Archive - Nov 2015

Dear fast food workers of the US - presenting you nemesis: the Momentum Machines burger maker. It just made all of your jobs obsolete.

“By sanctioning a ‘shoot first, think later’ approach to policing, the Court renders protections of the Fourth Amendment hollow.”

"An unmanned military underwater vehicle rigged with explosives was spotted on the seabed in the vicinity of the Nord Stream gas pipeline in the Baltics on Friday, Swedish media report."

Considering the crises facing Europe, the question is no longer: Will the EU survive? It is Orban’s question: Will European civilization survive the century? If the mass migrations are not halted, the rise of nationalist regimes at the expense of Europe’s liberals and leftists is inevitable.

He built the world's fastest road-legal car. He produced a classic British gangster flick. And he fell to his death on Sunday amid the global deflationary supply glut.

"As we progressed through the quarter, conditions softened. And September was especially weak, particularly in the U.S. product businesses....September typically is the strongest month of the year... There appears to be a general slowdown in U.S. industrial customer spending, both capital and operating spending.... we're not expecting to see sequential growth until the second half of the year (2016)"

- Keith Norbusch, ROK CEO

"All. Bets. Are. Off"...

The real risk is that while debt is rising on both a relative and an absolute basis, EBITDA, or cash flow, of both junk companies as well as Investment Grades, has been declining for at least one year. Or rather, while junk-rated companies have seen their EBITDA decline consistently for the past 5 years, the big inflection point was early 2014 when IG EBITDA also plateaued and has since been declining.

This may sound like one of those generation gap stories, where older folks complain about the “kids” doing their own thing and the kids not trusting “anyone over 30.” It’s not. From sea to shining sea, distrust and anger ripples across America. Older age groups like to criticize millennials: they’re spoiled, have a sense of entitlement. Actually, they should look in the mirror, as they’re leaving those who will follow one hell of a mess.

The idea that hard work leads to prosperity is increasingly becoming an American pipe dream, in some places more than others.

Following a 600% surge in sales over the past two months, Germany has run out of pepper spray, and the irritating substance can now only be purchased after weeks of waiting. Focus says that according to pepper spray manufacturers, "frightened Germans" have bought out all the available inventory. The alleged reason, according to the German publication: "die Flüchtlingskrise", or the refugee crisis.

API reported a huge 6.3 million barrel inventory build (notably larger than expected) extending the series of build to seven weeks. Even more worrying was the massive 2.5 million barrel build at Cushing, even as gasoline inventories fell 3.2mm. WTI immediately dropped 35c, breaking back to a $43 handle after-hours.

Tarp Man Commeth...

There is little evidence currently that the rally over the last couple of months has done much to reverse the more "bearish" market signals that currently exist. Furthermore, as noted by Jochen Schmidt, the current market action may be more indicative of market topping process. Not unlike previous market topping action, the markets could indeed even register "new highs," as witnessed in both 2000 and 2007 before the major market correction begins. This is typically how "bull markets" end by providing false signals and sucking in the last of those willing to "buy the top." The devastation comes soon after.