Archive - Nov 5, 2015

Another anecdote of the bursting ebulience for Biotechs. As Valeant collapses further, Kura Oncology - which IPO'd yesterday at $8 - has today crashed back below its IPO price (down over 56% from yesterday's opening highs).

Having pushed up towards $49 in its exuberant "a hawkish fed must mean everything in the world is awesome" way, yesterday's reality check on inventories (rising), production (rising), and The Fed (we are going to hike no matter what) which means the dollar too is surging and is pushing down on commodity prices, has dumped WTI Crude back below $46 and erased all of the gains post-FOMC.

Greece’s Public Power Company is angry. The amount of unpaid bills by its customers has reached the astronomic EUR 2.5 billion. The PPC is so angry that it plans to cut the power to those without outstanding debts as soon as possible - a whopping 2.1 million Greeks face darkness.

"Real Output" is perhaps an even more accurate indication of the true state of the US domestic economy considering all the complaints by the Fed over the state of the global economy and eliminate the "noise" from trade which has been depressing GDP for quarters. Unfortunately, what the real output data reveals is not pretty. Rising by 2.3% Y/Y in Q3, this was not only down substantially from 3.4% in Q3 and 3.5% in Q1, but this was the weakest increase since Q1 2014! And then there are jobs...

Zero Hedge first revealed the contingency plans that libertarian online retailer Overstock has implemented "in preparation for the next collapse" ten days ago. Today, the strategy outlined by Overstock Chairman Jonathan Johnson has resonated across the Atlantic and this morning as the Financial Times catches up to the story of an "online retailer hoarding gold as crisis defense" in which it calls the retailer a "redoubt of doomsday conservatism" adding its policy to prepare for the loss of central-planning control is "redolent of the small band of US survivalists preparing for the end of civilisation."

A modest 1.4% rise in unit labor costs in Q3 was dramatically below the expected (and hope-strewn) 2.5% growth and means unit labor costs have missed expectations for the 3rd quarter in a row for the first time since 2003. Perhaps just as bad, historical (weak) data was revised notably lower but of course, as Yellen and Fisher have made clear - none of this matters for the data-un-dependent Fed's December decision.

Just when you thought (for the 10th time this year) that the worst was over in the US energy space, Challenger Grey reports a massive spike in Energy sector layoffs - to six-month highs. For context, energy sector layoffs are 9 times higher in 2015 than 2014 and Texas - with 103,422 layoffs - is the worst state for job cuts (despite Dallas Fed Fisher's previous insistence that the state is 'diversified'). Despite the ongoing side in initial jobless claims, employers have announced 543,935 job cuts in 2015 so far, 31% higher than 2014.

Other asset-classes are screaming that deflationary headwinds are very much still in play...

• BOE Stays Cautious on Rate-Hike Timing as Inflation Outlook Cut (BBG)
• China Enters Bull Market (WSJ)
• Britain says Islamic State likely brought down Russian plane (Reuters)
• Dollar jumps as markets fix on December rate expectations (Reuters)
• Activist Investor Bill Ackman Plays Defense (WSJ)
• BOJ Survey Data Reveals Signs of Growing Inequality in Japan (BBG)
• UAW Warns of General Motors Strike If Workers Fail to Approve Contract (WSJ)

For those eager to cut to the chase and curious if overnight we have had another standard USDJPY ramp levitating US equity futures on low volume, the answer is yes. And since the USDJPY carry was patient enough, it managed to trigger the 2100 ES stops and as of this moment the futures were comfortably on the politically-correct side of 2100.