Archive - Dec 2014 - Story

"Every brick we can make has already been sold up to three months in advance – the UK brickmakers can’t supply demand at the moment," exclaims the CEO of one of Britain's largest brickmakers. With The UK's housing bubble spreading from London, The Telegraph reports that stocks of bricks have reached the lowest levels on record as homebuilders rush to take advantage of the surging demand for British property (which has seen realtors and economists worry is getting out of hand).

Ouch! 80% government-owned Royal Bank of Scotland is daring to go there... In the wake of a comprehensive review of more than 50 current and former traders who worked at the bank (and a $634 million fine), Bloomberg reports that RBS is suspending the bonuses of 18 FX traders. “We are undertaking a robust and thorough review into the actions of the traders that caused this wrongdoing and the management that oversaw it,” Jon Pain, RBS’s head of conduct and regulatory affairs, said, adding "no further bonus payments will be made or unvested bonus awards released to those in scope of the review until it has concluded."

From the October 2007 highs in the US equity market, World Stocks (ex US) are down over 25%... while the US is now over 36% higher. That huge divergence, however, has only come about since The Fed unleashed QE3 and once again 2014 (with world stocks down almost 7% and US stocks up over 12%) shows the US (stock market) decoupling from the rest of the world...

As investors and market participants become increasingly aware of the regulatory failures that allowed for manipulation of LIBOR, FOREX, municipal bond bidding and certain commodities markets, regulatory sources are increasingly expressing concern that they have paid too little attention to potential manipulations of an arguably larger, more systemically important and less regulated market – the CDS market as self-governed, through ‘regulatory license’, by the International Swaps and Derivatives Association (ISDA).

This is not USDJPY-driven. VIX has diverged (as has HY Credit) for the last 3 days but the push higher in the 'fear index' in the last few minutes (with no obvious catalyst) has dragged the S&P lower - erasing (once again) the Santa-Rally gains...

Investors have never - ever - been less bearish about the stock market than they are in 2014...

Earlier today from Reuters we learned that "a body recovered on Wednesday from the crashed AirAsia plane was wearing a life jacket, an Indonesian search and rescue official said, raising new questions about how the disaster unfolded. Why is this surprising? Because  the fact that one person put on a life jacket suggests those on board had time before the aircraft hit the water, or before it sank. And yet the pilots did not issue a distress signal..."

Ah Moldova... the poorest country in Europe, which just so happens to have had a Communist party majority in its parliament since 1998. These two points are not unrelated.

Monday - Purge. Tuesday - Surge. Wednesday Purge. Although on light volume, gold and silver prices are tumbling this morning, now trading back below the pre-Dec 17th FOMC levels (making sure that status quo-huggers can point to them being down year-to-date as proof all is well in the world)...

Earlier today, Saudi Arabia's stock market fell sharply with the Tadawul All Share Index plunging following a Saudi state TV report that King Abdullah had been admitted to hospital for tests. As shown in the chart report, the index tumbled as much as 6% lower in the minutes after the Saudi Press Agency report which quoted a brief royal court statement. But while the ill king of the King, aged 90, is hardly news to the discounting stock market, a few more nuanced interpertation of not just what happens if and when the King passes away but what Saudi succession looks like, is much more relevant for oil - especially now that Saudi Arabia has unilaterally decided to tear apart OPEC in its push to put US shale producers out of business.

While existing home sales rose 0.8% (beating the 0.5% expectation) MoM in November, once again previous data was revised lower. On an unadjusted basis however, YoY home sales rose at only 1.7% - missing expectations of 2.6% growth. The Midwest region saw existing home sales drop again - for the 6th month in a row, down over 5% in that period.

Only 1 of MNI's Chicago Business Barometer components rose in December as the headline index tumbled from October's multi-year highs at 66.2 to today's December print of 58.3 - lowest in 5 months and missing expectations for the 2nd month in a row. While new orders, prices paid, and production all fell, employment (the sole improvment) rose.