Archive - Nov 2015

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.”

On Friday, we previously reported that "Europe Cracks Down On Bitcoin, Virtual Currencies To "Curb Terrorism Funding." That was the appetizer because today we read, again with little surprise, that "as part of a push to clamp down on the financing of militant groups" French Finance Minister Michel Sapin European said that authorities need to be able to tap into data from the SWIFT bank payments network.

"The hardest questions we are trying to reconcile here are how is that possible to see all these signs of weakness under the surface being balanced by very strong equity markets and upbeat employment picture. One of these sides has to be wrong..."

Dominated by an 8.7% collapse in The West, existing home sales fell 3.4% in October MoM (worse than the 2.7% drop expected) to a 5.36mm SAAR. Year-over-year, existing home sales are up just 3.9% - the weakest since January. And finally, in a mind-numbing reality for The Fed's wealth creation plan, median home prices have now dropped for 4 months in a row.

Despite EU PMIs surging, US Manufacturing PMI has re-collapsed to 25 month lows as manufacturing employment showed "one of the smallest monthly gains seen over the past five years." The 52.6 print is below October's 54.1 and expectations of 54.0. Export orders saw renewed weakness and overall new orders, output, and employment slowed. Of course, hope remains that the Services side of the economy will maintain the dream of escape velocity but if last month's drop in Services PMI is anything to go by, it seems unlikely.

On November 18, the Chairman and CEO of Guotai Junan went missing, and given what we know about China's crackdown on anyone suspected of engaging in activities that might send stocks lower, you know what that means...

If you think you're fighting the market, or the banks, or the Fed, you're dead wrong!

It may be a holiday shortened week in the US with Thanksgiving and Black Friday sales on deck (some of which may be starting as soon as Wednesday) but there is a lot of macro data to digest in the next few days.

National Activity contracted for the 3rd month in a row according to The Chicago Fed's index. Printing -0.04 (missing expectations of +0.05 for the 9th time of the last 11 months), CFNAI has now been below 0 (contraction) for 8 months this year. Under the surface the biggest problem is the collapse in the sales-to-inventories index to cycle lows (contracting 7 of the last 8 months).

Just 2 hours after news broke of Saudi officials discussing the need to do "whatever it takes" to stabilize the oil market - sending crude soaring - half the gains are gone. With the algos tagging Friday's highs, WTI Crude has tumbled back into the red from Friday's close as traders want action not words to solve the massive global oil glut...