Archive - Nov 2015

A collapse in new orders and the order backlog combined with a plunge in wages, average workweek, and number of employees has left the Richmond Fed contracting for the 3rd month in a row. The last three times this happened, The US was either in recession or The Fed unleashed QE3.

The lowest income Americans appear to have officially given up on the "hope"...

Just three months ago Consumer Confidence was peaking at 8 year highs and everything was awesome. Now, with the biggest miss since March 2009, Consumer Confidence crashed to 90.4 from 99.1. This is the lowest since Septmeber 2014 as the "decline was mainly due to a less favorable view of the job market." Almost every cohort - across age, income, race saw a collapse in confidence though we note low income and under-35s saw the biggest declines as Income Growth expectations plunge to the lowest in 14 months.

On Friday Nov. 20th we sold a half unit each of nearby January WTI trading at or near to $41.85 and nearby Brent trading at or very near to $44.23, giving us an average of $43.04. Our stated risk, was 2% on the position, so the stops were set at $42.10 and $45.11 respectively, and we used our “hour or so” methodology; that is, we’d want to see crude trade through those levels “for an hour or so” before activating the stops in question. Those stops have been activated. The Saudis caught us off. We are gone… now!

CFTC meets this morning to propose a registration standard applying to as many as 100 firms that have changed markets by trading their own money using complex algorithms and advanced technology. As Bloomberg notes, this proposal follows more than 5 yrs of debate about market disruptions, such as the May 2010 flash crash. Crucially, as is well known now, high-speed, automated trading in recent years has surged to account for almost three-quarters of certain derivatives markets which means any regulatory crackdowns will no doubt have impacts on markets; as former CFTC chief Chilton noted “Clearly some of the rules are antiquated.”

The world is awash with debt. With central banks increasing their balance sheets through quantitative easing, simultaneously pushing down interest rates and taking huge chunks of the market out of circulation, investors have had to stray beyond developed market government bonds in search of yield.

After 3 straight months of home price declines, August and now September have seen the usual seasonal pattern unfolding as Case-Shiller reports 0.61% rise in September (double the +0.3% expectations). Of course this runs in the face of NAR's 4 month decline in median home prices, but who's quibbling. Notably, 2015 is playing out almost exactly the same as 2014... winter is coming.

Futures tumble and bond yields slide following news that Turkish F-16s have taken down a Russian Su-24 fighter jet near the Syria border. Russia confirms its plane was downed but claims the plane was over Syrian territory for the entire flight.

A month ago the US economy was said to have grown only 1.5%, driven by a long-overdue and perhaps welcome correction to inventories. Moments ago we got the first revision to the Q3 GDP, which as consensus expected rose from 1.5% to 2.1%, however for all the wrong reasons because while personal consumption actually decline from a 3.2% increase, and a 2.19% contribution to the GDP bottom line, it is now said to have grown only 3.0%, adding 2.05% to the final GDP print.

Update: Alleged footage of the crash site inside.

"If the strike is confirmed, the TOW missile was most likely supplied through the same US and Turkey-backed logistics programme that has reportedly been supplying Alwiya al-Ashar." 

PUTIN SAYS LOSS OF RUSSIAN WARPLANE TODAY DUE TO BACKSTABBING
PUTIN SAYS INCIDENT TO HAVE SERIOUS CONSQUENCES FOR TURKEY TIES
PUTIN: OIL FROM ISLAMIC STATE IS BEING SHIPPED TO TURKEY
PUTIN SAYS ISLAMIC STATE GETS CASH BY SELLING OIL TO TURKEY

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• Turkey downs Russian warplane near Syria border, Moscow denies airspace violation (Reuters)
• Investors seek safety in bonds, yen after Turkey downs Russian jet (Reuters)
• Donald Trump Is Not Backing Down (BBG)
• Uber's Exposure May Grow as U.S. Drivers Seek 57.5 Cents a Mile (BBG)
• U.S. issues global travel alert as manhunt continues for Paris attackers (Reuters)
• Stung by Oil, Distressed-Debt Traders See Worst Losses Since '08 (BBG)

Everyone has been waiting to hear the official Russian response to the Turkish downing of a Russian warplane next the the Syria border. So here it is, straight form the horse's mouth: Vladimir Putin who is now speaking with the King of Jordan, is expected to make a statement over the downed plane.