Archive - Dec 2015

Un-rigged...

There is little question that bullshit is a real and consequential phenomenon (especially popular in the financial markets and central planning arena). Indeed, as the following scientific study finds, given the rise of communication technology and the associated increase in the availability of information from a variety of sources, both expert and otherwise, bullshit may be more pervasive than ever before. Despite these seemingly commonplace observations, we know of no psychological research on bullshit. Are people able to detect blatant bullshit? Who is most likely to fall prey to bullshit and why?

Saudi Arabia is at risk of becoming a major destabilizing influence in the Arab world, German intelligence has warned. Internal power struggles and the desire to emerge as the leading Arab power threaten to make the key Western ally a source of instability, according to the BND intelligence service. “The current cautious diplomatic stance of senior members of the Saudi royal family will be replaced by an impulsive intervention policy,” a BND memo widely distributed to the German press reads.

Following yesterday's crash in the DAX, and historic surge in the Euro after an ECB announcement which many suggested was another central bank policy error, moments ago Mario Draghi did everything in his power to reverse said error, which in a speech in New York, he effectively doubled down on his "whatever it takes" posture, and said that not only is "QE there to stay", but could be "calibrated" if needed and the ECB can use "further tools" if needed. The result: a parabolic nove higher in the S&P which is now well higher than before yesterday's drop.

Two things happened after the most recent widely publicized US mass shootings/domestic terrorism acts: i) Obama once again made a concerted effort to push for gun-control, and ii) gun sales soared to record highs for November most likely in response to i). As we reported in September, citing the FT, "gun sales this year could surpass the record set in 2013, when gun purchases surged after the December 2012 Sandy Hook murders." And given that Black Friday background checks broke all previous records, it appears we are well on our way.

For the 13th week of the last 14, US Oil rig counts declined. Down 10 to 545 rigs, this is the lowest since May 2010 as the temporary respite in the early Fall has given way to reality and rig counts track the lagged crude price lower...

Keynes is dead – unfortunately his etatiste nonsense didn’t expire with him. Meanwhile, the long run is catching up with those who have so far failed to die.

The positive US payrolls report has sent December rate hike odds up to around 80% and along with the 'all clear' from Hilsy, one would expect relative 'strong dollar' flows front-running the divergent policy directions about to be undertaken by The Fed. However, EURUSD continues to rise this morning... here's why... (until Draghi puts everyone straight)

After plunging to 17-month lows just 2 weeks ago on a CDC report that ecoli was more widespread than previously believed, Chipotle Mexican Grill is plunging once again on a new CDC report of seven more ill people and Illinois, Maryland, and Pennsylvania have been added to the list of states reporting illnesses, bringing the total to nine states.  

Magic ‘Super Mario’, the ECB’s monetary magician, disappointed markets yesterday as continuing and unprecedented monetary easing failed to prevent a sharp sell-off in stock and bond markets yesterday which has continued today.

Whether or not the Fed actually manages to raise rates in the real world is less important than maintaining USD hegemony. No empire has ever prospered or endured by weakening its currency.

What happens next?

Here is one of the reasons why the Fed is confident the US economy is strong and resilient enough to sustain a rate hike: since January, the US has added 293,900 waiter & bartender positions and zero manufacturing workers.

In a somewhat depressing show of the farce that is Europe's immigration policy, local media reports "apocalyptic scenes" on the northern Greek border where "economic migrants" who are not entitled to leave Greece's provisional camps are fighting with 'refugees' who are entitled to leave, and head into other European nations. Petrol bombs and stones flew through the air, fists, kicks and wrestling on the ground as migrants hindered refugees from entering Macedonia (FYROM). People have injured, trampled and faint, among them many babies as some migrants tried to pass together with the refugees and were apparently hindered with stun grenades fired by the FYROM police.

OPEC HAS AGREED TO OIL OUTPUT POLICY ROLLOVER, SETS TARGET AT 31.5 M B/D AFTER INDONESIA JOINS: DELEGATE. This increases the output limit up from 30 million but is merely reflective of the current real output from the Cartel of 31.5 million barrels. And crude is crashing, Ruble is dumping and gold is jumping.