, is precisely as expected. RIP Japan.