Archive - Nov 12, 2015 - Story

In a sign that the slowing economy, rising bank NPLs, and lackluster demand for credit from overleveraged corporates is overwhelming Beijin's easing efforts, China's October loan growth data came in far weaker than expected in yet another sign that all is most certainly not well with the world's engine of global growth and trade. Meanwhile, fiscal spending soared as it now appears Beijing may have no choice but to go the helicopter route if it hopes to reignite growth.

When FedSpeak Fails...

Having soared to almost $100 - because it was a social media company - Camera-on-a-stick maker GoPro has collapsed 75% from its highs and broken back below its $24 IPO Price for the first time.. which is odd as in July, CNBC's Jim Cramer said "Go Pro is heading higher... I know growth oriented money managers who would gladly pay as much as 60 times earnings for a company with these numbers. I think GoPro's a bargain at these levels."

Spain's Constitutional Court has ordered the suspension of Catalonia's independence bid and threatened to arrest its leader Artur Mas. Separately, Mas lost a bid for re-election as the same lawmakers who support his push for independence are unwilling to support him as President citing corruption.

Evolution happens without goals... without conscious thought. It is a trip without a destination. It is also the way economies work; they do not respond well to manipulation by self-important meddlers. But if you are speaking for the entire planet, you have already gone way beyond the theory of evolution. You are in a world without theory… without science… without experience or history. You are in a world of make-believe – where pundits pretend to know what they are talking about and newspapers fill space with mythical claptrap.

With the crude market on tenterhooks since API reported a huge surge in inventories (especially at Cushing), DOE reported a considerable 4.2mm barrel build (less than API's 6.3mm) but way above analyst expectations of a modest draw (7th week in a row). Cushing saw a very significant 2.24mm barrel build (API 2.5mm). Crude Production also rose near 3mo highs, putting firther pressure on crude prices which are whipsawing wildly on this data...

Despite a modest bounce in the headline Consumer Comfort index, the under-currents are ugly. The "state of the economy" and  "personal finances" surveys tumbled to 2 month lows. But the biggest crashes in comfort were among two interesting cohorts - black Americans' comfort plunged to its most uncomfortable relative to white Americans in 2 months; and 35-44 year olds saw comfort crash the most in 13 months to 3-month lows. So it appears, if The Fed is to reinvigorate animal spirits, it needs to focus on black Americans between 35 and 44 years old...

"the seasonally adjusted labour force estimates from the Australian Bureau of Statistics for October sound incredible and they should be treated as just that: not credible.  Don't believe politicians as they gloat and claim credit. Don't believe the wire services when they report the estimates as fact....  The former chief statistician recently said the data was not worth the paper it was written on."

With the 'paper' price of gold are a somewhat unprecedented barrage of selling currently (down 9 of the last 11 days) to 4-month lows, one could be forgiven for thinking that demand for the precious metal is dropping. However, as almost every nation in the world (ex US) is devaluing their currency, The World Gold Council reports that physical gold demand has risen dramatically with US gold Eagle coin sales at the highest levels since the financial crisis.

Bonds are back in town and stocks are tumbling. Dow Transports remain the worst performer of the major indices (down over 11% year-to-date), but, after the exuberance of October, November's reality of a tightening Fed has dragged first Small Caps, then The Dow, and now The S&P into negative territory for 2015. Only Nasdaq remains in the green (up a stunning and entirely unsustainable 10% YTD). The S&P 500 also broke below its 200-day moving average.

The most important thing Bullard said in his speech titled "Permazero" is that the the US may be entering a permanent period of lower inflation and interest rates. Wait, wasn't ZIRP and QE supposed to push the US economy, boost inflation and hike rates? Good to know 7 years later that the biggest monetary experiment in history did precisely the opposite of what it was supposed to achieve.

Rolls Royce just delivered a shocker of a profit warning as new CEO Warren East said the company will take a $990 million hit in 2016 attributable to "sharply lower" sales in the corporate jet space. The shares fell as much as 22% and CDS blew out to three-year wides. 

The housing recovery without mortgage originations is coming to its inevitable conclusion.

Just when you thought it couldn't get any worse - amid supply gluts, production surges, market share scrambles, and demand disappointment - it does. OPEC this morning confirmed not only no change in the already weak global demand picture but the current oil inventrory surplus is the largest in at least a decade. This has driven WTI prices down close to a $41 handle this morning (from over $48 a week ago) as simply put, there's too much oil and OPEC's grand strategy for solving this imbalance - pray for a colder winter...