Archive - Dec 2, 2015 - Story

After the worst monthly performance since 2013 and the weakest close since February 2010, it appears "managed money" has piled in to the momentum trade. According to CFTC, hedge funds have never been more short gold (slashing long bets and increasing short beta by around 11 million ounces net in the last week). But gold is not alone as 15 of the 24 commodities tracked by CFTC showed sentiment swinging more bearish last week (with Brent and WTI also at their most-bearish positioning on record). And this is happening as November US Mint gold coin sales rose 86% YoY.

“We will listen, and then decide,” he said on Tuesday upon his arrival in Vienna, trying to tamp down speculation that the outcome is preordained. When asked if OPEC’s strategy of pursuing market share was working, al-Naimi was coy. “What strategy?” he said. “Who said we’re keeping market share?” Despite al-Naimi’s assurances that the Saudi delegation won’t dictate policy to OPEC, his voice is the only one that counts.

Overnight, Credit Suisse became the latest bank to join Goldman, JPM and increasingly more banks in predicting that 2016 will be a year in which investors will want to rotate out of equities. Specifically, the second largest Swiss bank said that it is "we reduce our equity weightings to our most cautious strategic stance since 2008 and take our mid-2016 S&P 500 target down to 2,150, the same as our end-2016 target." Here are the five reasons why CS just looked at the mounting wall of worry... and began to worry.

Update: Emergency: UNC issues 'All Clear'

The University of North Carolina at Chapel Hill suspended classes Wednesday morning (and students asked to shelter in place) after an unconfirmed report of an armed person on campus.

The third stock market collapse of this century is near at hand. The global economy is in the midst of an unprecedented commodity deflation and CapEx depression - the payback for 20 years of lunatic monetary stimulus and credit expansion. Yet the central banks are powerless to stop the payback. When the Fed announces a rate increase after 84 months of dithering next week in the face of GDP growth that has already decelerated to barely 1% this quarter the jig will be up. Monumental money printing has failed. Soon there will be no place to hide - not even in the Tremendous Ten.

From "pumping out lots of jobs" in September to "not slowing meaningfully" in October, and despite consistent job losses in manufacturing (which is odd because auto sales are so awesome, right?), ADP reports November a jump to 217k (against expectations of 190k and October's 182k). ADP has missed expectations 8 months so far in 2015, but November's beat is the biggest since 2014 which one could argue was just catch up from ADP's big miss relative to BLS data (182 ADP with an upward revision to 196K now, vs 271k BLS). Of course, none of this "data" matters apparently as Fed's Lockhart said just this morning that the Fed's "criterion of job market improvement has been met."

“It is not in doubt. ISIS is almost finished. They are weak. If only America would stop supporting them, we could defeat them in days.”

The EU is warning Greece it faces suspension from the Schengen passport-free travel zone unless it overhauls its response to the migration crisis by mid-December, as frustration mounts over Athens’ reluctance to accept outside support. Meanwhile non-EU member Turkey gloats as it gets a soon to be embezzled wire transfer of €3.0 billion for its "proactive" refugee response.

• Yellen, in back-to-back appearances, could close out era of zero rates (Reuters)
• ECB stimulus hopes keep Europe stocks at three-month high (Reuters)
• ECB to Test the Limits of Its Bond-Buying Program (WSJ)
• Watch for U.S. recession, zero interest rates in China next year, Citi says (Reuters)
• Euro’s Loss Being Yen’s Gain May Be Headache for BOJ (BBG)
• Yahoo Board to Weigh Sale of Internet Business (WSJ)
• Islamic State Prevents Civilians From Fleeing Iraqi City of Ramadi (WSJ)

As previously noted, it has been a bad year for some of the marquee hedge fund names, with Einhorn's Greenlight Capital down 21% YTD, and as reported last night, Ackman's Pershing Square is not doing much better and as of November 30, was down 20.8%.  On the weekly table one can clearly see when Pershing's fortunes turned in mid August when the fund dropped from being up 11% for the year to going negative for the year on the heels of the collapse in Valeant shares.

It is only logical that a day after the S&P500 surged, hitting Goldman's 2016 target of 2,100 more than a year early because the US manufacturing sector entered into a recession, that Europe would follow and when Eurostat reported an hour ago that European headline inflation of 0.1% missed expectations of a modest 0.2% increase (core rising 0.9% vs Exp. 1.1%), European stocks predictably surged not on any improvement to fundamentals of course, but simply because the EURUSD stumbled once more, sliding by 40 pips to a session low below the 1.06 level.