Archive - Dec 10, 2015

If we have a saviour, it is the person in the mirror. If we are to be saved, we alone must do the research, make the plans, vote with our feet and establish our own liberty.

"The United States is prepared to assist the Iraqi Army with additional unique capabilities to help them finish the job, including attack helicopters and accompanying advisers."

"By the time we figure out how to stop that, ISIS will have the next thing. They use tricks. Always they are a step ahead of you, no matter how smart you are."

"What I find most hilarious is that some serious commentators have been pontificating at considerable length about what the market’s participants think. These days, some 70% of market orders are generated by computers, and many of the rest by indexers. And computers do not think... I cannot remember a time when less thinking has ever been done in the financial markets, which is why I find today’s financial markets infinitely boring."

- Charles Gave

And if American Entrepreneurism is in a death spiral, then so too is the U.S. economy and the state that lives off the surplus generated by American Entrepreneurism.

Without giving any reasons, South African President Jacob Zuma has fired his finance minister (after just 19 months in office). This has shocked investors, already anxious about the nation's surging debt and sluggish economy and South African bonds and FX have collapsed andhas given rating agencies “perfect justification” for further downgrades and the loss of investment grade status. 10Y yields spiked 140bps to 10.18% - the highest since July 2008 - and CDS have soared. The Rand has crashed to new record lows above 15 to the USD.

While the headline import price figure suggested there is some hope that import prices will improve at the headline level in the coming months, something else has emerged which suggests that the real importing of others' deflation is only just starting. Or rather, someone else. China.

BANZAI7 FOOD, BEVERAGE AND STATIST SLIMEBALL WARNING...

It's a bad time to be in the commodities business. Crude is in a veritable tailspin as an increasingly disjointed OPEC ramps production to three-year highs and thanks to a worldwide deflationary supply glut, the Bloomberg commodities index is sitting near its lowest levels of the 21st century portending doom and gloom for prices across the entire commodities complex. On Thursday, we get the latest round of desperate cost saving measures as oil major ConocoPhillips slashes capex by some 25% and looks to raise $2.3 billion from asset sales.

Weak surveys, mass layoffs, and poor outlooks appear to have finally rippled through the government's data and sparked a significant rise in initial jobless claims. Up 13k to 282k, this is the highest claims since early July. Of course, it remains below the Maginot Line of 300k which 'proves' everything is awesome, but initial claims is now at the same level as it was when The Fed ended QE3. Perhaps more notable is the spike in continuing claims (up 3.8%) - the end biggest jump since 2008 to 3 month highs.

The media can try to hide reality all it wants. But an economic collapse is here. It will trigger another stock market crash just as it did in the early ’90s, the Tech Bubble, and the Housing Bubble. 

While the major indexes remain within arm’s length of their 52-week high, the number of stocks hitting new lows is piling up.

Whether Beijing is questioning Guo about his habit of eschewing investments in China in favor of deploying capital overseas or whether Fosun did something “wrong” in the markets during the selloff is hard to know, but one thing’s for certain: “kill the chicken to scare the monkey” is alive and well.

The latest confirmation that the oil cartel formerly known as OPEC is effectively non-existent, came a little over an hour ago when in its latest November monthly report, the Organization of Petroleum Exporting Countries reported that total monthly crude output for the member nations rose to 31.695 million barrels per day, the highest amount produced in three and a half years.

• Win or Lose, Trump Has Already Left His Mark on Republican Primary (BBG)
• S&P 500 Futures Rise With Miners; Oil Erases Gains, Euro Drops (BBG)
• U.S. top court divided over affirmative action in college admissions (Reuters)
• San Bernardino Shooter Said to Have Planned an Attack in 2012 (WSJ)
• Gun buyer and gunman linked through marriage, previous plot (AP)

The Fed & ECB are spawning the next crisis....