Archive - Dec 2014 - Story

While superficially the November Beige Book, which is chronically bad at spotting actual trends as was the case in the 2005-2007 period when it came to the housing bubble and the BB had absolutely no warnings about what only in retrospect would be a glaringly obvious bubble, was among the more optimistic ones seen in recent months (there were only 13 instances of "weather" in the document), here is what the Fed's assessment had to say about the only thing that matters currently for the US economy (in addition to the soaring US Dollar of course): oil. One example: 'Energy and mining activity was higher on net, though lower oil prices were a concern for the oil industry in the Atlanta and Dallas Districts."

Investments in oil and gas exploration and production generate substantial economic gains, as well as other benefits such as increased energy independence.  The Perryman Group estimates that the industry as a whole generates an economic stimulus of almost $1.2 trillion in gross product each year, as well as more than 9.3 million permanent jobs across the nation.  Simply put, this means 9.3 million, or 93% of the 10 million jobs created since the recession/depression trough, are energy related.

The various interpretations of put/call ratios are as diverse as the number of traders who view them. Typically they are used contrarian-wise, a high Put/Call ratio signals an over-cautious investor universe and thus is bullish (and vice versa) but in recent years that has been much less evident. Currently, the index-based put/call ratio is at 1.80 - the highest since May 2012, having been notably above 1 (i.e. more puts than calls) for most of the days since the Bullard lows.

The ink on Barack Obama's Chuck Hagel termination letter hasn't dried yet but already the US president's new, and seemingly far more hawkish advisors, are having their warmongering presence felt. Case in point: the Eastern European theater of (Cold) war, where Military.com reports that the new Army commander in Europe plans to bolster the U.S. armored presence in Poland and the Baltic states and keep rotations of U.S. troops there through next year and possibly beyond to counter Russia. Lt. Gen. Frederick "Ben" Hodges, who replaced Lt. Gen. Donald M. Campbell  earlier this month as commander of U.S. Army Europe, said the Army was looking to add about 100 Abrams tanks and Bradley Fighting Vehicles to the forces in Eastern Europe.

As part of the final solution to inner city social unrest across America, President Obama has put forward recommendations that all police offers wear body cameras... this is what the 'eyes-are-always-on-you' NYPD police camera will look like. What ever happened to Google Glass privacy concerns?

While everyone knows Obama's position and stance on everything which is either his way or the potholeway, here is how the other side sees Obama's inability to lead, i.e., reach a consensus. As The Hill reported, Sen. John Cornyn (R-Texas) blasted President Obama for killing a bipartisan tax deal. “The president seems to be positively allergic to compromise and good faith negotiations,” Cornyn said on the Senate floor Tuesday. “His actions are dividing the country.”

Houston, we have a problem-er. With a third of S&P 500 capital expenditure due from the imploding energy sector (and with over 20% of the high-yield market dominated by these names), paying attention to any inflection point in the US oil-producers is critical as they have been gung-ho "unequivocally good" expanders even as oil prices began to fall. So, when Reuters reports a drop of almost 40 percent in new well permits issued across the United States in November, even The Fed's Stan Fischer might start to question his lower oil prices are "a phenomenon that’s making everybody better off," may warrant a rethink. New permits, which indicate what drilling rigs will be doing 60-90 days in the future, showed steep declines for the first time this year across the top three U.S. onshore fields: the Permian Basin and Eagle Ford in Texas and North Dakota's Bakken shale.

Just when industry experts were eying zee stabilittee in oil prices in the last 12 hours, this happens...

*SAUDI ARABIA SAID TO SEE OIL AROUND $60/BARREL: WSJ

And crude oil prices begin to dip once again.

Venezuela CDS is surging once again this morning, even as oil prices stabilize on the day, to its highest since January 2009 as traders increase hedges or speculation that the nation will be forced to default on its bonds. Current prices imply around an 85% chance of default (likely not helped by President Maduro's insistence that all is well and that he will try to destrout the black market for dollars that implies a massive devaluation is afoot for the Bolivar)

The nation's top CEOs trimmed their forecasts for sales and capital spending, according to the Business Roundtable's fourth quarter survey, predicting the economy will grow a modest 2.4% next year (well below the forecasts of many economists who expect the nation's GDP to rise 3% or more in 2015), with only 36% expecting to increase capital spending. Given the roundtable's urging government to extend corporate tax breaks that are set to expire and pass broader corporate tax changes that would encourage companies to invest in the U.S., we look forward to President Obama explaining to the CEOs why they've never had it better...

• SWEDISH PM LOEFVEN SAYS SWEDEN IN SERIOUS SITUATION
• SWEDISH PM LOEFVEN SAYS WON'T ACCEPT NEW POLITICAL SITUATION
• SWEDISH PRIME MINISTER LOEFVEN CALLS FOR NEW ELECTION IN 2015
• SWEDISH PM SAYS NEW ELECTION TO BE HELD ON MARCH 22
• SWEDISH GOVT: WILL NEVER ALLOW SWEDEN DEMS TO DICTATE RULES
• SWEDISH PM LOEFVEN WON'T SEEK ANY FURTHER TALKS WITH OPPOSITION

Confused? You are not alone...

ISM's Nieves: "services in strong uplift in recent months"

Markit's Williamson: "moderating growth in the service sector is a sign of domestic demand weakening... services collectively growing at a much reduced rate"

Trade accordingly...

On the heels of 5 months of weakness in Services PMI, and 2 months of weakness in ISM Services, it only makes sense that ISM's Services print would massively beat expectations at 59.3 (against 57.5). All ISM subindices rose - apart from employment (which dropped to 4 months lows)! Just 15 minutes after one survey indicates a drastic slowdown in domestic demand for services, another one says it has almost never been better...