Once again we feel the close tug of systemic illiquidity as it transcends the usual noise about assurances to ignore or trivialize all this growing uncertainty. Even though stocks and other assets have been trading in their own world mostly free from all this more hidden esoterica, the full weight of this analysis suggests that can’t be more than a temporary deviation. Since it is the angle of economy that is ultimately driving all of this, everything depends upon a global economy that has already been beaten down far past anticipation.
Venezuela is at a political crossroads, with an all-important parliamentary election set to take place in December. Meanwhile, the Venezuelan economy continues to deteriorate as the state seeks to stave off default and a brewing financial crisis. Late last month, Brazil withdrew its involvement in election monitoring after Venezuela rejected the officials Brazil put forward. Maduro is doing his best to keep international observers from scrutinizing the election. The election will take place just as the OPEC meeting will be wrapping up in Vienna, which is expected to yield few benefits for Venezuela. All signs point to OPEC continuing its market share strategy, keeping a lid on any substantial price rebound in the short-run. That does not bode well for Venezuela as it teeters on the brink of catastrophe.
Global Stocks Fall For 5th Day On Disturbing Chinese Inflation Data; Renewed Rate Hike Fears; Copper At 6 Year LowSubmitted by Tyler Durden on 11/10/2015 06:58 -0500
The ongoing failure of China to achieve any stabilization in its economy, after already cutting interest rates six times in the past year, and the prospect of a U.S. interest rate hike in December, had made markets increasingly jittery and worried which is not only why the S&P 500 Index had its biggest drop in a month, but thanks to the soaring dollar emerging market stocks are falling for a fourth day - led by China - bringing their decline in that period to almost 4 percent, and the global stock index down for a 5th consecutive day.
"Overnight if we were to eliminate tariffs on imports, we would likely see the dairy sector in Canada, and perhaps the poultry and egg sectors, collapse overnight."
Venezuela Default Countdown Begins: After Selling Billions In Gold, Caracas Raids $467 Million In IMF ReservesSubmitted by Tyler Durden on 11/09/2015 18:43 -0500
While ridiculous, Venezuela's decision to liquidate some of its gold is perhaps understandable under the circumstances: Venezulea relies on crude oil for 95% of its export revenue, and with prices refusing to rebound, the only question is when do all those CDS which price in a Venezuela default finally get paid. What is even more understandable is what Venezuela should have done in the first place before dumping a fifth of its gold, but got to do eventually, namely raiding all of the IMF capital held under its name in a special SDR reserve account.
Last week, under pressure from companies including Buffett’s BNSF - which has spent more money lobbying Congress this year than any other railroad - U.S. legislators passed, and President Obama signed, a law that delays the so-called positive train control mandate. That means railroad operators can put off having to buy and install equipment that safety advocates say would have prevented accidents that have claimed more than 245 lives and caused over 4,200 injuries since the NTSB began calling for the technology in 1969.
The Oil Wars Heat Up: Russia, Iraq Steal Saudi Market Share While Oman Blasts OPEC As "Irresponsible"Submitted by Tyler Durden on 11/09/2015 14:30 -0500
Having dramatically converged to the tumbling price of WTI Crude, Trannies are jumping dramatically after Bloomberg runs the following flashing-red headline: *CANADIAN PACIFIC SAID TO EXPLORE TAKEOVER OF NORFOLK SOUTHERN. Amid crashing railcar loadings (down over 23% YoY - worst since the financial crisis), this 'syngery' may make some sense but will likely only mean moar layoffs as "two wrongs do not make a right."
Moments ago in what we initially thought was a joke, abc9 reported that close to two dozen train cars derailed after a crash Monday morning. Lt. Brett Grimshaw of the Des Moines County Sheriff’s Office said the crash happened a little after 8 a.m. when a coal train hit a road grader that had been backed up onto the tracks. And before you ask, yes, this train, too, belongs to BNSF, which in turn belongs to Warren Buffett,
Oil was already weak this morning but the release of Genscape estimates of yet another siazable inventory build (1.8 million barrels) appears to have kicked the down-leg a notch lower. The overnight flash-crash lows are now in sight at WTI Crude trades with a $43 handle once again (and Dow Transports converge lower).
Commodity pices are crumbling this morning as more jawboning of a "big cut" from The ECB has sparked further EUR weakness and thus USD strength (EURUSD 1.0740). WTI's morning bounce (after flash-crashing at the Asia open) has been erased and new lows are looming. Silver is back at a $14 handle and Gold is holding below $1100.
- Global Stocks Slip Lower (WSJ)
- Dollar sits pretty, bond yields rise as Fed bets firm (Reuters)
- Takeover Loans Have Few Takers on Wall Street (WSJ)
- Chinese Buyers Seek Dollar Assets as Promise of Yuan Gains Fades (BBG)
- Banking Giants Learn Cost of Preventing Another Lehman Moment (BBG)
- Eurozone Finance Ministers Won’t Release $2.15 billion Loan to Greece (WSJ)
Once again, the two major macroeconomic announcements over the weekend came from China, where we first saw an unexpected, if still to be confirmed, increase in FX reserves, and then Chinese trade data once again disappointed tumbling by 6.9% while imports plunged 18.8%. So how did the market react? The Shanghai Composite Index rose for a fourth day and reached its highest since August 20because more bad data means more easing from the PBOC, and just to give what few investors are left the green light to come back into the pool, overnight Chinese brokers soared after Chinese IPOs returned after a 5 month hiatus. Elsewhere, Stocks and currencies in emerging markets slump on prospect of higher U.S. borrowing costs before year-end and after data underscored slowdown in Asia’s biggest economy. Euro strengthens.
With crude stocks moving up solidly despite inventories being still almost one-third above the “cycle” trend from 2009 through 2014, the economics of that behavior suggest the opposite of what the FOMC would like to project. And that would seem to bridge the eurodollar curve’s front and back ends, aligning it with commodities more generally. In that view, eurodollar futures are suggesting exactly what they have been for almost a year and a half – that the Fed might or might not act, but if they do it won’t alter the economic course but only wield the potential to make a bad (and growing more so) physical and general economy situation that much worse.
China's exports fell for the fourth consecutive month in October as evidence of collapsing global demand and trade continues to pile up. “A lot of Westerners think this helped us out a lot. But the 2% depreciation actually hurt us. It was in every newspaper and customers called us within hours pushing for 6% discount, so we had to give them 4%."