Archive - Oct 8, 2015 - Story

What may be the worst month in Volkswagen's corporate history is about to get a cherry on top, when the CEO of Volkswagen of America CEO Michael Horn is set undergo the Kangaroo Court treatment, when he testifies before a House Energy and Commerce  subcommittee investigating last month's admission the company had installed on-board computer software designed to cheat on government emissions tests in nearly 500,000 of its four-cylinder "clean diesel" cars starting with the 2009 model year.

As more and more "reputable" analysts realize that the 30 Year bull market in Treasury isn't going anywhere, another firm jumped on the "more easing" bandwagon overnight, when HSBC's Steven Major slashed his target yield on 10Y Treasurys for 2015 and 2016, from 2.4% and 2.8% to 2.1% and 1.5% respectively. The reason: more easing of course, or rather expectations for further ECB monetary easing which will help U.S. curve to perform.

Last month, when King Salman arrived in Washington to a fleet of Mercedes S-Classes, we asked if, considering the current circumstances, cutting back on spending might be in order. Indeed, in the wake of Saudi Arabia's move to tap debt markets, rumors have been circulating for months that the kingdom has enlisted the help of "advisers" to help rein in the ballooning deficit. Now, Riyadh has effectively declared a spending moratorium in the face of self-inflicted crude carnage.

The market is prone to temporary fits of shared enthusiasm – for emerging-market debt, for Internet stocks, for residential mortgage-backed securities, for Greek government debt. Traders need not wait to see when or whether the profits materialize. IBGYBG, they say – I’ll be gone, you’ll be gone. There are numerous routes to bezzle and febezzle...  traders borrowed money from the future. And then the future came, as it always does, turning the bezzle into a bummer.

Just a day after no lesser world-renowned newsletter writer than Dennis Gartman went full bull-tard of crude oil (in $29.95 terms), Goldman Sachs has come out with a "lower for longer" warning about the crude complex noting that the gains have been exacerbated by still large short positioning and the break of key technical levels. Despite the magnitude of this rally, Goldman does not believe that data releases over the past week suggest a change in oil fundamentals. In fact, high frequency data continue to point to an oversupplied market despite a gradual decline in US production.

Not everything is "fine" in the land of European banks, in fact quite the opposite.

Job cuts have already surpassed  last year's total, according to Challenger, Gray & Christmas with the highest annual total since 2009, when nearly 1.3 million layoffs were announced at the tail-end of the recession... so how does the government explain the fact that initial jobless claims have once again re-tumbled back to close to 42-year lows...

Having closed yesterday above the 200-day moving average for the first time since May, the weaker-than-expected Chinese equity market open sent the precious metal tumbling and it is extending losses in the early US session.

Moments ago, as part of its quite stale and otherwise irrelevant minutes of its September 2-3 governing council meeting, the ECB did precisely the same, announcing that as part of its ongoing open-ended QE program (which the ECB expects will be implemented fully by September 2016 "or beyond") it would frontload purchases between September and November because, you guessed it, volatility once again declines in December.

• Congress probing U.S. spy agencies' possible lapses on Russia (Reuters)
• Defense Ministers From NATO Hit Out at Russian Action in Syria (WSJ)
• U.S. Rules Out Cooperation With Russia as Moscow Launches First Naval Strikes on Syria (WSJ)
• Man Who Called China's Boom and Bust Says Use This Rally to Sell (BBG)
• For Volkswagen, New Questions Arise on U.S. Injury Reporting (BBG)
• Deutsche Bank May Swell $14 Billion Selloff in China Bank Stakes (BBG)
• Emerging market slowdown hits German exports (FT)

It was supposed to be the day China's triumphantly returned to the markets from its Golden Holiday week off, and with global stocks soaring over 5% in the past 7 days, hopes were that the Shanghai Composite would close at least that much higher and then some, especially with the "National Team" cheerleading on the side and arresting any sellers. Sure enough, in early trading Chinese futures did seem willing to go with the script, and then everything fell apart when a weak Shanghai Composite open tried to stage a feeble rebound into mid-session, and then closed near the day lows even as the PBOC injected another CNY120 bn via reverse repo earlier.