Archive - Dec 2015 - Story

An analysis of terror attacks since 2002 suggests U.S. efforts to combat terrorism - i.e., the "War on Terror" - have led to a dramatic increase in death and suffering from terrorism.

Not only were there downward revisions between the November and October "government data", but as the chart below shows, over the past 5 months the data has been consistently "revised lower" with every incremental release.

API's reported huge 3.6mm drawdown in total crude inventories (against expectations of a 2.33mm build) was just the catalyst to send crude prices soaring overnight and DOE just confirmed it with a massive 5.88mm draw - the largest in over 6 months. However, initial exuberance was tempered as Cushing saw a 2.045mm build - its 7th week in a row. And finally, crude production rose for the second week in a row.

Following Existing Home Sales sudden collapse catch down to reality (blamed on new paperwork timing), New Home Sales in November printed 490k SAAR (missing expectations of 505k). Historical revisions enabled a 'rise' MoM but we note that new home sales in The Northeast crashed 28.6% (after a huge spike in October) while The West saw sales rise 20.5% MoM (seriously!!??).

Having seen long-bond yields collapse on heavy volume immediately after The Fed's decision last week to hike rates, it appears the "policy error" message was just too much to bear for an un-manipulated market. The last 2 days have seen a very light volume 13bps surge in 30Y yields, now back above the Maginot Line of 3.00% - erasing any "policy error" questions post-Fed... for now.

From $35.35 lows (in Feb contract) on Monday, WTI crude has extended its overnight post-API inventory gains, pressing up to $37, running the stops to last week's FOMC meeting moves. Let's just hope DOE does not disappoint (and don't forget to look at Cuhsing storage getting full).

"To make a total payment will be almost impossible. If a partial payment is made: what bonds should we pay? It is an assessment that is being done. It is highly unlikely that there will not be default, in whole or partially."

If it wasn't for America's war machine, the economy would be deep in recession. Defense spending (aircraft and parts) soared 148% in the last 3 months - biggest such rise since 2007 managing to squeeze Durable Goods Orders overall to unchanged in Nov (vs -0.6% exp). That's the good news. Everywhere else you look bad. Core Capex fell 1.93% YoY - the 10th consecutive YoY drop - something not seen before outside of recession.

The end result was that in November personal savings was $748 billion, a $9.4 billion decline from the $757 billion a month ago, which translates into a 5.5% savings rate, down from last month's 5.6%, however well above the average rate seen over the past 12 months as consumers continue to be unwilling to dip into their savings despite the so-called "gas" tax cut.

An index that tracks the world’s largest stocks is testing its post-2009 uptrend... again.

Investors have bought increasing volumes of put options that will pay out if the price of WTI drops to $20 to $30 a barrel next year. The largest open interest across options contracts - both bullish and bearish - for December 2016 is for puts at $30 a barrel. The open interest for June 2016 put options at $25 a barrel has nearly doubled over the last week. Investors have even bought put options that will pay if WTI drops below $15 a barrel by December next year. The volume of financial bets at that level is tiny - 640,000 barrels in total.

As Baghdad gears up for an assault on ISIS-held Mosul, the Iraqi army has managed to liberate Ramadi, the "heartland" of the country's Sunni community. “We went into the center of Ramadi from different axes, and we started clearing residential areas. The city will be cleared within the coming 72 hours."

• Oil up after U.S. crude stocks drop, still close to 11-year lows (Reuters)
• Global Stocks Rally; Mining, Metals Shares Lead Gains (WSJ)
• OPEC Sees Demand for Its Crude Oil Falling for Rest of Decade (BBG)
• The Trouble With Sovereign-Wealth Funds (WSJ)
• U.S. Calls for 256% Tariff on Imports of Steel From China (BBG)
• Iraqi troops expected to drive ISIS from Ramadi in days (Reuters)

With just a handful of trading sessions left in the year, this is how the major global markets look as 2015 is about to close. As of this moment, and in keeping with the Christmas spirit, the biggest question is whether the S&P500 will close green or red for the year.

In a shocking new report, Seymour Hersh reveals what he says was a covert operation run by the Joint Chiefs of Staff who sought to undermine the Obama administration and the CIA's goal of overthrowing the Assad regime in Syria. "If the American public saw the intelligence we were producing daily, at the most sensitive level, they would go ballistic."