Archive - Dec 2015

First thing this morning, when previewing the key event of the day, namely today's auction of $29 billion in 7 Year Treasurys, we said that "with the issue not anywhere close to trading "special" in repo, the risk for a big tail - like in yesterday's 5Y auction - is high." And, just like yesterday, when we again correctly predicted the tail on the 5Year (following the very strong squeeze into the 2Year the day before) moments ago we got just what we expected when the Treasury announced that it had sold the $29 billion of Cusip N30 at a yield of 2.161%, the highest since September 2014, but more importantly tailing 0.5 bps to the 2.156% When Issued.

Two Thousand Fifteen had high hopes at the start, but a sharp selloff in August nearly ripped us apart; Then Draghi and Yellen swore that hope hadn't departed, so we stuttered and sputtered to just get back where we started.... Hoverboards were this season's really, really hot toy; And Bruce Jenner's now Caitlyn - he's no longer a boy

State Department spokesperson John Kirby is raising eyebrows after he released a reap of 2015 “success stories” in which he credits the United States for bringing “peace” and “security” to Syria and “stepping up” to help the country’s people at a difficult time. Using the hashtag #2015in5words to highlight last year’s wins, Kirby boasted: “Bringing Peace, Security to Syria.”

If you are an institutional investor and you bought Novo Banco bonds, you just had a bad morning...

Conventional explorations of why the middle class is shrinking focus on economic issues such as the decline of unions and manufacturing, the increasing premiums paid to the highest-paid workers and the rising costs of higher education and healthcare. All of these factors have a role, but few comment on the non-economic factors, specifically the values that underpin the accumulation of capital that is the one essential project of middle class households.

Following recent strength on the heels of hope for a new finance minister, news that Ruosseff has sent the minimum-wage-hike Bill to Congress appears to have crushed the hype of any fiscal rectitude and sent Real tumbling. Down over 4% - the most since September 2011 - BRL is back above 4.00 per USD, giving up all the recent gains.

If at first you don't succeed, try, try, keep trying again and again. That appears to be the mantra of Goldman's credit strategists.

While stories of micro-aggression and "safe spaces" abound in America, it appears the growth so-called "little emperors" throughout the world's universities is on the rise. As Harry Mount rages in the following Telegraph op-ed, the babies of the late 90s – mollycoddled by their parents, spoon-fed by their teachers, indulged by society – have now reached university and "It's time to say No to our pampered student emperors."

Last night's surprisingly large inventory build reported by API (+2.9mm vs expectations of -2.5mm) sent hopeful crude prices reeling (not helped by comments from Iran and Saudi this morning). Following last week's huge 5.9mm draw, DOE reports a 2.63mm build (confirming API's data). Cushing (which API reported as a 923k build) also saw DOE report a 0.9mm barrel build (pushing closer to its limits). As we have detailed previously, December typically sees major drawdowns in inventory as energy firms attempt to minimize tax burdens into year-end. December 2015 has seen a notably lower drawdown.

Be careful what you wish for; you just might get it.

In a guest article for Handelsblatt, Christine Lagarde warns that 2016 is likely to be a disappointment as the Fed hike and China's transition to a consumer-driven economy continue to weigh on global growth prospects. Sorry Janet, it looks like the IMF doesn't agree with your justification for liftoff.

Having seen New Home Sales disappoint and Existing Home Sales crash in November, Pending Home Sales plunged 0.9% MoM (against expectations of a 0.7% MoM rise). Having plateaued in October near 8-month lows, today's huge miss was driven by a plunge in sales in The West (-5.5%) and NorthEast (-3.0%). Home sales rose just 2.6% YoY - the weakest since October 2014. The excuse factory was busy with weather, home prices, and inventory trotted out but, perhaps most notably, Realtors warned that higher mortgage rates will temper sales growth in an explicit threat to Janet to "hold."

For now Noble refuses to throw in the towel, and overnight released the following statement on the Singapore Exchange where its massively beaten down stock trades.

Sell Mortimer, Sell!

"Last week, during which the S&P 500 rallied 2.8%, BofAML clients were net sellers of US stocks for the second week, in the amount of $0.7bn. (Globally, our colleagues who track EPFR flow data have noted flows out of the US but into Europe and Japan in recent weeks). Net sales were chiefly due to institutional clients last week, who have sold stocks for eight consecutive weeks. Buybacks by corporate clients decelerated vs. the prior week, and YTD are tracking over $40bn, below last year’s record $45bn." So the smart money was selling, companies were not buying back, and stocks rallied nearly 3%.