Creditors

As oil prices wallow near multi-year lows, it’s becoming increasingly clear that the new cartel controlling oil prices is not OPEC but world credit markets. From Saudi Arabia’s record $100 billion deficit to shale oil’s continuing reliance on cheap credit funding, it’s clear that no major oil producer or company in the world right now is economically self-sufficient based on oil revenues alone. This situation has left the flow of oil and the decision on when to stop pumping the increasingly tarnished black gold in the hands of banks rather than oil men.

“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.”

If you are an institutional investor and you bought Novo Banco bonds, you just had a bad morning...

Thus ends KaloBios' "turnaround in progress" - two months after it was dragged out of bankruptcy by Martin Shkreli in an attempt to crush the company's shorts and unleash a massive squeeze, Kalobios is again, well, bankrupt.

With just two days left in 2015, the main driver of overnight global stocks and US equity futures remains the most familiar one of all of 2015 - crude oil, which, after its latest torrid bounce yesterday has resumed the familiar "yoyo" mode, and again stumbled dropping below $37 on yesterday's surprising API 2.9 million crude inventory build, as well several more long-term "forecasts" by OPEC members, with Kuwait now budgeting for $30 oil, while Venezuela's Maduro said the oil price fell to $28/bbl and is "headed downward." As a result U.S. futures declined and European stocks fell, extending their worst December drop since 2002 in thin volume on the last full trading day of the year.

As the ruble plunges to record lows against the dollar, we take a close look at the outlook for inflation and GDP growth in 2016 in the context of The Kremlin's budget, which assumes $50/bbl crude. We also ask whether the deficit - expected to balloon to 4.4% of GDP in the event oil hovers around $35/bbl - will grow as a result of a planned bailout for insolvent state lender VEB. 

"Moody's downgrades Noble Group to Ba1; outlook negative.... "The downgrade of Noble's ratings reflects Moody's concerns over the company's liquidity," says Joe Morrison, a Moody's Vice President and Senior Credit Officer. The Ba1 ratings also reflect low levels of profitability and consistent negative free cash flow from core operating activities, which exclude proceeds from asset sales."

Santa Claus is cutting it close: after stocks closed down yesterday, and just fractionally red for the year, the jolly old gift-giver (who now has activist investors breathing down his neck) has just three trading days to push if not stocks then the market into the green for the year. And so far, so good, with US equity futures rising by 8 points or 0.4%, on the back of some modest renewed Dollar strength but mostly on oil, which after yesterday's big slide, has managed to stem the decline and is up fractionally, just under $37, along with other commodities if not copper, which falls for second day.

• Global Stocks Take Breather After Oil-Fueled Rally (WSJ)
• Junk Investors Evade the Trade (WSJ)
• How the Third Avenue Fund Melted Down (WSJ)
• Oil Traders Set to Pounce as U.S. Prepares to Lift Export Ban (BBG)
• JPMorgan Says Japan Inc. Must Prepare for Yen Below 100 a Dollar (BBG)

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.

"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."

Speaking to Slovak news agency TASR on December 15h, President Milos Zeman said that he was "extremely disappointed that the summer negotiations between Greece and creditors did not ultimately lead to Greece’s exit from the euro area, although it looked quite possible." Greece had an immediate response: it recalled its ambassador to Prague. 

Despite every effort by The Fed to convince the world that everything is awesome, it's not. From China growth risks to concerns about tightening financial conditions, Goldman warns so-called 'grey swan' fears are rising with Brexit, Trumpe elected, widening terrorist threats, and increased protectionism the most impactful.