Archive - Dec 9, 2015

After yesterday's 3 Year auction saw a blistering surge in Direct bidder demand (as a result of a substantial negative rate in repo), we were not at all surprised to see that today's 10 Year reopening auction of $21 billion was a likewise solid (even if tailing fractionally to the When Issued 2.232%) issue printing at 2.233% with 23.93% allotment, with the bid to cover rising from 2.58 to 2.64, the highest since September.

With global freight costs collapsing, as China trade dries up, status-quo-hugging talking heads have point to America's car sales and picture some islandic isolation that means investors in US equities are immune. Well that little dream just burst. Rail freight carloads tumbled 5.1% in October, dramatically accelerating the 1.6% drop in Q3 as a strong dollar crimps exports, retailers whittle down excess inventory and energy investment stalls. Until recebtly, the one bright spot in rail traffic was auto shipments... but even that just plunged and is now at the seasonally weakest since 2008.

 The analogy is as if you notice an ember smoldering in a combustible forest you might be only somewhat cautious, perhaps even rationalizing it away.  But if you then notice a second ember smoking up...

We all need to work together to create an environment that is hostile to bad guys.  We don't need more gun-free zones like San Bernadino...

The “war on drugs” costs Americans a staggering amount of money every year that it persists. Despite the billions they receive, federal, state and local law enforcement have a proven inability to stem the flow of drugs on the nation’s streets.

Well that escalated quickly...

“I don’t think we’ve seen the last of this trend. When I trained as an economist, negative rates weren’t in the textbooks. But that’s the world we live in now, and it hasn’t stopped turning."

Who could have seen that coming?

Andy Hall's Astenbeck hedge-fund lost 9.7% in November, bringing 2015 losses to more than 26%. As a result of capital losses and mounting redemptions, Astenbeck’s assets under management fell to $2.4 billion, down from $3 billion at the start of the year and nearly $5 billion less than three years ago.

People understand nothing lasts forever. The bottom does not last forever. You want to buy low and sell high. Not only are we skipping along the lows, perhaps we can go lower but there is true value  here - in all aspects - not only in the gold and silver but also in the natural resource sector. as a whole with bargains all over the place.

Following a roudy session in Congress that nearly dissolved into "chaos," the Brazilian Supreme Court suspended impeachment proceedings against President Dilma Rousseff until December 16. Meanwhile, annual inflation rose to 10.5% in November, the highest in 12 years as the country's stagflationary nightmare continues unabated.

Following last night's unexpected inventory draw reported by API, DOE reported an even bigger draw of 3.568 million barrel (against expectations of a 1.3mm barrel build). The biggest draw in almost 4 months sent crude surging back to $39. Cushing continues to fill up, with a 423k build - the 5th week in a row. Production dropped the most in 2 months (with both Alaska and The Lower 48 dropping).

“The government and parliament need to review the agreement signed with the United States on security because the United States does not seriously care about its fulfillment, We demand that it be annulled." 

Q4 GDP expectations are off to a bad start as October wholesale inventories dropped 0.1% (missing expectations of a 0.2% rise and well down from the September surge of 0.5%). Wholesale inventories rose only 3.7% YoY, the lowest since Sept 2013 but sales have now been negative YoY since December. This leaves the crucial inventories-to-sales ratio at 1.31 - post-crisis highs, and deep in recession territory.