Archive - Dec 21, 2015 - Story

We now enter the “discovery” phase of financial collapse, where things labeled “capital” and “credit” turn out to be mere holograms. It’s not just the Federal Reserve; everything around us is backed into a corner as the rude discovery that capital is not what it has appeared to be is now underway, with the power to derail political systems and societies.

So there you have it: a riskless "profit" handout for foreign banks, subsidized by the most famous US "public" institution - the Federal Reserves - amounting to approximately $11 billion in just one year.

Following a brief dead-cat-bounce into The Fed's policy error, high-yield bonds are once again being sold for the 3rd day in a row, filling the gap-up from last week. This reality - among others - is weighing on US equities as The S&P just gave up all its Monday morning "stocks are up and they should be" gains.

If a person is unable to earn enough to save, and is unable to compete with financiers and corporations for productive assets, that person is a modern-day serf, a debt-serf indentured to banks and stripped of opportunities to own the sort of assets the Financial Nobility use to accumulate ever-greater wealth and income. The injustice of this central-bank enforced neofeudalism cannot be suppressed like interest rates.

“These kinds of ETFs don’t exist now. Using capital spending as a factor in deciding what goes in an ETF is quite unusual. I think the message from the BOJ is for us to go out and make them.”

OPEC blowback continues to ripple around the world. With Russia's Ruble pushing back towards record lows against the USD, and Kazakhstan's Tenge having tumbled to record lows, the writing was on the wall for Azerbaijan. As Bloomberg reports, the third-biggest oil producer in the former Soviet Union moved to a free float on Monday and the manat crashed almost 50% instantly to its weakest on record with the second devaluation this year.

The Fed seems to have been operating on the theory that their own views on the economy determine its path. But recently the Fed has taken the principle to an extreme never seen. Yellen may well have just hiked rates expecting, hoping, that the mere act of showing confidence in the economy would produce an economy worthy of confidence. The Fed has dominated the narrative for years now, investors and traders hanging on every word. Last week that started to change, the market repudiating the Fed’s outlook over a 48 hour period that must have produced some second guessing at the Fed.

While contracts have rolled, we thought it worth noting that January WTI Crude just flushed to a $33 handle for the first time this cycle. Feb crude (the current front-month) is down almost 2% to its series lows around $35.35...

Stocks are rallying "and they should" according to CNBC's Bob Pisani... but nothing else is playing along.

And the hits just keep on coming for "America's most hated" biotech CEO-cum-charged with fraud hedge funder, Martin Shrekli, who several days after resigning as CEO from Turing Pharma, has just been fired by his "other" recent infamous investment KaloBios, which as a reminder was trading at $1 just over a month ago when it had announced it would liquidate just before Shrekli invested several million in the insolvent biotech.

Puerto Rico may be teetering on the verge of default but that doesn't mean public sector employees won't be going home with some extra cash for the holidays. Ten days before $1 billion in interest payments come due and two weeks after resorting to an absurd revenue clawback end-around to make a $354 million payment, the commonwealth just paid out $120 million in bonuses.

While many still cling to the belief that U.S. shale and tight oil plays are commercial even at current low oil prices but data on the Permian basin and Bakken plays simply does not support this hope. In fact, less than 2 percent of Permian basin tight oil wells are commercial at $30 per barrel oil prices.

Today we get another confirmation just how bad Apple end-demand has become, with news out of India that Apple has cut prices of its latest iPhone 6s and iPhone 6s Plus by up to 16% just two months after their launch in India to boost flagging sales in what is historically its most crucial quarter as demand for the flagship devices nosedived from a Diwali high.