• Bruce Krasting
    12/18/2014 - 21:42
      The one thing that Jordan can't do in this war is appear to be weak.
  • Marc To Market
    12/20/2014 - 12:21
    When the dollar falls, we are told it is logical.  The empire is crashing and burning.  When the dollar rises, the markets, we are told are manipulated.    Well, the dollar is...

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Janet Yellen's Last (Considerably Confused) FOMC Press Conference Of 2014 - Live Webcast

Having added further confusion to the markets by keeping "considerable" and adding "patient", suffered 3 dissents (1 dove, 2 hawks), and explaining that the energy price drop is "transitory", we suspect Fed Chair Janet Yellen will have some 'splainin' to do during today's press conference. Is "patient" longer than "considerable time" and just what (Dow Jones Industrial Average) data is the Fed dependent on now?



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The December "Dots"... Drop

Presenting the quarterly change of the Fed's "dot plot", showing where the Fed thinks the Fed Funds rate will be at the end of 2016. The Fed is so hawkish about the upcoming rate hikes, that since September, when the median dot was at at 2.875%, the dots, "surprisingly", have declined across the board and now have a median of 2.50%.



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Complexity Of Fed Message Resumes Rising: FOMC Words Increase From 707 To 734

Just when you thought it was safe to assume The Fed had any kind of handle on things, they ramp up the confusion level and generate more words than last month to explain their machinations. Though well below the peak confusion levels of September, we hope the trend is not rising again...

 



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No More "Considerable Time" - Meet The New, "Patient" Fed

With expectations that the FOMC would drop "considerable time," ignore foreign market instability, and shrug off HY credit's demise (as they had previously said it was a bubble), the members did not let anyone down...

  • *FOMC SAYS IT CAN BE 'PATIENT' IN APPROACH TO RAISING RATES
  • *FOMC DECLINES TO MENTION RECENT GLOBAL MARKET INSTABILITY
  • *FOMC SAYS PATIENT APPROACH 'CONSISTENT WITH OCT. STATEMENT'
  • *FISHER, PLOSSER, KOCHERLAKOTA DISSENT IN FOMC DECISION

For the 3rd FOMC meeting in a row, equity markets have surged (and decoupled from bonds); we will soon see if history repeats a third time.

Pre-FOMC: S&P Futs: 1988.00, 10Y 2010%, Gold $1195, WTI $57.50



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Surprise... Everyone Was Wrong About The End Of QE

Since the beginning of this year, Wall Street economists and analysts have been consistently prognosticating that following the Federal Reserve's latest bond buying campaign, economic growth would gather steam and interest rates would begin to rise. This has consistently been the wrong call. The recent decline in interest rates should really not be a surprise as there is little evidence that current rates of economic growth are set to increase markedly anytime soon. Consumers are still heavily levered; wage growth remains anemic, and business owners are still operating on an "as needed basis." This "economic reality" continues to constrain the ability of the economy to grow organically at strong enough rates to sustain higher interest rates. This is a point that seems to be lost on most economists who forget that the Federal Reserve has been pumping in trillions of dollars of liquidity into the economy to pull forward future consumption.



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New York Governor Cuomo Does Saudi Bidding, Bans Fracking In NY State

Having missed the entire shale boom, and with heavily-indebted shale companies now scrambling to boost liquidity or else face bankruptcy if crude prices remain at current levels, moments ago - in the latest example of blatant populist pandering -  New York Governor Andrew Cuomo said Wednesday his administration would prohibit hydraulic fracturing statewide, citing health concerns and calling the economic benefits to drilling there limited.  “I cannot support high-volume hydraulic fracturing in the great state of New York,” acting health commissioner Howard Zucker said, adding that he wouldn’t allow his own children to live near a fracking site. He said the “cumulative concerns” about fracking “give me reason to pause.”



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Why It's So Hard Being A Fed Decision-Maker

"consistency"



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Greek Prime Minister Fails To Get Enough Votes To Elect President, Has Less Support Than Expected

As previewed earlier today, in a vote whose outcome was widely anticipated, Greece's Samaras failed to get enough votes (200) to push through his choice for president, Stavros Dimas.

  • GREECE'S SAMARAS FAILS TO GET VOTES TO ELECT PRESIDENT: TALLY
  • GREECE'S SAMARAS LOSES FIRST OF THREE DEC. VOTES ON PRESIDENT

As a reminder, this is the first of three votes, in which the candidate needs 200 votes. ND and PASOK have together 155 seats in the Parliament, and they expected to win some votes from independent MPs and possibly also some votes from Independent Greeks and Democratic Left MPs. According to Greek media, the government expects to win a total of 162-165 votes for Dimas in the first round. The final vote: 160 For, 135 Against, and 5 Abstain. In other words, Samaras is a crucial 20 votes short of getting his candidate pushed through in 2 weeks, after which follow a messy election that according to recent polls may well be won by left-wing Syriza and its anti-bailout leader, Samaras.



