Glencore

News That Matters

In a tragic, if very odd coincidence, a day after we postulated that the real "commodity-trader" risk may not be Glencore after all, but its just as vast, if even more levered competitor, Trafigura, moments ago the privately-held company (with publicly traded bonds), announced that its founder and biggest shareholder, french billionaire Claude Dauphin has died at the age of 64.

It takes ignorance on an almost unbelievable level to try to claim that “nothing is happening” in the financial world right now.

• Asia shares rally, but on track for worst quarterly loss in four years (Reuters)
• Global Rally Shows Relief at End of $11 Trillion Stocks Meltdown (BBG)
• Glencore Extends Rebound as Turmoil Shows Signs of Easing (BBG)
• Putin wins parliamentary backing for air strikes in Syria (Reuters)
• China Cuts Minimum Home Down Payment for First-Time Buyers (BBG)
• German Unemployment Unexpectedly Rises in Sign of Economic Risks (BBG)
• Japan Industrial Output Slide Hints at Recession (WSJ)

Terrible economic news is wonderful news for markets, all over again, and with the worst S&P500 quarter since 2011 set to close today, some horribly "great" news is just what the window-dressing hedge funds, most of whom are deeply underperforming the broader market (not to mention Dennis Gartman) ordered.

Asian markets are bouncing modestly off a weak US session, buoyed by more unbelievable propaganda from Japan. Abe's proclamations that "deflationary mindset" has been shrugged off was met with calls for more stimulus, more debt monetization, and an admission by Etsuro Honda (Abe's closest adviser) that Japan "is not growing positively" and more QE is required despite trillions of Yen in money-printing having failed miserably, warning that raising taxes to pay for extra budget "would be suicidal." Japanese data was a disaster with factory output unexpectedly dropping 0.5% and retail trade missing. Markets are relatively stable at the open as China margin debt drop sto a 9-month low. PBOC strengthened the Yuan fix for the 3rd day in a row to its strongest in 3 weeks.

News That Matters

When you tell people in self denial the market could drop 40% in a few months, they think you are crazy. They declare this could never happen. They would get out of the market before it would fall vertically. Their memories are conveniently short as their normalcy bias and cognitive dissonance blind them to what happened over three months in 2008/2009. We wonder how many willfully ignorant investors can handle a 50% to 70% haircut in their 401k, especially if they are over 50 years old. We wonder how much angrier the populace will become when the current recession results in more job losses, bankruptcies and revelations of Wall Street malfeasance. Beware of the bear.

Forget China, Volkswagen, Glencore, Noble, and pretty much everything else. The only catalyst that matters for today's price action has just been revealed. Earlier today, Dennis Gartman, whose flop-flip-flop-flipping calls on stocks, commodities and everything else have become a blur, just went mega bearish, and is predicting that the S&P has some 400 points of imminent downside.

convincing equity that company is viable is one thing (and the company and its sellside cheerleaders sure are trying).  Convincing the far more skeptical bond market, which is desperately trying to figure out the counterparty risk, will be far more difficult...

• Commodities in crisis as Asian shares tumble and shipper files for bankruptcy (Reuters)
• Global Rout Eases as S&P 500 Futures Advance With Oil, Glencore (BBG)
• Chinese Stocks Decline Most in a Month in Hong Kong on Economy (BBG)
• India cuts interest rates by more than expected (BBC)
• Glencore Rebounds as $50 Billion Plunge Is Seen as Excessive (BBG)
• How Congress May Have Saved Goldman Sachs From Itself (BBG)

It was a tale of two markets overnight: Asia first - where all commodity hell broke loose - and then Europe (and the US), where central banks did everything they could to stabilize the already terrible sentiment.