Archive - Oct 7, 2015 - Story

If yesterday's 3Year auction was solid across the board, then today's sale of $21 billion in 10Y was an all around show-stopper,

If anarcho-capitalists should move to Somalia, then socialists - especially, “social democrats” - should move to Venezuela. The country is a complete disaster. Economic chaos, food rationing and a complete break down of the social order aren’t lessons of a misguided dictatorship of the proletariat, but a fundamental reality of socialism, whether democratic or not.

The colonel "got away", and now his "partner" is out of jail...

There is little that is of greater importance to systemic confidence than faith in the abilities of central banks. Thus, when even the mainstream financial press begins to publish articles about a potential “loss of credibility” faced by these august institutions, one must begin to pay close attention.

Mortgage applications rose 25.5% week-over-week - the 2nd largest surge since 2009 - to the highest level (for this time of year) since 2012. Both refis and purchases soared, and exuberance immediatoley extrapolated this surge as 'proving' the housing recovery is healthy. However, as MBA admits, "many applications were filed prior to the TILA-RESPA regulatory change," strongly suggesting this is anything but sustainable.

A popular view among some market participants is that the Fed is unlikely to hike in a presidential election year. While many economic and market factors may influence when and how often the Fed hikes in the upcoming months, BofAML does not expect the timing of US elections to play any meaningful role in the Fed’s policy deliberations.

A huge build in crude inventories started the ball rolling but a sudden "spoofer from above" sent US equities slumping this morning. The Dow and S&P have now joined the Nasdaq in the red...

The takeaway is that to the extent the overnight relief rally in the ringgit and then subsequently in other Asia EM "assets" was catalyzed by a "better" than expected read on the situation in China, the market may be making a mistake because just like Chinese GDP prints, the headline figure on the PBoC's store of FX reserves should be taken with a grain (or perhaps a whole shaker) of salt when it comes to drawing conclusions about the pace of outflows from the world's second most important economy.

In the face of a modest inventory drawdown (reported last night by API), DOE reports a major 3.073 million barrel inventory build (for the 2nd week in a row). As EIA reports, oil stocks remain at their highest in at least 80 years. Rubbing salt into the wounds, Crude production rose 0.84% WoW, the biggest surge in 5 months. WTI Crude's initial reaction is a significant sell-off...

Saudi Arabia’s competitors from the Gulf cut their prices last month, forcing the largest OPEC producer to follow suit. Although there was little expectation of a shift in strategy, the price cut highlights Saudi Arabia’s determination to continue to pursue market share by keeping production volumes elevated. On top of that, October could be a crucial month for struggling drillers. With drillers undergoing credit redeterminations, October could see a wave of debt restructuring and cuts to credit lines, potentially forcing deeper cuts in the shale patch.

As the following org chart of Glencore shows, the company - at least on the surface - appears to be far "simpler" than Enron was in the days preceding its biggest, for the time, and quite unexpected, bankruptcy.

For the first time since Spetember 2011, the Nasdaq Biotech Index has triggered a "death cross" as its 50-day moving average crosses below its 200-day average...

This is what happens when the corporate buyback bonanza bursts. If the CFO loved it at $116 - which is Monsanto's average stock buyback stock over the past 5 years - he'll love it at $84.

Simply put, job growth is not keeping pace with population growth--specifically, the growth of the labor force which is generally defined as the population between the ages of 18 and 64. So what happens to the economy as millions of people never acquire the habits of hard work or lose them due to chronic joblessness?