Archive - Oct 9, 2015

Goodbye to "fat fingers" being blamed for flash crashes, and welcome to the Heisenberg uncertainty market: you can have your 1 cent bid/ask spreads... but you can't have any real market depth at the same time.

The following is extraordinarily creepy and disturbing. It’s also extremely clever, from a jackbooted, fascist thug perspective. When massive censorship itself isn’t enough...

Last weekend we called Obama's latest failed attempt to replace Syria's president for what it is: "this is shaping up to be the most spectacular US foreign policy debacle since Vietnam." Today, less than a week later, we have confirmation that this was correct after first Bloomberg reported that "some top White House advisers and National Security Council staffers are trying to persuade President Barack Obama to scale back U.S. engagement" in Syria, and then a report from the NYT that "the Obama administration has ended the Pentagon’s $500 million program to train and equip Syrian rebels." And just like that Obama folds, again.

As we pointed out previously, the growing convergence between BLS-reported initial jobless claims (at 42 year lows) and reported job cuts (highest since 2009) suggests someone is lying. It appears we have found the cuplrit as Goldman Sachs confirms that changes in gross labor market flows (e.g. gross hires and quits), as well as changes in the unemployment insurance benefit take up rate, affect the relationship between jobless claims and employment growth over the cycle. For this reason, today’s low level of jobless claims should probably not be taken as a sign of a booming labor market.

"We will never allow any country to violate China's territorial waters and airspace in the Spratly Islands, in the name of protecting freedom of navigation and overflight," Foreign Ministry spokeswoman Hua Chunying told a regular news briefing."We urge the related parties not to take any provocative actions, and genuinely take a responsible stance on regional peace and stability," Hua said in response to a question about possible U.S. patrols.

In a year when the nation’s overall prison population dropped, the number of older inmates grew rapidly in 2014, continuing a trend that translates into higher federal and state prison health care spending.

The latest BAC credit and debit card spending data is out and it is not pretty, and not just for the mid-level consumer who, as documented previously, has been tapping out ever since April as the following Gallup consumer spending chart shows but also for the high-end.

There's one thing resource downturns are good for: seeing which projects and regions are the strongest in industry. And we got another big indication this week that there's one global leader when it comes to uranium mining...

It appears bad news is bad news again. Fed's Evans just played "bad cop" to any hopeful talking head (Fed's Dudley earlier predicted US rate hike this year), implicitly taking October off the table...

• *EVANS: POL SHLD BE SOMEWHAT MORE ACCOMMOD THAN SEP SUGGESTS
• *EVANS: APPROPRIATE FOR FED RATES TO STILL BE SUB-1% AT END-2016
• *EVANS SAYS SLOWER GROWTH IN CHINA AMONG RISKS TO U.S. INFLATION

The market's reaction to this "way lower for longer" comment was negative.

Following last week's biggest rig count decline in 5 months, Baker Hughes reports a smaller decline of 9 oil rigs this week to 605 - the lowest since July 2010. WTI Crude was trading just below $50 as the data printed and jumped above it on the rig count drop.

As the evidence, that the US economy is either in or near a recession, mounts (confirmed by a new cycle high in inventories-to-sales just today), it appears even the most ardent optimists are admitting the odds of a US recession are on the rise. As Bloomberg reports, for the first time in 14 months, economists year-ahead recession probability estimates rose (to their highest level in 2 years).

The warnings are getting louder.  Is anybody listening?

The Dow-Jones Industrial average closed over 17,000 today, for the first time since August. Do not misinterpret this recent rise. Happy Days are not here again.

Hot on the heels of Deutsche Bank's admission that all is not well, Credit Suisse's announcement last night of a major capital raise was greeted by buying pressure from investors. However, reality punched them in the face this morning as CS releasaed its investor day details and, as Bloomberg reports, is looking to raise up to CHF8 billion (almost 50% larger than Goldman Sachs investor survey suggested). Clearly, CS' has a much more massive capital shortfall than expected.