Archive - Oct 2014 - Story

While large shifts in positioning precipitated a sell-off in oil prices that far exceeded the actual weakening in fundamentals, Goldman Sachs' confidence in a 2015 oversupplied global oil market has increased. As a result, they have brought forward their medium-term bearish oil outlook (WTI crude oil forecast is $75/bbl for 1Q15 and 2H15 (from $90/bbl previously)). WTI just broke below $80 back to June 2012 levels once again as Goldman also downgraded the entire oil service space (happily buying up muppets' positions as they sell).

Just as we warned last night was indicated by the Japanese market's Brazil ETFs, so the IBOVESPA has opened down over 6% this morning on very heavy volume following the 'disappointing for the bulls' electionvictory of Dilma Rousseff. Despite her associations with Petrobras (which may have suggested it bounced), the favorite Jim Chanos short is being crushed, down 14% at the open. The Real is tumbling too, breaking above 2.54 to its weakest against the USD since Dec 2008.

Following a weekend in which the condition of the Ebola-diagnosed doctor currently being treated at Bellevue hospital, Craig Spencer, reportedly deteriorated, the NY Post which first broke news of Spencer's condition last week reported several hours ago that NY may have its second Ebola case after a 5-year-old boy, who just returned from West Africa, was transported to Bellevue Hospital for testing with possible Ebola symptoms, according to law-enforcement sources. According to the Post, the child was vomiting and had a 103-degree fever when he was carried from his Bronx home by EMS workers wearing hazmat suits, neighbors said. “He looked weak,” said a neighbor.

• White House questions new Ebola rules, nurse plans to sue (Reuters)
• States stand firm on Ebola quarantines despite White House pressure (Reuters)
• Rousseff Naming Brazil Finance Minister Key to Regain Trust (BBG)
• Ukraine leader wins pro-West mandate but wary of Russia (Reuters)
• Single Firm Holds More Than 50% of Copper in LME Warehouses (WSJ)
• Treasury Liquidity Squeeze Seen as Dealer Shut Off Machine (BBG)
• CVS follows Rite-Aid, shuts off Apple Pay (USAToday)
• Oil Speculators Bet Wrong as Rebound Proves Fleeting (BBG)
• Draghi Sets Stimulus Pace as ECB Reveals Covered-Bond Purchases (BBG)
• German Ifo Business Confidence Drops for Sixth Month (BBG)

It started off so well: the day after the ECB said that despite a gargantuan €879 billion in bad loans, of which €136 billion were previously undisclosed, only 25 European banks had failed its stress test and had to raised capital, 17 of which had already remedied their capital deficiency confirming that absolutely nothing would change, Europe started off with a bang as stocks across the Atlantic jumped, which in turn pushed US equity futures to fresh multi-week highs putting the early October market drubbing well into the rear view mirror. Then things turned sour. Whether as a result of the re-election of incumbent Brazilian president Dilma Russeff, which is expected to lead to a greater than 10% plunge in the Bovespa when it opens later, or the latest disappointment out of Germany, when the October IFO confidence declined again from 104.5 to 103.2, or because "failing" Italian bank Monte Paschi was not only repeatedly halted after crashing 20% but which saw yet another "transitory" short-selling ban by the Italian regulator, and the mood in Europe suddenly turned quite sour, which in turn dragged both the EURUSD and the USDJPY lower, and with it US equity futures which at last check were red.

"This is simple payback for Washington's threats, banking fines and penalties against institutions and nations de jure that fail to march to the US tune of dictating trade and financial arrangements. The world is now ganging up on the United States because Washington has terrorized smaller nations around the world for decades as the big bully on the block."

Willem Middlekoop, author of The Big Reset – The War On Gold And The Financial Endgame, believes the current international monetary system has entered its last term and is up for a reset. Having predicted the collapse of the real estate market in 2006, (while Ben Bernanke didn't), Middlekoop asks (rhetorically) - can the global credit expansion 'experiment' from 2002 – 2008, which Bernanke completely underestimated, be compared to the global QE 'experiment' from 2008 – present? - the answer is worrisome. In the following presentation he shares his thoughts on the future of the global monetary system; and how gold, the US and China are paramount for its outcome.

When stock prices go all wonky, as they have in recent days, it pays to think a little about what really moves asset prices and determines long term business success.  For ConvergEx's Nick Colas, the key driver has been – and always will be – return on capital.  What investment analysts know as the DuPont model is now 100 years old, but its lessons and applications still drive innovation today.

So far US equity futures are flat to modestly higher on the 'disappointing' news that Rousseff was re-elected in Brazil. USDJPY has given up its hope-based gains and is lower (implying a 4-5 point drop in S&P Futures that is not there yet). Brazilian stocks (trading in Japanese ETFs) are down almost 6% in early trading on heavy volume as the pro-business hope-driven rally has been almost entirely given back.

Let’s face it, your child’s mind is fertile ground for oligarchs, corrupt politicians and any other thieving member of the so-called “ruling elite” who aim to enslave the masses both mentally and monetarily. Unfortunately, the propaganda that comes from the government and our largest corporations is perceived as being absolute truth by most people. If you’re like me, at one point in time you had to wake up to it all and accept that you had been completely brainwashed for the first few decades for your life. I truly believe that most Americans suffer from Stockholm Syndrome.

As we previously reported, the ECB's latest stress test was once again patently flawed from the start. Why? Because as we noted earlier, in its most draconian, "adverse" scenario, the ECB simply refused to contemplate the possibility of deflation. And here's why. Buried deep in the report, on page 75 of 178, is the following revelation which contains in it the scariest number presented to the public today.

Back on January 26, a 58-year-old former senior executive at German investment bank behemoth Deutsche Bank, William Broeksmit, was found dead after hanging himself at his London home, and with that, set off an unprecedented series of banker suicides throughout the year which included former Fed officials and numerous JPMorgan traders. Following a brief late summer spell in which there was little if any news of bankers taking their lives, as reported previously, the banker suicides returned with a bang when none other than the hedge fund partner of infamous former IMF head Dominique Strauss-Khan, Thierry Leyne, a French-Israeli entrepreneur, was found dead after jumping off the 23rd floor of one of the Yoo towers, a prestigious residential complex in Tel Aviv.  Just a few brief hours later the WSJ reported that yet another Deutsche Bank veteran has committed suicide, and not just anyone but the bank's associate general counsel, 41 year old Calogero "Charlie" Gambino, who was found on the morning of Oct. 20, having also hung himself by the neck from a stairway banister,

Our global economy depends on continual growth to function. And not just any kind of growth; but exponential growth. But in order to grow, it must receive an ever-increasing input supply of affordable energy and resources from the natural world. What I’m about to show you is a preponderance of data that indicates those inputs will just not be there in the volumes needed to supply the growth that the world economy is counting on. Simply put, the next 20 years will be completely unlike the past 20.