Archive - 2015

From the fringe, for birdie...

Following last week's huge build reported by DOE, crude inventories reported by API tonight dropped 3.6 million barrels (drastically different from the 2.3mm build expected). WTI is rallying on the news, despite a 1.5 million barrel build at Cushing (up notably from last week's 847k) - the 7th weekly build in a row.

At 108 four-year colleges, at least half of all students hadn’t paid even $1 of what they owe within three years of leaving college. Those colleges got more than $10 billion in federal student loans and grants last year.

"These people, I hate some of these people. But I would never kill them." 

“I know where she went. It’s disgusting. I don’t want to talk about it. It’s disgusting."

Update: just minutes after the WPIX report, the WNBC chief investigative reporter Jonathan Dienst said that there is no new specific threat to New York City.

A “credible threat” has been lodged against New York City, days ahead of Christmas and during an especially busy time of the year when tourists flock to the Big Apple, law enforcement sources told PIX11 News Tuesday.

With the market now back to oversold conditions and redemptions complete, it is now or never for the traditional “Santa Rally.” Statistically speaking, the odds are high that the market will muster a rally over the next couple of weeks. While the short-term trends are indeed still bullishly-biased, the longer-term analysis (monthly) reveals a more dangerous picture emerging.

"The last straw was the amount of food the Americans provided – 200 pounds of rice and 200 pounds of kidney beans, enough for each of the course graduates for a week or two, but not for their families, who are in dire financial straits. That’s when the group voted to take two weeks off."

The first Fed rate hike in seven years was supposed to trigger a powerful equity rally as the bulls expected money to pour out of bonds into stocks; especially into the cyclicals. Unfortunately for the equity bulls,, as Mizuho's Steve Ricchiuto notes, this time things are different and instead of the Fed rate hike triggering the traditional Santa Claus rally; it looks like the FOMC is actually the Grinch. The key message delivered by the Fed though the SEP, the DOTS and the Chair’s post meeting press conference is that this is the best the economy is going to get.

Needless to say, these names are just the beginning: once the redemptions - and gating - genie is out of the bottle, there is no putting it back.

Without being able to predict the election outcome in 2016, it will be prudent to keep cash levels high in order to maintain flexibility. Furthermore with the leading beta asset classes starting to exhibit corrections, there are growing signs that the investing environment is changing, which should give investors pause.

Since our Keynesian central bankers have no clue that their prodigious money printing resulted in the drastic underpricing of credit and capital over the course of the past two decades, they are flying blind. They simply fail to see that the global economy is now swamped in more excess capacity than at any time since the 1930s, and probably even then. So they keep expecting the commodity cycle to momentarily bottom and prices to rebound, thereby reflating CapEx and household spending.

Speaking to Slovak news agency TASR on December 15h, President Milos Zeman said that he was "extremely disappointed that the summer negotiations between Greece and creditors did not ultimately lead to Greece’s exit from the euro area, although it looked quite possible." Greece had an immediate response: it recalled its ambassador to Prague. 

"...Unfortunately, we don’t see conditions improving and only becoming more acute as liquidity continues to deteriorate, asset valuations become increasingly stretched, and the Fed navigates the unwind of the greatest policy experiment in history."

“I worry greatly that the rhetoric coming from the Republicans, particularly Donald Trump, is sending a message to Muslims here ... and ... around the world, that there is a ‘clash of civilizations.'” So said Hillary Clinton in Saturday night’s New Hampshire debate. Yet, that phrase was not popularized by Donald Trump, but by Harvard’s famed Samuel Huntington. That Clinton is unaware of the thesis, or dismisses it, does not speak well of the depth of her understanding of our world.