Archive - Jan 5, 2015

Anyone who put on a long Shanghai Composite, short Brent trade on January 1, 2014, congratulations: you can now retire. However, since nobody did and instead the groupthink herd of beta-levered momentum chasers known as hedge funds were mostly long the S&P and short Treasurys, it explains why most of them generated negative returns in 2014. Here is how all the other main asset classes did in 2014, denominated both in local currency and in the soaring USD.

• Economists sceptical ECB bond-buying would revive eurozone (FT)
• Indonesia naval captain says may have located missing plane's tail section (Reuters)
• Oil hits five and a half year low under $55 (Reuters)
• Samaras Warns of Euro Exit Risk as Greek Campaign Starts (BBG)
• The death of active investing: Vanguard Sets Record Funds Inflow (WSJ) - thank you Fed
• Oil Downturn Has Many Wondering How Lone Star State Will Weather a Bust (WSJ)
• Hollande Says France Must Exceed 1% Economic Growth to Spur Jobs (BBG)

The new year is not even a week old and already the volatility fireworks are off, as well as the continued commodity derisking. But while for now US stocks continue to be an island oasis in a turbulent global sea where GDP forecasts decline every single day, the same can not be said about either the Euro, which after crashing overnight to a 9 year low, and rebounding briefly, has continued to decline and is now once again flirting with a key support level, this time 1.19, last reached during the May 2010 first Greek bailout. The catalyst, as usual, Greece which may or may not be leaving the Eurozone shortly, as well as ongoing bets on ECB QE following this morning's regional German inflation data which declined once more and now hints at outright deflation in Europe's strongest nation.

"Russia has presented a startling proposal to overcome the tensions with the EU: The EU should renounce the free trade agreement with the United States TTIP and enter into a partnership with the newly established Eurasian Economic Union instead. A free trade zone with the neighbors would make more sense than a deal with the US."

2014 may go down as the year when gold and silver conspiracy “theories” became conspiracy “facts” as banks globally were found to have conspired to rig the prices of gold, silver, currency and many other markets.