Archive - Dec 2015 - Story

Who could have seen that coming?

Andy Hall's Astenbeck hedge-fund lost 9.7% in November, bringing 2015 losses to more than 26%. As a result of capital losses and mounting redemptions, Astenbeck’s assets under management fell to $2.4 billion, down from $3 billion at the start of the year and nearly $5 billion less than three years ago.

Following a roudy session in Congress that nearly dissolved into "chaos," the Brazilian Supreme Court suspended impeachment proceedings against President Dilma Rousseff until December 16. Meanwhile, annual inflation rose to 10.5% in November, the highest in 12 years as the country's stagflationary nightmare continues unabated.

Following last night's unexpected inventory draw reported by API, DOE reported an even bigger draw of 3.568 million barrel (against expectations of a 1.3mm barrel build). The biggest draw in almost 4 months sent crude surging back to $39. Cushing continues to fill up, with a 423k build - the 5th week in a row. Production dropped the most in 2 months (with both Alaska and The Lower 48 dropping).

“The government and parliament need to review the agreement signed with the United States on security because the United States does not seriously care about its fulfillment, We demand that it be annulled." 

Q4 GDP expectations are off to a bad start as October wholesale inventories dropped 0.1% (missing expectations of a 0.2% rise and well down from the September surge of 0.5%). Wholesale inventories rose only 3.7% YoY, the lowest since Sept 2013 but sales have now been negative YoY since December. This leaves the crucial inventories-to-sales ratio at 1.31 - post-crisis highs, and deep in recession territory.

Do you need a bit of comic relief this Wednesday morning? Tune in live as Ash Carter explains to lawmakers how The Pentagon intends to fight Islamic State in the year ahead.

As of today, with Glencore stock once again trading near all time lows sliding as low at 75p, the company's default risk just hit 54%, the highest in 6 years, as a result of its CDS blowing out past 900 and wider than the intraday spreads hit in September as the following chart from Markit shows.

For the second day in a row, European stock markets have broken. Today, it is even more serious as Euronext warns of a "data issue" which means no levels are being disseminated for AEX, CAC40, BEL20, and PSI20.

Since laste June, "local investors" have been restricted to only being allowed to buy shares and disallowed from withdrawing cash from accounts. Those restrictions did not stop the stock market from collapsing further and today authorities have decided to lift those capital controls... the result - ASE has plunged below mid-Summer lows to its lowest since June 2009...

The USD is getting pummeled this morning (following China's 'devaluation' to the weakest Yuan since 2011 overnight) as all the majors are bid against the greenback. USD Index is now below the post-ECB lows from last week... The USD is now at its weakest since early November.

Government interference by both central banks and regulators (the latter are desperately fighting the “last crisis”, bolting the barn door long after the horse has escaped, thereby putting into place the preconditions for the next crisis) has created an ever more fragile situation in both the global economy and the financial markets. As the below charts and data show, price distortions and dislocations have been moving from one market segment to the next and they keep growing, which indicates to us that there is considerable danger that a really big dislocation will eventually happen.