Archive - Dec 2014 - Story

With African Americans. However, even they are unhappy with Obama's Ferguson performance.

Not a quarter passes without a bank announcing, as part of its earning statement, that - it just so happens - it has incurred a few hundreds million (or billion) in legal fees, expenses and charges for breaking the law and manipulating this market or that (recall that for banks "Crime Is Now An Ordinary Course Of Business"), but it's ok, because it is a one-time, non-recurring thing, so please exclude it from the EPS calculation.... Until the next quarter when everything repeats once more. But the repetition of "one-time" events is not the only constant: the other one, of course, is that nobody ever goes to jail. The latter is also the reason why, as the WSJ reports, British regulators are "getting exasperated with banks failing to clean up their act after repeated wrongdoings." No, really: the UK's equivalent to the SEC truly can't understand how banks refuse to stop breaking the law when the have a paid for by others - and quite literal - get out of jail card.

Outspoken realist billionaire Sam Zell tells Fox's Maria Bartiromo, "the US economy is bifurcated," noting that "the very top has done very well as The Fed's QE 'saved the system'," but, he adds, the 90% that did not benefit from that "have seen wages go down and the recent election showed a lot of discomfort and a lack of trust." A hopeful money-honey asks whether the president will work with the Republicans to improve this situation, Zell lashes back, "isn't the question whether the president wants to work with anybody to create anything?"

Mission Accomplished Abenomics? The Nikkei 225 just hit fresh 7 year highs at around 17,900 (the highest since July 2007) managing to soar 24% off the mid-October 'Bullard lows' and once again trading above the Dow. Great news for all the bulled up US investors we see day after day on financial TV... wrong! In US Dollars, US investors remain down 4% year-to-date (and have yet to have a positive close in 2014). But hey on the bright side, your Japanese brethren are loving the nominal surge in their 'wealth' as their currency collapses to 119.4 this evening.

Any economic sage should conclude that the cure for high taxation is, well, low taxation. Remember our job is not to maximize government revenues in the short run, but to improve living standards in the long run. France would do well to repudiate its native son Piketty, and move to align its policies with the Scotsman Adam Smith, who a long time ago advocated low-broad taxation and light-handed regulation of capital and labour markets.

If you notice that display racks this holiday season are nicely scented, it’s not just shops are tidier at year’s end. Scents like citrus and floral can make you linger and stay alert in the shop to buy more. The use of scent is just one of four sensory marketing tricks being used on us by shops eager for more sales. Collated in the new infographic below you can find a number of scientific studies that indicate what we see, hear or touch affect our buying decisions. Do you know why Apple Store leaves its notebook display half-open, or why you suddenly crave for a tropical vacation while inside Bloomingdale’s?

With an 83% probability of default within 5 years, Venezuela is in trouble... imminent trouble with a 24% chance of default within a year (more than 10 times the probability of a Russian default)

The selling is because the dominant Common Knowledge regarding energy sector stocks is that they move up and down with the price of oil. Common Knowledge is not what everyone knows; that’s the consensus. Common Knowledge is what everyone knows that everyone knows, and it’s the driving force behind the Game of Sentiment. Everyone knows that everyone knows energy stocks are tied to oil prices, we just took another sharp leg down in oil prices, and so energy stocks must be sold. The fact that energy stocks are down “proves” the relationship (a wonderful example of Soros’s concept of reflexivity), which adds to the selling. The reality (not that it matters) is that energy stocks are barely correlated with the price of oil, and their correlation with each other is barely driven by oil prices. What’s really driving this across-the-board decline is the fact that “long energy” has become a very crowded trade.

"It's a funny thing... but if you start taxing countries for doing the right thing, in order to pay countries who are doing the wrong thing, you're going to end up fewer of the former and more of the latter." Europe's perverse incentives to 'not' succeed exposed in just 70 seconds...

Bob Farrell's rule #9 says: "When all the experts and forecasts agree, something else is going to happen." Why should you care? Because hardly anyone expects US Treasuries to outperform in 2015… and that’s exactly why they might. In the following analysis, we’ll look at 5 reasons why the long bond might be the best trade of next year.

By now, every trader who watches markets every day is acutely aware of the increasing concentration of massive amounts of volume in the last second of the trading day. Here is 8 years of the last few seconds of the trading day and how 'efficiently' it has evolved...

With Ebola off the front-pages of every media outlet, President Obama appears to finding it tough to get his $6 billion funding request to fight the deadly disease... time for some hope (things are good in America, Spain delcared Ebola-free) and fearmongery (5,987 deaths and 16,889 cases currently) as The White House increases Ebola response units in the US and sends more military and civilians into Africa...

Following yesterday's dead-cat-bounce, oil prices resumed their downward push today, closing just shy of the flush lows on Friday back to a $66 handle for WTI. Gold also slipped modestly with copper and silver flat as the USD surged higher (+0.75% on the day). Stocks just melted up all day long (supported by USDJPY pushing to new cycle highs over 119), stop-hunting the whole way (with the S&P breaking back above its 5-day moving-average and back into the green on the week briefly). Yesterday's losers (Trannies and Small Caps) were today's BTFD winners. Treasury yields rose notably once again (up 11-13bps on the week) as we suspect oil-producers are selling to help support their collapsing currencies. VIX closed below 13 - slammed into the close to scrape the S&P back above its 5DMA.

Presented with no comment...

If all it took to push stocks to ever recorder(est) highs, granted on no volume, but recorder(est) highs nonetheless, was for correlation algos to pick a carry FX pair trade du jour which to push the Nikkei, or the Dax, or - most frequently - the S&P higher, then all equity indices would already been in scientific digit territory. And since they aren't, it is only logical that prosperity through currency debasement can only "work" for so long.

But how long? Well, when it comes to the primary carry pair du jour, the Dollar-Yen, the answer may be just a few hundred pips more, before it all comes unglued for Japan's Prime Minister whose first stint in the role ended in a prophetic bout of epic diarrhea, Shinzo Abe.