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59% Of Americans Support Post-9/11 Torture – Propaganda, Cultural Sickness, Or Both?

"By an almost 2-1 margin, or 59-to-31 percent, those interviewed support the CIA’s brutal methods, with the vast majority of supporters saying they produced valuable intelligence." Does this confirm the total degeneration of American culture into a collective of chicken-hawk, unthinking, statist war-mongering automatons? Alternatively, does it merely reflect the effectiveness of corporate-government propaganda? Is it a combination of both?



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WTI Crude Spikes Over $59, Up 9% From Lows: Biggest Intraday Swing Since April 2009

No obvious catalyst yet, aside from pure triple-witching anticipatory stop runs, but:

WTI CLIMBS AS MUCH AS 5.5%; BRENT GAINS AS MUCH AS 5.8%

Lifting WTI over $59 and Brent over $63. In fact, the $9 surge from the lows is the biggest move in crude since April 2009!



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Energy Stocks & Credit Decouple As Significant "Short Squeeze" Lifts Market

Surprise! "Most Shorted" stocks are surging today - up over 1.7%, almost double the performance of the broad market as it appears energy stocks, following a modest bounce in crude prices, have ripped a stunning 4.4% higher on the day. The credit market, however, is not so excited... We will see who is right!



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President Obama "Normalizes" Relations With Cuba, Opens Diplomatic Channels; USAID Chief Resigns - Live Feed

“It is clear that decades of U.S. isolation of Cuba have failed to accomplish our enduring objective of promoting the emergence of a democratic, prosperous, and stable Cuba,” White House says in statement. So sanctions don't work?

Rajiv Shah, the administrator for the U.S. Agency for International Development, oversaw secret US programs aimed at regime change in Cuba, abruptly resigned on Wednesday after US and Cuba announced plans to normalize relations and exchange prisoners.



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Bob Janjuah: Forget Rate Hikes, "We May Well Need QE4 From The Fed"

I realise that it is not normal to have a bearish risk view for December through to mid-January. Normally markets tend to ramp up in December and early January before selling off later in January. But this year I do think things are different. One look at the moves in core bond markets over 2014, when almost everyone I talked to had been bearish bonds, paints a stunning picture. I would entitle this picture ‘The Victory of Deflation’, or (as many folks now talk about (but still generally dismiss)) ‘The Japanification of the World’. I may end up eating my words in 2015 if the US consumer does come through, but if he or she does not, then we may well need QE4 from the Fed to battle the incredibly strong headwinds of deflation around the world. And I will revert on this subject, but to me the coming ECB QE and more BOJ QE are woefully inadequate substitutes for USD Fed QE.



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Soaring Inflation Around The Globe: Cartier Hikes Russian Prices By 50%, Suntory Whiskey Prices Surge 25% In Japan

As the Fed continues to rely on seasonally-adjusted survey data to validate its belief that the time to hike rates is coming, even as market-implied inflation swap rates are back to 2008 levels, the one thing that continues to happen everywhere but in the US is precisely what the Fed wishes for the US (as we reported yesterday): devaluaing currencies and spiking inflation (and expectations), without any accompanying rise in wages, have lead consumers to a buying frenzy in Russia, and to a far lesser extent Japan. As a result, providers of products and services in these countries have been scrambling to match prices to demand, especially since the demand is purely the result demand brought forward due to plunging currencies, not the result of some magical source of widespread wealth. Case in point, Cartier, the luxury jewelery maker, raised its Russian prices by as much as 50 percent after the ruble plunged to a record low.



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"Oil May Drop To $25 On Chinese Demand Plunge, Supply Glut, Ageing Boomers"

Most commentators remain in a state of denial about the enormity of the price fall underway. Some, failing to understand the powerful forces now unleashed, even believe prices may quickly recover. Our view is that oil prices are likely to continue falling to $50/bbl and probably lower in H1 2015, in the absence of OPEC cutbacks or other supply disruption. Critically, China’s slowdown under President Xi’s New Normal economic policy means its demand growth will be a fraction of that seen in the past. This will create a demand shock equivalent to the supply shock seen in 1973 during the Arab oil boycott. Today's ageing Boomers mean that demand is weakening at a time when the world faces an energy supply glut. This will effectively reverse the 1973 position and lead to the arrival of a deflationary mindset.... Prices have so far fallen $40/bbl from $105/bbl since we first argued in mid-August that a Great Unwinding was now underway. And there have been no production cutbacks around the world in response, or sudden jumps in demand. So prices may well need to fall the same amount again.



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