Archive - Dec 9, 2014

There can be only one bond king. And with Gross in cross-asset limbo, that means that the undisputed fixed income crown, for now, goes to the one true monrach Jeffrey Gundlach. And in a few moments, said fixed income royal will be discussing the economy, the markets and his outlook for what he believes may be the best investment strategies and sector allocations, in his latest webcast titled, to borrow Barron's latest headline, "This Time It's Different."

Here we go again! Mortgage giants Fannie Mae and Freddie Mac have now officially approved 3% down payment mortgages. Having government entities provide low down payment mortgages to people who can’t afford to buy a house is always a good move. Keynesians like Krugman approve wholeheartedly. The housing market will get a nice boost and the working taxpayers will fund the bad debt through Fannie and Freddie. You own Fannie and Freddie. Everyone wins. In case you forgot, the closing costs to sell a house are usually 8% of the home price. So these home buyers are immediately 5% underwater when they move in... "Sometimes I can’t believe I live in a world this f##ked up. And no one notices and no one cares."

Curious how over the past 6 years we got to a point where the market is now so irreparably broken, even the BIS couldn't take it anymore and threw up all over the the world's central bankers? Then look no further than the following chart summarizing 6 years of global central bank liquidity injections that have made it imperative to use quotation marks every time one writes the word "market"

Having already raised rates and devalued the Naira (and widened its trading bands), the Nigerian currency continues to collapse to new record lows as crude crashes lower and lower. Having tumbled 11.5% since oil prices peaked, the Naira is holdinga round 184/USD - over 9% above the new peg and dramatically outside of the new trading bands of +/-5% as it seems capital flight is out of control. That is probably why, as Bloomberg reports, Finance Minister Ngozi Okonjo-Iweala has commented that Nigeria won’t resort to printing money or imprudent borrowing as it adjusts to lower prices of oil. “This is not the first time this country has gone through lower oil prices and it will not be the last,” she said - making it very clear that Nigeria is not Zimbabwe (yet).

If China just suffered its biggest market selloff in years, when the plug was pulled on just $200 billion in "shadow banking" assets, let's all hope that Bank of New York and State Street, who among just the two of them control some $55 trillion in custodial, repoable assets, never get any ideas from Beijing...

Corruption and lack of ethics is now endemic to American life and the economy.

Having secured for himself the most expensive suite of all the leaders at the G-20 meeting in Brisbane, Australia on November 15th, The Daily Mail reports that President Obama's 4,096-room entourage of security guards and assistants cost taxpayers a stunning $1.732 million for the one-night-stand against Putin. "Some folks are being ripped off..."

The entire “recovery” story was total BS and that the Fed has made things worse than before. As always, stocks are the last to “get it.” But we wouldn’t be surprised to see a crash in stocks in the coming months.

While the S&P 500, Dow, and Trannies remain in the red (just), the meltup off the opening lows is something to behold as Small Caps are now +1.3% on the day. The driver of this muppetry... a huge squeeze of "most shorted" stocks once again that took them from down over 2.5% at the open to higher by more than 0.5% now... Stocks, though, have decoupled from credit and USDJPY in this last vertical ramp.

With interest rates near their lowest levels on record, they have nowhere to go from here "but up." This is the consensus of virtually all of the analysts and economists on Wall Street which currently suggests that rates will rise to 3.88% next year on the 30-year treasury. Is everyone still wrong?

The White House just released President Obama's response to the CIA Torture Report...

Two months ago, when the first tremors in the crude market appeared, we wondered, jokingly, if one of the biggest crude bulls, Phibro's (and formerly Citi's uber-well paid trader) Andy Hall was puking blood yet. "Any crude BWICs from Andy Hall yet?" But while we may have been joking, for Andy Hall things were only all too real. So real, in fact, he just lost his job according to Bloomberg.

OIL TRADER ANDREW HALL SAID TO LEAVE PHIBRO BY YR-END: SOURCES

So is Hall's unwind the source of what some say is a relentless, rolling liquidation within the commodity space?

If there's one absolute truism we hear again and again, it's that central banks are desperately trying to create inflation. Perversely, their easy-money policies actually generation the exact opposite: deflation. Financial and risk bubbles don't pop in a vacuum--all the phantom collateral constructed with mal-invested free money for financiers will also implode.

VIX has been unable to make lower lows as stocks made higher highs in recent weeks as it appears managers protected these insane gains of the last few weeks rather than piled in - beta-chase-style - as financial media would have us believe. VIX has broken back above 16 this morning adding to its biggest 2-day surge in 2 months and suggesting notably more downside for stocks from here. We suspect credit hedgers are spilling over into the equity protection markets as bond liquidty dries up and protection costs soar.