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Frontrunning: December 1

  • Global Stocks Edge Higher on Expected ECB Stimulus (WSJ)
  • Moment of truth as Puerto Rico faces crucial debt payment (Reuters)
  • Obama urges Turkey to reduce tensions with Russia, stresses support (Reuters)
  • Russian Media Takes Aim at Turkey (WSJ)
  • Support Grows for U.S. Commando Raids to Fight Islamic State (BBG)
  • Yuan Drops as SDR Approval Seen Prompting PBOC to Reduce Support (BBG)
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Seeking A Savior

It’s an unfortunate truth that, when people are worried about the future, they often put their faith in politicians to somehow make everything better. The hard truth, however, is that if we have a savior, he is the man in the mirror. If we are to be saved, we alone must do the research, make the plans, vote with our feet, and establish our own liberty.

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The Lull Before The Storm - An Ideal Chance To Exit The Casino, Part 1

Last night’s Asia action brought another warning that the global deflation cycle is accelerating. Iron ore broke below $40 per ton for the first time since the central banks kicked off the world’s credit based growth binge two decades ago; it’s now down 40% this year and 80% from its 2011-212 peak. This implosion of demand cannot be remedied with another round of central bank money printing because the world is already at peak debt. Accordingly,  global corporate profit cycle is heading into a deep downturn, just as the equity markets go into a final spasm of levitation based on a handful of big cap stocks.

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Market Panics After Arrest Of Brazilian Lawmaker: "Never Have We Had So Little Certainty About Tomorrow"

Last week's arrest of Latin America's most prominent investment banker sent shares of BTG Pactual plunging as investors pulled a third of their money from the firm's fixed income funds. As shocking as Andre Esteves' detention most assuredly was, analysts say the real risk may stem from the investigation into Rousseff's "guy" in the Senate, Delcidio Amaral, who was also detained last Wednesday. As Bloomberg reports, Amaral's "arrest not only delayed government efforts to resolve this year’s budget dispute, but it also dispelled a long-held belief that sitting lawmakers are all but untouchable because of a quirk in Brazilian law that affords politicians special treatment in criminal investigations." 

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Futures Rebound On Latest Chinese Intervention, Renewed Hopes For "Moar From Mario"

Without a rerun of last Friday's Chinese stock market rout, European traders could focus on what "really matters", namely how much of the ECB's upcoming 20 bps rate cut and €20 billion QE expansion (with Commerzbank saying Draghi may even hint at Europe's QE3) is priced in, and whether the ECB's actions are just modestly priced in, or more than fully, and just how big the "sell the news" event will be.The result: the Euro falls to a new 7 month low, the dollar spot index hits a new all time high, and European stocks and US futures stage another remarkable overnight comeback on the usual low volume levitation and central bank intervention.

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And The 'Fakest' Country In The World Is...

If America is so 'exceptional' why is it the world's leader in needing to 'change'...

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Frontrunning: November 27

  • Russia Takes Aim at Turkish Economy Amid Fighter-Jet Spat (WSJ)
  • ‘Commercial scale’ oil smuggling into Turkey becomes priority target of anti-ISIS strikes (RT)
  • Russia-Turkey Ties Are Headed Into a Deep Freeze (WSJ)
  • France signals softer stance on Assad after Russia talks (FT)
  • China Calm Shattered as Brokerage Probe Sparks Selloff in Stocks (BBG)
  • China Stock Bulls Hit Breaking Point as State Dials Back Support (BBG)
  • China's Bond Stresses Mount as Two More Companies Flag Concerns (BBG)
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"There Are No More Dollars In The Central Bank": Argentina's New President Confronts Liquidity Crisis

On Monday, Mauricio Macri, the son of Italian-born construction tycoon Francesco Macri, beat out Cristina Kirchner’s handpicked successor Daniel Scioli for Argentina’s presidency in what amounted to a referendum on 12 years of Peronist rule. Now, Macri faces a trio of daunting tasks: i) restore central bank liquidity, ii) implement a new FX regime, and iii) tackle the ballooning budget deficit. The most most pressing concern: the central bank is literally out of dollars. 

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CEO Of Brazil's "Goldman Sachs" Is Arrested

Here is a sight that will never be seen in the US: the CEO of the country's largest investment bank arrested and perp walked after accusation we was part of the nation's largest corruption scandal.

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Frontrunning: November 25

  • European stocks up, oil slides as concerns ease over Russia-Turkey tension (Reuters)
  • ECB discusses two-tiered bank charges, broader bond buys (Reuters)
  • New agonies, alliances as Fed debates post-liftoff plan (Reuters)
  • A New Military Power Rises in the Mideast, Courtesy of One Man (BBG)
  • Russia's Gazprom says halts gas supplies to Ukraine over payment (Reuters)
  • Other central banks set to act, but Swiss policy cupboard bare (Reuters)
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"Your Debt Bubble Is Here" - The Updated Leverage Cycle Map

Wondering where the world's economies are in the leverage cycle? Well, wonder no more. SocGen is out with its updated "leverage clock" which shows you where the bank thinks everyone falls in terms of ticking debt time bombs. As you'll see, SocGen's assessment is quite generous...

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Saudi De-Peg Looms As FX Market Signals Loudest "Black Swan Warning" In 13 Years

As we noted recently, BofAML fears "a depeg of the Saudi riyal is the number one black-swan event for the global oil market in 2016," adding that it is "a highly unlikely but highly impactful risk." Given the recent action in Saudi Riyal forwards - the market's best guess at where the oil-ruch nation's currency will trade in the future - the chance of the black swan 'de-peg' is its highest since 2002. Besides this morning's "whatever it takes" moment, which oil markets quickly shrugged off, amid heavy subsidies to keep the people calm and the costs of wars in Yemen (and more in Syria), weak oil revenues leave The Sauds with few options (outside of the load the nation with ever more debt program): It's either stop it with the whole flooding an oversupplied market strategy, or let the peg fall before reserves runs dry.

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A Year Of "Pain Trades" And Flash Crashes: 2015 Summarized In 10 Bullet Points

2015 ends with the market cap of Amazon & Google exceeding that of every single Chinese company in the MSCI China index… the US stock market a mere 107 trading days away from becoming the 2nd longest bull market of all-time, with equity leadership driven by “growth” (longest duration of outperformance ever) & “quality” (at all-time relative high)… and $6trn of negatively-yielding government bonds, $17trn of bonds yielding <1%, and the Fed expected to raise the Fed funds rates for the 1st time since 2006.

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