Archive - Dec 18, 2014 - Story

With great delight we present the latest blowback from Obama's "brilliant" strategy to cripple Putin: in addition to the default wave about to crush America's own shale industry, America's biggest foreign ally and military partner when it comes to "ideologically pure missions of liberation" - the UK, and specifically its North Sea oil industry which according to the BBC is in a "crisis" and according to Robin Allan, chairman of the independent explorers' association Brindex, the industry was "close to collapse".  "It's almost impossible to make money at these oil prices", said a director of Premier Oil. "It's a huge crisis. It's close to collapse. In terms of new investments - there will be none, everyone is retreating, people are being laid off at most companies this week and in the coming weeks. Budgets for 2015 are being cut by everyone."

If there’s one thing we have learned about Barack Obama, it’s that he is a master of deception and absolutely loves to lie to the public. He seems to enjoy conning the plebs to such a degree, I think he actually receives blasts of dopamine every time he does it. The bigger the lie, the better the rush: "President Obama has issued a form of executive action known as the presidential memorandum more often than any other president in history — using it to take unilateral action even as he has signed fewer executive orders. Like executive orders, presidential memoranda don’t require action by Congress. They have the same force of law as executive orders and often have consequences just as far-reaching. And some of the most significant actions of the Obama presidency have come not by executive order but by presidential memoranda."

China's seven-day repurchase rate, a gauge of interbank funding availability in the banking system, surged 139 basis points, to a 10-month high of 5.28% in Shanghai, the biggest since Jan. 20. The reason for the sudden cash crunch, according to Bloomberg, is that subscriptions for the biggest new share sales of the year lock up funds. Twelve initial public offerings from today through Dec. 25 will draw orders of as much as 3 trillion yuan ($483 billion), Shenyin & Wanguo Securities Co. estimated. In other words, the scramble to allocate capital into China's surest way of making money, IPOs, has led to a drying out of general liquidity in the entire market. This in turn forced the PBOC to intervene and inject short-term money loans to commercial lenders in order to prevent the kind of interbank liquidity lock up that emerged in China in June 2013 in the aftermath of the first Taper Tantrum (and which before all is said and done, will likely take place again) and which sent global capital markets around the globe reeling before China resumed its massive liquidity injections which are at the heart of China's debt-fuelled bubble in the first place.

4 seconds before the close, one super-bullish algorithm exuberantly bought a massive $200 million worth of the S&P 500 ETF up to a 2,130 level on the index in one second... and no - it was not a fat finger!! It was 1,147 trades! Now who do we know that is an 'expert' in ETF trading?

The ruble is dying, and fast. Ill prepared to wait it out, the central bank is clearly a step behind the game and perhaps even out of its league. But Black Monday suggested other powers might be at play.

Monday was incidentally the day of an interesting 700 billion ruble liquidity auction. Prior to the auction, Rosneft raised 625 billion rubles (almost $11 billion) in a bond issue backed by the central bank...

Deja vu all over again... and investors remain ever full of faith...

The 40%-plus drop in oil prices over the past 6 months has garnered a lot of attention recently, most of it focused on the economic stimulus lower oil prices should provide the global economy, the impact on currency and fixed-income markets, and the increase in economic pain suffered by exporters such as Iran and Russia. However, based on historical data, the potential increase in geopolitical tail risk that lower oil prices may represent is an overlooked consequence that, while low probability, would have an outsize impact on the global economy.

With all eyes firmly distracted in Cuba (or Sony or Russia or Ukraine), we thought a brief reminder worthwhile...

Around the world, unsustainable policies from the 20th century are beginning to fail in earnest. What will the future geopolitical landscape look like in their aftermath?

Think young adults in Mexico, Thailand, Philippines, and Russia have it tough? Think again. 20-24 year-olds in the USA have an average gross income over 40% below the national average. That is the worst disparity in the world... USA USA USA!!

"Abenomics is not having clear traction across the country," warned the head of Japan's auto lobby on Thursday as unexpectedly weak domestic sales revealed - yet again - what an utter disaster government policy is. "We feel a sense of crisis about the fact that cars are actually not selling," he exclaimed, saying that, as Reuters reports April sales tax hike was only partly to blame for the domestic sales weakness, citing the government's failure to boost consumption. But, but, but Japanese stocks are up 1000 points in the last 2 days so how can this be?

"It appears possible that the Central Bank of Russia has started to sell off some of its gold reserves in December, with some sources reporting that official gold reserves dropped by $4.3 billion in the first week of the month."

With everyone and their pet rabbit convinced the US Dollar strength continues, we thought some longer-term context on the 'strength' of the dollar was useful...

Shale 0 - Saudi Arabia 1