Archive - Sep 2015

Today's Glencore implosion is a far greater risk to the capital markets and the global economy than Volkswagen: a few executive resignations, a few bribes to US Congress, and the scandal will be promptly snuffed. For Glencore, however, which suddenly the entire world realizes is - as we said in March 2014 - the way to trade China, it may now be too late.

“We assume [the Russian buildup in Syria is] being coordinated with the Iranians. What we are seeing now is that there is some sort of Iran nexus."

Re-unleash The Bullard...

Following August's collapse (from 13 to 0), September's Richmond Fed followed on the heels of Philly, Empire, and Dallas Fed surveys and collapsed to -5 - its lowest since January 2013. Under the covers it is a total disaster, the average workweek crashed from 3 to -12 - the lowest level since April 2009 (as did the order backlog). New Orders and Capacity Utilization also plunged to its lowest since Jan 2013 as clearly the inventory accumulation is starting to feedback into prodiction cuts. Combined, the regional surveys suggest a notable plunge in overall ISM in September... flashing bright red recession warnings.

If anyone is still confused by the trigger that caused the biggest selloff in biotech stocks in 2015, here are the Taiwanese animators with "all you need to know."

From a financial market psychology standpoint it is however very important that central bankers don’t appear clueless. A majority of market participants needs to be able to suspend disbelief to an sufficient extent, i.e., they must be able to share in the collective hallucination that central bankers actually do know what they are doing. When it is no longer possible to maintain this facade, many things are likely to be suddenly questioned – and among these is the question whether it makes sense to remain exposed to yet another gargantuan asset bubble.

"They were very busy over the weekend"...

As WaPo reports, "Hillary Clinton is proposing a $250 monthly cap on the amount patients with chronic and serious medical problems would have to pay out of pocket for prescription drugs as a way to reduce the effect of skyrocketing drug prices on consumers." "Nobody in America should have to choose between buying the medicine they need and paying rent," Clinton says. 

The only other time the S&P 500 Hedgers’ net long position exceeded 60,000 contracts was... September 25-October 9, 2007. We may or may not have to remind you that October 9, 2007 marked the all-time high in the S&P 500 to that point – and for 6 years to follow. Obviously, this was decidedly NOT a well-timed long extreme.

Rule 48 to be unleashed any minute now... Dow futures are now down 300 points (and down 700 from post-FOMC algo exuberance)....

To my colleagues, our clients and our shareholders,

Late this summer after several weeks of not feeling well, I underwent a series of tests, which culminated in a biopsy last week. After the biopsy, I was told by my doctors that I have lymphoma. Fortunately, my form of lymphoma is highly curable and my doctors' and my own expectation is that I will be cured.

A series of dramatic moves at the helm of Germany's iconic carmaker leaves many wondering what's next. Here are some thoughts.

• Pressure builds on Volkswagen CEO as emissions-cheating probe spreads (Reuters)
• Volkswagen Emissions Scandal Relates to 11 Million Cars (WSJ)
• Volkswagen Emissions Investigations Should Widen to Entire Auto Industry, Officials Say (WSJ)
• Germany's Bosch makes VW's U.S. diesel components (Reuters)
• Volkswagen scandal will have personnel consequences - state economy minister (Reuters)
• Glencore Falls to Record as Mining Shares Lead Stock Losses (BBG)
• Despite Slump, China’s Xi Jinping Pledges Economic Reforms (WSJ)

"Unlike his acolytes, Keynes understood the value of gold and the dangers of currency debasement ... World where currencies are backed by nothing more than a governmental promise to pay while the printing presses whirled unchecked ..."

While Asian trading overnight started off on the right foot, chasing US momentum higher, things rapidly shifted once Europe opened as attention moved back to global growth fears, global central banks losing credibility, as well as miners and the ongoing Volkswagen fiasco.