Archive - Nov 2015

Perhaps a retail coals-in-the-stockings Christmas will awaken the mainstream media to the reality that recession is now a global phenomenon.

"Today is a historic day. It’s the changing of an era. We can live in an Argentina without poverty, where we can all aspire to have our own homes with running water and a sewage system." 

"The question is whether this is going to be something like the rebirth of Argentina or another failed dream that people get excited about, but then they can’t overcome the challenges.”

• Brussels on Edge as Lockdown Continues (WSJ)
• Stocks Pare Decline as Crude Oil Erases Drop on Saudi Comments (BBG)
• Italy’s Eni Plans to Pump Arctic Oil, After Others Abandon the Field (WSJ)
• Treasuries Decline as Economists Say GDP to Be Revised Higher (BBG)
• Why the Housing Rebound Hasn’t Lifted the U.S. Economy Much (WSJ)
• Argentina Fever Is Back for Investors as Kirchner Rival Triumphs (BBG)

The oil producers are rapidly learning from the central banks how to jawbone markets higher. With both Brent and WTI sliding as recently as ten minutes ago, suddenly a buying frenzy was unleashed following a Bloomberg headline which cited the Saudi Press Agency, according to which the world's largest crude exporter was ready to pull a Draghi and would do "whatever it takes" for a stable oil market, and that it would cooperate with OPEC and non-OPEC members for stable prices.

As was extensively reported over the weekend, the Pfizer-Allergan tax-inverting, reverse-merger (in which the far smaller Allergan would end up "buying" Pfizer, courtesy of fungible debt which doesn't care where it ends up as long as there are cash flows) would be announced this morning, and sure enough, moments ago the long-awaited press release finally hit.

As a result of the global commodity weakness, global stocks have fallen for the first time in six days as the sell-off in commodities continued, dragging both US equity futures and European stocks lower. However, putting this in context, last week the MSCI All Country World Index posted its biggest weekly gain in six weeks: alas, without a coincident rebound in commodity prices, it will be merely the latest dead cat bounce.

A big catalyst for the ongoing collapse in the Bloomberg commodity index which just hit a fresh 16 year low, is the relentless surge in the dollar, with the DXY rising as high as 99.98 the highest since April, as a result of rising prospects for a December U.S. rake hike (odds are now at 70%, up from 36% a month ago) boosting currency differentials and flows into the USD, making commodities more expensive for buyers in other currencies.

With the ECB expected to announce a boost to QE and pushing rates even lower into record negative territory, perhaps Markit did not get the memo to double seasonally adjust the seasonally adjusted European manufacturing and services PMI survey data, when instead of providing cover for Draghi ("look, the economy is slowing down even more, surely you must unleash more printing") it reported that not only the Manufacturing PMI rose to 52.8 from 52.3, a 19 month high and above the highest estimate (range was 51.5 to 52.6), not only the Service PMI rose to 54.6 from 54.1, a 54 month high and also above the highest estimate (range of 53.5-54.4), but the Composite PMI soared to the highest level recorded since May 2011, rising from 53.9 to 54.4.

Front-month (Dec) copper futures are trading near $200 ($200.15) for the first time since March 2009 as the collapse in the global economic indicator extends to an unprecedented 14th day in a row. The ongoing collapse appears to have finally impacted Chinese equities which have given up the morning's gains and are drifting rapidly lower. Overall, as Goldman warns, the metals market appears to be increasingly pricing concurrent and/or future weakness in China’s old economy.

According to current and former officials who spoke on the condition of anonymity, US Central Command may have been involved in a year long effort to obscure the fact that America’s strategy to combat ISIS simply was not effective. "At the least, the prospect that senior officials intentionally skewed intelligence conclusions has raised questions about how much Mr. Obama, Congress and the public can believe the military’s assessments."  

The U.S. is, in fact, Europe’s enemy - not merely Russia’s enemy. Not merely the truth’s enemy. Not merely democracy’s enemy.

If it doesn’t start a war in the short run, it’s going to guarantee a U.S. bankruptcy in the slightly longer run. All the “hawks” running for president this year (which is to say, almost every candidate) seem oblivious to the fact that, in anything but the briefest conflict, economic power completely trumps military hardware. Simply put, whenever you see a mention of the U.S. Navy and the Spratlys in the same paragraph, you’re seeing a reminder of an open vein helping to bleed America dry. And that’s the best case.

Having recently explained how "The Fed has done everything it can to avoid surprising the market," vice-chair Stan Fischer better be right about what happens next. With all the double-edged FedSpeak and CONfidence reiteration - in the face of tsunami-like global deflationary forces only made reflexively worse by a soaring US Dollar - speculators are at extremely short bonds and short VIX (bullish stocks). The last time this happened was the end of QE1...