Bond

After a furious three day "dash for trash", no volume, no breadth, commodity-driven rally, even Santa is now exhausted and overnight US equity index futures were little changed with European and Asian shares mixed. The dollar has declines as gold, silver gain, with WTI initially continuing its recent meteoric rise (up over 8% in the past three days, nearly hitting $38), only to reverse and give up all overnight gains moments ago. Copper falls after Chinese stocks see a second day of weakness, down 0.7% while an unexpected tumble in the USDJPY to 7 weeks lows has dragged the Nikkei (-0.5%) and its futures down.

When the word 'bloodbath' just doesn't quite sum it up, distressed debt investors's bonuses have been obliterated in 2015. Despite seeking safety away from oil and coal companies, one trader exclaimed, the pain is "like cancer, it's spreading throughout the body," as every industry from materials to retail and industrials has collapsed... though, as Bloomberg reports, some investments stood out in their awfulness.

At the end of the day, the Fed led central bank money printing spree of the past two decades resulted in what is functionally a massive dollar short. Once the Fed stopped expanding its balance sheet when QE officially ended in October 2014, it was only a matter of time before all the “near-dollars” of the world would come under enormous downward pressure in the FX markets. Our Keynesian witch doctors believe that sinking currencies are a wonderful thing, of course. They claim making your country poorer is a good way to stimulate export growth and a virtuous cycle of spending and growth. But there is another thing. It is also a good way to generate capital flight and the ensuing chaos that creates.

Good things are coming for beaten-down commodity investors in 2016...

"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."

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.

With the market now back to oversold conditions and redemptions complete, it is now or never for the traditional “Santa Rally.” Statistically speaking, the odds are high that the market will muster a rally over the next couple of weeks. While the short-term trends are indeed still bullishly-biased, the longer-term analysis (monthly) reveals a more dangerous picture emerging.

Needless to say, these names are just the beginning: once the redemptions - and gating - genie is out of the bottle, there is no putting it back.

Since our Keynesian central bankers have no clue that their prodigious money printing resulted in the drastic underpricing of credit and capital over the course of the past two decades, they are flying blind. They simply fail to see that the global economy is now swamped in more excess capacity than at any time since the 1930s, and probably even then. So they keep expecting the commodity cycle to momentarily bottom and prices to rebound, thereby reflating CapEx and household spending.

• Battered oil wins respite, lifts stocks (Reuters)
• Oil Halts Decline as Emerging Market Stocks Climb on China (BBG)
• Bonds Set to Beat Stocks Globally in 2015 After China Falters (BBG)
• SpaceX Falcon rocket nails safe landing in pivotal space feat (Reuters)
• China Leaders Flag More Stimulus After Top Economic Meeting (BBG)
• SEC to Retrench Case Against SAC’s Steven A. Cohen (WSJ)

It has been a seesaw session with U.S. stock index futures following their dramatic buying burst in the last half hour of market trading yesterday by first rising, then falling, then rising again alongside European equities both driven almost tick for tick with even the smallest move in the carry trade of choice, the USDJPY, even as Asian shares trade near intraday highs after China’s leaders signaled they will take further steps to support growth.

On Dec 16, Federal Chair Janet Yellen announced the Fed was raising the federal funds rate by 25 basis points. She will have to take it back.

There are many half-truths perpetrated on individuals by Wall Street to sell product, gain assets, etc. However, if individuals took a moment to think about it, the illogic of many of these arguments are readily apparent. The index is a mythical creature, like the Unicorn, and chasing it has historically led to disappointment. Investing is not a competition, and there are horrid consequences for treating it as such.

Janet, where is your accelerating economy?