Archive - 2015

Respect is something earned, not entitled...

2014 proved to be a momentous one for the oil markets, having seen prices cut in half in just six months. The big question is what oil prices will do in 2015.
It is anybody’s guess, but here are the top five variables that will determine the trajectory of oil prices over the next 12 months, in no particular order.

Is the CEO of IBM the biggest 3 card monte grifter of all? That and other New Years prognostications

Back in 2008, Goldman got rid of not one but two main competitors when first Bear and then Lehman quietly went into that good night when a Goldman-controlled Fed refused to bail these banks out, in the process unleashing the biggest taxpayer-funded, and still ongoing, wealth transfer to bank executives in history. 7 years later, banks have proven surprisingly resilient to the massive commodity deflationary impulse even as the global growth is slowing to a pace not seen since the events in 2008, which is why Goldman decided it is time to take matters into its own hands with what may be the most "modest proposal" of the day, if not year: it may be time for JPM to break itself up voluntarily... a process Goldman (and its bonus-receiving employees, not to mention shareholders) would endorse wholeheartedly as it would remove its biggest and most connected competitor in the US financial landscape today.

While Bob Pisani last week told the world that he was "encouraged" by the decoupling of energy-related stocks from their basic raw material oil prices, today's rational response to fresh 5-year-lows in crude oil prices would suggest the 'most important thing' is to be "discouraged." Just how long did 'investors' think energy stocks and crude could remain decoupled... as the post-FOMC Yellen squeeze is erased rapidly...

The ubiquitous opening ramp into the US equity open has given way rapidly and stocks are testing earlier lows - along with WTI Crude (as energy stocks lead the way lower). Silver is surging higher (up almost 3%) and Gold is back above $1200. USDJPY broke below 120.00 and is weighing heavy on stocks broadly. So much for the Santa Rally..

Just over 4 months ago, the US was furious as the "mysterious" bloc launching bombing raids on Libya was identified as consisting of Saudi Arabia, UAE, and Egypt. This weekend saw another "mysterious" bombing raid, but as AP reports, this time it was not on Libya directly but on a Greek-owned tanker ship at the eastern Libyan port of Darna (killing 2 sailors). The Greeks have strongly condemned this "unprovoked and cowardly" act and are taking all necessary steps to identify and punish the perpetrators. One can't help but wonder, if the Saudi/UAE bloc is doing everything in its power to eliminate all competition: from Russia to Venezuela to US shale; why not anyone transacting with a bunch of Libyan terrorists?

When thousands of cops showed up yesterday to pay their respects to their slain colleague Wenjian Liu who was murdered in cold blood two weekends ago, perhaps the only question on everyone's mind was whether the local police would - once again - turn their back on NYC mayor Bill de Blasio, who as we reported previously, the NYPD is engaged in a cold war with, with arrests and citations plummeting in recent weeks as a result of what has become a police boycott of city hall.  The answer: a resounding yes, and as the AP reports, "thousands of police turned their backs Sunday as Mayor Bill de Blasio eulogized an officer shot dead with his partner, repeating a stinging display of scorn for the mayor despite entreaties to put anger aside."

Having tested the almighty 10,000 level, Germany's DAX is plunging back to pre-FOMC earth levels following the weak CPI print this morning...

Issuing lies and pursuing willful blindness is not leadership: it's failure on a grand scale.

Don't adjust your rear view mirror too much: 2015 is beginning to look a bit like 2014

But it can't drop any further? What about all that pent-up demand (and cash on the sidelines)?

With regional CPIs cliff-diving in December relative to November, it is not entirely surprising that broad Consumer Price Inflation for Germany as a whole just printed at a mere +0.2% YoY (missing expectations of +0.3%) - the lowest since October 2009 and was unchanged MoM. The initial reaction in DAX was a modest rise as if the EU's strongest core economy is nearing outright deflation, markets will price-in even more likelihood to the ECB's sovereign QE any minute now. Of course, in the eyes of the Fed this is all transitory and energy-driven but stocks hope that Draghi ignores that.

Anyone who put on a long Shanghai Composite, short Brent trade on January 1, 2014, congratulations: you can now retire. However, since nobody did and instead the groupthink herd of beta-levered momentum chasers known as hedge funds were mostly long the S&P and short Treasurys, it explains why most of them generated negative returns in 2014. Here is how all the other main asset classes did in 2014, denominated both in local currency and in the soaring USD.

• Economists sceptical ECB bond-buying would revive eurozone (FT)
• Indonesia naval captain says may have located missing plane's tail section (Reuters)
• Oil hits five and a half year low under $55 (Reuters)
• Samaras Warns of Euro Exit Risk as Greek Campaign Starts (BBG)
• The death of active investing: Vanguard Sets Record Funds Inflow (WSJ) - thank you Fed
• Oil Downturn Has Many Wondering How Lone Star State Will Weather a Bust (WSJ)
• Hollande Says France Must Exceed 1% Economic Growth to Spur Jobs (BBG)