Archive - Nov 23, 2015

The Federal Reserve has been telegraphing to markets that they are going to raise the fed funds rate by 25 basis points next month at its December Fed Meeting.

Since 20 March 2015 a new gold price fixing organized by the London Bullion Market Association has been in operation. It has replaced the previous price determination process, which was in place for more than a century and became subject to criticism as it was highly vulnerable to manipulation. Has manipulation now ceased?

Treasury yields are at the lows of the day (despite relative equity strength) as this morning's triple whammy of weak data (CFNAI, PMI, and Existing home sales) confirms fears of Fed policy errors. The extreme short-positioning across the entire Treasury complex is likely making a few nervous as 30Y yield breaks back below 3.00% for the 3rd time in 3 days... and the 2s30s curve breaks to 7-month lows.

Just an hour after Bernie Sanders exclaimed that the Pfizer/Allergan merger would be a disaster for Americans who already pay the highest prices in the world for prescription drugs, Hillary Clinton has come out swinging in her most populist manner lambasting Republicans for "enabling tax inversions" and vowing to "crackdown" on companies moving abroad to "avoid paying their fair share."

Perhaps at a yield of just under 1%, the highest since May 2010, there is an increase in relative value demand. Nowhere is this more visible than when looking at the German 2 Year Bund, which earlier today hit a new record low, just shy of -0.40% (yes, negative).

Amid all the singing and dancing over Spain's miraculous recovery and Europe's renaissance on the back of Draghi's money-printing machine, it appears - just like in America - that below the glossy veneer of engineered equity and bond prices, all is not well. As Xinhua reports, the average wage in Spain has fallen to its lowest level since 2007, according to figures released by the Spanish Ministry of Finance, and after peaking at 19.3 million in 2009, the number of workers is also collapsing. It appears Catalan is righty to want out...

The American people have been forced to pay untold millions for a ten-year CIA and Pentagon program to undermine and overthrow the Syrian government, and now we are supposed to pay millions more to provide welfare for the refugees Obama created. If Obama wants to take in refugees from the chaos in Syria, there are probably plenty of vacant rooms in the White House.

From an intraday high of $97.64, Valeant shares are down 10% this morning as the last few days' short squeeze and hope-fueled stability in the hedge fund hotel has given way to more 'first mover advantage' across the levered trading community. As we noted here, this is what hedge fund panic looks like.

The debt to GDP ratio for the entire world is 286%.  In other words, global debt is almost 3 times the size of the world economy.  Both public and private debt are exploding and - despite what mainstream economists think - 141 years of history shows that excessive private debt can cause depressions.

Just as we warned was possible, KBIO is going full Volkwsagen up another 150% today alone (up from $1 last Wednesday to over $45 today), the stock has just been halted.  And here is the punchline: According to Markit, the short interest of float is now 38%. Why is this a problem? Because Shrekli's investor "group" bought 70%.  This means that if Shkreli pulls all the borrow, there will simply not be enough shares for the shorts to cover.

Yes, what we are about to show you is simply a collection of anecdotal data points.

EURUSD just broke to a 1.05 handle, its lowest since April. With EURUSD now down 9 big figures from Draghi's mid-October jawboning, the US Dollar index (heavily-weighted to EUR) is soaring, reaching back above to its highest since March. Bearing in mind that Fed's Fischer says that the worst of USD's impact on the US economy is yet to come, we may have a problem.

Presented with no comment (if confused, don't worry - you are not alone)

The government of Venezuelan President Nicolas Maduro is investigating a report that the U.S. government has been spying on executives of the state-owned Petroleos de Venezuela, or PDVSA, over the past decade. “The oil industry is the backbone of the Venezuelan economy,” Maduro said on state television. “The U.S. empire for a long time … has intended to sabotage [Venezuela’s] oil industry and defeat the [Caracas] government in order to steal the oil.”