Archive - Aug 19, 2015 - Story

Currency wars triggered a collapse in the Tenge overnight and sinking oil prices are putting the brakes on Kazakhstan’s once-soaring economy, forcing layoffs in the all-important energy sector. With memories of the months-long strike in the western town of Zhanaozen that culminated in a bloody crackdown in 2011 still fresh in the memory, the government has put measures in place to prevent the seeds of industrial unrest.

If there was any confusion as to whether the recently devalued Chinese yuan would be landing in the IMF SDR basket on January 1, the Fund just cleared it up.

“Over the past five years, our businesses have created more than 11 million new jobs. Our economy is growing and creating jobs at the fastest pace since 1999.” - President Obama

Despite those feel-good headlines, the average American is far, far from solid financial footing.

To the utter horror of Ashley Madison's 37 million customers - and to the sheer delight of millions of divorce attorney around the globe - last night the Impact Team did just as it threatened it would, and released a data dump with all the user data in the form of a 9.7GB torrent.

Naysyers are warning that the recent plunge in Bitcoin prices - from almost $318 at its peak during the Greek crisis, to $221 yesterday - due to growing power struggle over the future of the cryptocurrency that is dividing its lead developers could spell the end of the cryptocurrency. On Saturday, a rival version of the current software was released by two bitcoin big guns. As Reuters reports, Bitcoin XT would increase the block size to 8 megabytes enabling more transactions to be processed every second. Those who oppose Bitcoin XT say the bigger block size jeopardizes the vision of a decentralized payments system that bitcoin is built and represents a "governance coup.". However, the turmoil in the price also coincides with some rather notable global macro events from Asia (where Bitcoin is extremely popular).

The Nasdaq has once again dropped below its crucial "everything is awesome" 5,000 level. This follows The Dow losing 18,000 and The S&P losing 2,100 and is back to unchanged in 2015. Somebody do something!!

If we call stagnation progress, what have we accomplished?

The S&P 500 has broken back below its 200-day moving average once again...

Following last night's API inventory 'draw', DOE reported a much larger than expected build of 2.62 million barrels in crude inventory - the biggest weekly build since April. WTI Crude prices are tumbing on the news. However, it is worth noting that US crude production fell for the 3rd wek in the last 4 to its lowest in over 3 months. This is the biggest 4-week production decline since Oct 2013.

Now that the PBoC has created a situation where it’s forced to prop up the yuan via open FX ops just about as often as it’s forced to prop up the SHCOMP via China Securities Finance, concerns are growing about liquidity and a severe tightening of money markets, prompting the PBoC to inject hundreds of billions in emergency funding.

After yesterday's slamming efforts, precious metals are well bid this morning following the USD flash crash this morning. Silver has regained yesterday's losses and gold is hitting one month highs...

Amid heavy volume at the open, US equity markets are rapidly reverting to Monday's lows. The Dow is now down 200 points from the Monday highs. Having seen the biggest squeeze on Monday, small caps are leading the plunge.

A rate hike is coming. It is coming because the economy is not in crisis and zero rates are crisis rates, Bloomberg’s Richard Breslow writes. It is coming because the benefits of starting down the path to monetary policy normality are vitally important to the future health of the economy and restoring the Fed’s reaction function. The world can share the benefits and the costs. But one thing we do know, is that with all the hinting and polling and talk of trajectory, it is not priced in.

Because nothing says "sell bonds" like a dismally low inflation print. From the moment CPI printed (lower than expected), Treasury yields started to rise and accelerate higher as traders reflect on the chances of a delayed Fed rate hike... bad-enough news is bad news for bonds (for now) and stocks...

Turkey’s lira is once again in free fall, after testing all-time lows against the dollar during multiple sessions of late as political turmoil and civil war wreak havoc on the currency. As BofAML notes, "now that the CBT has left rates unchanged and announced that it will largely rely on selling more FX to tame volatility in FX market while waiting Fed to hike first, TRY still remains a fair game."