Archive - Jan 2015 - Story

Having previously warned that The Fed's "fixation with the markets has created a deadly trap," and recently noted that "Central Banking has lost its way," Stephen Roach unleashed a few minutes of painfully honest truthiness on an unsuspecting Kelly Evans at CNBC. The brief interview reiterates Roach's previous comments, as Tim Iacono notes, that "it didn't have to be this way." The Fed "is in total denial," Roach rants, adding that it "hasn't learned the lessons of what it put the world through a decade ago."

Two months ago we reported that former Soviet leader Mikhail Gorbachev has warned that tensions between Russia and the West over the Ukraine crisis have put the world "on the brink of a new Cold War." That warning has now escalated as the 1990 Nobel Peace Prize winner told Der Spiegel news magazine, according to excerpts released on Friday, that tensions between Russia and European powers over the Ukraine crisis could result in a major conflict or even nuclear war, adding that "a war of this kind would unavoidably lead to a nuclear war."

Update: the hostage-takers are dead. However, according to Reuters at least four hostages at the Kosher supermarket have been killed according to Reuters, citing a police source.  Additionally, and take this with a grain of salt, CNN adds that the female suspect in the Paris grocery siege escapes.

Yesterday, to much shock and dismay, Obama revealed his latest "noble" grand vision: provide a free community college education to millions of folks. Apparently now, far too late, even the community organizer-in-chief realized that with $1.2 trillion in student loans the Millennials will never be able to take their rightful place as the dynamo of US economic growth. What is Obama's solution? Another free lunch. Socialist unicorns and Marxist rainbows aside, what will Obama's "free" plan cost taxpayers? The answer: $60 billion over 10 years, according to a White House official.

"Is the recent bout in volatility yet another ‘buy-the-dip’ opportunity or a sign of worse to come? Investors struggle to both keep up with the markets while protecting themselves against a severe correction. By taking a step back, investors might be able to see the forest for the trees to gauge whether their portfolio is ready for what lies ahead." What we find most interesting is that there is very little concern that something could negatively impact the markets. In fact, if anything would actually happen, it will just be a mild 10-15% correction. The problem is that historically, such outcomes have only been found in "rarified air."

In Harrison County, Ohio, drilling company worker Rick Lucente sums up all that is wrong with the mainstream media's narrative (puppeting even The Fed's great thinkers) about what great news low oil prices are... while his monthly gas bill for his Chevy pickup truck has dropped, he admonishes, "That’s not going to replace a paycheck... and I don’t know why this is happening." As the local mayor adds, the impact of the energy industry is widespread, oil prices affect almost every facet of their lives, from home values to roads to jobs.

Venezuela has a massive population and tremendous natural resources... and yet, the place is a real mess. Years of mismanagement and utopian socialist policies mean that the country is facing shortages of basic necessities such as food and toilet paper. You have to imagine that when a place is in such turmoil, significant regime change isn’t far off. In fact, this year’s parliamentary elections will be an important indicator of what will happen in Venezuela. Peacefully or not, things in Venezuela simply have to change. The country is reaching its day of reckoning.

Since regulators are so busy focused on the interest rate, FX, credit derivative, and commodity market manipulations and rigging, we suspect they missed the oh so visible hand of "spoofing" that is occurring today in Crude Oil. As Nanex so brilliantly exposes (once again), large orders 'spoof' the depth of the market before disappearing entirely as liquidity approaches and demands a trade...

Just as T.Boone Pickens warned, US Rig Counts are plunging. Down by 61 this week alone - the biggest weekly drop in over 5 years - at 1,750, this is now the lowest since November 2013 (and very close the lowest since 2010). The 10% or so plunge in the last 7 weeks is following the same trajectory as the 2008 collapse - which led to - just as Pickens suggested - a 50% crash in rig counts...

Having tested-the-waters with his "2 years of free community college for all" plan last night, President Obama will this afternoon explain how it's all going to work, how it will be paid for (and by whom), how it will not raise education costs, how it will ensure Americans become more productive and encouraged to seek and take work, and how it will wean people from suckling at the teat of the welfare state... Oh and how he will define 'responsible' students? (rather like moderate terrorists we suspect?). Or is this all a 'delaying tactic' as America's aging workforce crowds out the younger generation from all but burger-flipping?

...over time, grand coalition governments may only serve to ossify the re-orientation of political allegiances along the mainstream vs. populist dimension. If economic malaise persists to the next election, support for populist parties is likely to build, as scepticism about the adjustments required to sustain Euro area membership rises. The Greek experience points in this direction. Were this experience to extend to larger and more systemically relevant countries (such as Italy or Germany), the implications for markets would be profound.

The oil industry is facing rising debt from collapsing oil prices, but there could be another sector that becomes a casualty of the low oil price environment: liquefied natural gas (LNG).

We have great news for America's increasingly aging work force: the number of workers 55 and over just hit 32.9 million, up 1.3 million from a year ago, and an all time high.  For those who happen to be young and, inexplicably, also want a job, we have good news too...

This is not what was supposed to happen... Brent Crude broke to a $48 handle and WTI nears a $46 handle as yet another dead-cat-bounce dies...