Archive - Dec 11, 2015

Amid the carnage in crude markets today, Baker Hughes just reported a 21 rig drop in oil rigs - the biggest absolute drop in 2 months. The total rig count dropped 28 to 709 - the lowest since 1999.

Presented with no comment...

What the PBOC's unexpected announcement means, is that for anyone who thought the Yuan devaluation is over, now that the currency is at the lowest level relative to the dollar since 2011, the reality is that the devaluation relatively to everyone else is only just starting.

Here’s one for the "actions speak louder than words" file: Investment research firm TrimTabs reported on Wednesday that insider selling reached $7.6 billion for the month of November, the fourth-highest monthly level on record.

With the biggest single-day drop in over 4 years, US High-Yield bond prices have collapsed to their lowest levels since July 2009. Crucially, it's not just energy companies as the painful illqiuidty has careened across the entire space, not helped by fund liquidations and the biggest outflows since August 2014.

A tragic example of this was seen in Italy in recent days when a pensioner committed suicide after having his life savings wiped out in a bank bail-in. A pensioner from near Rome, hanged himself after his €100,000 (£72,000; $110,000) investment in Banca Etruria bonds were wiped out in a bail-in. A suicide note was left by the pensioner criticising the bank.

Putting the 'mad' in Maduro. Venezuela's heavy crude oil price just crashed almost 9% to $31.24... its lowest since December 2004. Time for another 'swap' with China?

He got caught up in the future of energy, instead of focusing on maximizing profits and running the business in the here and now.

Time to go to Tijuana for Christmas vacations? The Mexican Peso just collapsed to all-time record lows against the US Dollar...

"Templeton Global Bond ($100bn in total; $59bn in mutual funds) – BEN’s largest fixed income fund – has seen meaningful outflows YTD (-$7.6bn from retail; -13% annualized rate) and could persist given the deterioration in excess performance (-460bps vs. benchmark YTD)."

As soon as the Fed moves money market rates upwards, unproductive parts of the economy will come under severe strain which in turn sets in motion recessionary forces prompting the Fed to reverse course. The only way out is to realize that the world is awash in mal-invested capital that need to be written off. Since that is inconceivable for today’s vested interests, the way forward will be further “Japanification” of the global economy. And this time we are all out of arrows.

Clearly the time for a rate hike that "boosts confidence in the economy" has come....

The writing has been on the wall for a few days/weeks, but it appears a combination of global FX and equity turmoil and domestic corporate debt market collapse is finally starting to roil US equity markets. The Dow is down over 600 points in the last week or so, bond yields are collapsing, the USDollar is tumbling, crude is crashing, and junk bonds are in free-fall.

Following the wholesale inventories-to-sales jump, business inventories-to-sales just shifted once again to cycle highs, deep in recessionary territory. With inventories unchanged in October, slightkly lower than thge expected 0.1% increase, Q4 GDP will start to be affected (and Q3 as prior data was revised lower). Nevertheless, with sales dropping 0.2%, with manufacturers tumbling 0.5% MoM, the looming production cuts set up The Fed for an epic policy error.

Even as large swaths of the population call for media outlets to do their part in stemming the “dangerous tide of hatred, violence, and suspicion” taking hold in the United States, corporate media - which stands to benefit nicely from the $5 billion 2016 presidential election - is egging on that same divisive rhetoric.