Archive - Sep 28, 2015

When is a 'date' not a 'date'? When a Fed member says so. The Fed speaker confusion-carpet-bombing contonues this morning with Bill Dudley who offered the following "insight":

*DUDLEY: HE EXPECTS FED PROBABLY WILL RAISE RATES LATER THIS YR (so a date?)
*DUDLEY: THAT'S NOT CALENDAR GUIDANCE, THAT'S DATA-DEPENDENT (not a date?)

His double-speak has sent stocks and bonds lower and USD higher for now...

Personal income rose at 0.3% MoM in August, the weakest growth and biggest miss since March's tumble. At the same time spending rose 0.4% MoM, slightly more than expected. Of course this relative shift means the savings rate declined from 4.7% to 4.6%, which is to be cheered by economic models the emphasize spending over saving.

Despite a relatively unchanged US Dollar, commodities across the board are under significant (and seemingly coordinated) pressure this morning. It appears that the key selling began as Europe opened and the carnage in massive commodity group Glencore began to materialize. Glencore CDS is now above 700bps (up 154bps today) and stocks down almost 30% today...

"It was our Black Monday. The big question is when will they come back, because managers have been really quite reliant on Sama for business in recent years."

There’s an enormous and growing disconnect between the cash and physical markets for gold. This is exactly what we would expect to precede a major market-shaking event based on a physical gold shortage.

• Headline winner: "Read Beyond Massive Job-Cuts Headlines: Labor Market Is Fine" (BBG)
• And speaking of lies: The More Yellen Talks Up Inflation, the Less Traders Believe Her (BBG)
• How Some Investors Get Special Access to Companies (WSJ)
• Victorious Catalan separatists claim mandate to break with Spain (Reuters)
• Russia seizes initiative in Syria (Reuters)
• Former VW boss Winterkorn investigated for fraud (Reuters)
• Investors Pull Back From Junk Bonds (WSJ)

It was all about China once again, where following a report of a historic layoff in which China's second biggest coal producer Longmay Group fired an unprecedented 100,000 or 40% of its workforce, overnight we got the latest industrial profits figure which plunging -8.8% Y/Y was the biggest drop since at least 2011, and which the National Bureau of Statistics attributed to "exchange rate losses, weak stock markets, falling industrial goods prices as well as a bigger rise in costs than increases in revenue." In not so many words: a "hard-landing."

If you borrow cash then it’s not income. No one in his right mind borrows to buy consumer goods... But what if someone else borrows, is that your income?

With liquidity in the markets drying up, it's important not only to understand the opportunity but also to understand how to execute on an opportunity!