Archive - Dec 1, 2015

Update: MAYOR OF ISTANBUL'S BAYRAMPASA DISTRICT SAYS EXPLOSION NEAR  METRO STATION CAUSED BY BOMB, FIVE INJURED: RTRS

One person has been killed and at least six more injured as Turkey's Haberturk TV reports an explosion occurred at an Istanbul Metro station. The trains have been halted, passengers evacuated, and ambulances are on their way. While the cause is unknown (some are suggesting it was a power transformer), sounds of the explosion were heard across several districts of Istanbul according to local press, and residents of the city remain on high alert following Erdogan's actions last week.

While it is hoped that the economy can continue to expand on the back of the "service" sector alone, history suggests that "manufacturing" continues to play a much more important dynamic that it is given credit for... and that is a major problem as ISM Manufacturing just fell below 50 for the first time since Nov 2012, crashing to 48.6 - the weakest since June 2009. Across the components, new orders collapsed (worst since Aug 2012), and prices paid crashed. Seems like a perfect time to raise rates!!

Following China's surging and tumbling Manufacturing PMIs, and mixed data in Europe, US Manufacturing PMI's fell in November to 52.8 from October's hope-strewn bounce above 54. This is the weakest PMI print since October 2013 (as ISM Manufacturing tumbled to its lowest since Dec 2012). 30 regions have reported PMIs so far with half (15) seeing weakness (and just 13 seeing improvements) as new orders plunge to lowest since Oct 2013.

Despite ongoing exuberance at auto sales in America (which disappointed) - as crashing credit standards enable every Tom, Dick, and Muppet to buy too much 'depreciating asset' for their incomes - there are numerous problems few are talking about for automakers worldwide. Aside from "plans to buy a car" tumbling in the latest confidence surveys, and inventories-to-sales surging, China just poured ice cold water on any hope of stability in that 'growth' market as auto dealers issue the highest inventory alert since June. November data from China shows demand plunging, sales collapsing, and inventories soaring - a triple whammy of "no, things are not 'stabilizing'."

It’s quite easy to get carried away with the drawing of conclusions based on a few technical chart patterns (and we are not doing that here!), but this chart is just too ugly to at least go unmentioned.

Following the the stunning news that BlueCrest, until recently one of the Europe's largest and fastest growing hedge funds, will be essentially unwinding as it returns the bulk of its managed money to outside investors (according to Bloomberg $7 billion of the $8 billion in AUM will be returned), and will liquidate the vast majority of its holdings, the question is just which securities will have the overhang of a forced seller over the next few months. Here is the answer.

Who could have seen that coming? It appears, for America's northern brethren, low oil proces are unequivocally terrible. Against expectations of a flat 0.0% unchanged September, Canadian GDP plunged 0.5% - its largest MoM drop since March 2009 and the biggest miss since Dec 2008. With Canada's housing bubble bursting, it's time for the central planners to get back to work and re-invigorate the massive mal-invesment boom (and ban pawning of luxury goods).

Puerto Rico faces its moment of truth on Tuesday as the commonwealth must decide whether to default on GO debt and risk triggering a cascade of litigation. Meanwhile, Governor Alejandro Garcia Padilla is on Capitol Hill hoping to drum up support for a plan that would allow for some of the island's agencies to file for bankruptcy.

BlueCrest Capital Management Limited "BlueCrest" announces it will, over the next several months, transition to a Private Investment Partnership, and will return to its clients the $8 billion it currently manages on their behalf.  Following the transition, BlueCrest will manage assets solely on behalf of its partners and employees.

In a broad-based press conference, President Obama is expected to address everything from climate change and fossil fuels to more mundane threats such as ISIS, Boko Haram, Turkey, Russia, and Saudi Arabia. As you watch the President explain how he is solving all these 'issues', bear in mind his statement from earlier today that the global pact on climate control is "an act of defiance" against terrorism that proves the world stands undeterred by ISIS. Yeah that really showed them, eh?!

The S&P 500 has completely disconnected from most risk assets, driven by the usual manipulation during options expiration week, performance gaming by hedge funds before end of the month results are posted, and short covering.

With Jeremy Corbyn's divided Labour MPs free to break party rank in Wednesday's key vote, "RAF crews could be bombing the Isis headquarters in Raqqa by the end of the week." Meanwhile, "German Chancellor Angela Merkel’s Cabinet approved deploying warplanes over Syria in the fight against Islamic State."

• Global Stocks Edge Higher on Expected ECB Stimulus (WSJ)
• Moment of truth as Puerto Rico faces crucial debt payment (Reuters)
• Obama urges Turkey to reduce tensions with Russia, stresses support (Reuters)
• Russian Media Takes Aim at Turkey (WSJ)
• Support Grows for U.S. Commando Raids to Fight Islamic State (BBG)
• Yuan Drops as SDR Approval Seen Prompting PBOC to Reduce Support (BBG)

There was something for everyone in last night's much anticipated Chinese PMI data, with the official number sliding to the lowest in over 3 years, suggesting the PBOC will need to do more stimulus and is thus bullish, while the unoffocial Caixin print rising to the highest since June, suggesting whatever the PBOC is doing is working, and is also bullish. Not unexpectedly, global stocks decided to take the bullish way out, and have risen across the globe led by Asia, where stocks rose as much as 1.8%, Europe also green and US equity futures up 10 points as of this writing.