The US data flow is relatively light which is typical of a post-payrolls week but it’s worth noting wholesale inventories on Tuesday and retail sales on Thursday. Importantly US House and senate negotiators are supposed to come to an agreement on a budget before the December 13th deadline. A lot of optimism has been expressed thus far from members of congress, and there are reports that a budget deal will be unveiled this week.
Iran's Rouhani: "We Are Not Dismantling Our Nuclear Facilities; Iran Will Maintain Its Uranium Enrichment Programme"Submitted by Tyler Durden on 11/29/2013 16:27 -0500
In case there was any confusion just how "historic" last week's agreement with Iran, loudly trumpeted by the Obama administration as the most "historic" since Syria in a, well, long time, truly was in terms of curbing Iran's nuclear ambitions, here is the explanation straight from the horse's mouth i.e., Iran president Hassan Rouhani who spoke today in an interview with the FT. "Mr Rouhani struck a tough line on Iran’s expectations over a comprehensive nuclear deal to be negotiated following last weekend’s landmark interim pact. “One hundred per cent [no],” he said when asked about dismantling nuclear facilities." So ixnay on the ismantleday. What about halting Uranium enrichment - that other pillar of Obama (and Hollande's of course) historic agreement? "[Rouhani] made clear that Tehran was determined to maintain a uranium enrichment programme for peaceful purposes." In other words, Iran will continue doing what it said it did before, only this time it will get billions of implicit subsidies as various embargoes are lifted.
While moderate recovery in growth and inflation is BofAML's rates team's base case, there are numerous risks to that forecast. The risk of tapering is already quite well known and they suspect it may not result in the significant market-moving event many expect when it actually happens; however, the following downside and upside risks threaten BofAML's central scenarios for 2014 as well.
Predictions for 2014 from a cold war spy
We are sure it was all planned a long time ago but the irony is not lost on us. A day after the US pisses the Israelis off with a sorta kinda deal with Iran, for the first time in Israel’s history, the Israel Air Force launched the “Blue Flag” training exercise – an international air force exercise with participation by the US, Italian and Greek air forces.
The video covers the race to debase and the manipulation of precious metal prices: "They can mess around with the price all they want, ultimately the price of everything in the long term will be dictated by supply and demand, particulary for a physical commodity like gold".
Another day, another carry currency-driven futures melt-up to daily record highs (the all important EURJPY soared overnight on the return of the now standard overnight Japanese jawboning of the JPY which sent the EURJPY just shy of a new 4 year high of 138 overnight), and another attempt by the ECB to have its record high market cake, and eat a lower Euro too (recall DB's said the "pain threshold" for the EUR/USD exchange rate - the level at which further appreciation impairs competitiveness and economic recovery - is $1.79 for Germany, $1.24 for France, and $1.17 for Italy) this time with ECB's Hansson repeating the generic talking point that the ECB is technically ready for negative deposit rates. However, with the halflife on such "threats" now measured in the minutes, and soon seconds, the European central bank will have to come up with something more original and creative soon, especially since the EURJPY can't really rise much more without really crushing European trade further.
"We, the German Fuhrer and Chancellor, and the British Prime Minister, have had a further meeting today and are agreed in recognizing that the question of Anglo-German relations is of the first importance for our two countries and for Europe. We regard the agreement signed last night and the Anglo-German Naval Agreement as symbolic of the desire of our two peoples never to go to war with one another again. We are resolved that the method of consultation shall be the method adopted to deal with any other questions that may concern our two countries, and we are determined to continue our efforts to remove possible sources of difference, and thus to contribute to assure the peace of Europe. My good friends, for the second time in our history, a British Prime Minister has returned from Germany bringing peace with honor. I believe it is "peace for our time." Go home and get a nice quiet sleep." - Neville Chamberlain, September 30, 1938
UPDATE: Details of the deal are emerging including $4.2bn in FX
Despite earlier denials from Iran's Deputy FinMin, EU, Iran, and US officials have confirmed:
- *IRAN NUCLEAR ACCORD WITH WORLD POWERS ENDS 10-YEAR DEADLOCK
- *IRAN WILL HALT 20% ENRICHMENT FOR 6 MONTHS, FARS REPORTS
- *IRAN AGREEMENT DOESN'T FORMALLY RECOGNIZE RIGHT TO ENRICH
- *IRAN AGREEMENT WILL STILL ALLOW IRAN TO ENRICH URANIUM
- *IRAN INTERIM AGREEMENT FREEZES ADDITIONAL SANCTIONS
- *IRAN DEAL LIFTS TRANSPORT AND INSURANCE SANCTIONS ON OIL
There are no details yet - but an interim agreement has been reached to 'roll back' some of Iran's nuclear program in exchange for a lifting of some sanctions. Close U.S. ally Israel opposes the deal as too generous to an enemy it sees as a mortal threat. Israel is not a party to the talks. President Obama will address the nation at 1015ET to take a victory lap (perhaps this foreign victory will lift his domestic approval rating off record lows)...
It is hard to believe that the end of the year is fast approaching. This weekend's list of things to ponder covers a range of issues that caught our attention this week. Will the economy continue to grow, are stocks under owned, what about Fed - rising credit risk (and collapsing credit risk premia) and the question of "when or if to taper?" These are all important questions that all investors must answer as the new year rapidly approaches.
The U.S. Is Sending Americans’ Confidential Info Abroad … For the Same Reason It’s Outsourcing Torture to Foreign GovernmentsSubmitted by George Washington on 11/21/2013 14:40 -0500
Outsourcing the NSA’s Dirty Deeds In An Attempt to Create Plausible Deniability
China Fires Shot Across Petrodollar Bow: Shanghai Futures Exchange May Price Crude Oil Futures In YuanSubmitted by Tyler Durden on 11/21/2013 08:23 -0500
With the US shale revolution set to make America the largest exporter of crude, however briefly, the influence of Saudi oil is rapidly declining. This has been felt most recently in the cold shoulder the US gave Saudi Arabia and Qatar first over the Syrian debacle, and subsequently in its overtures to break the ice with Iran over the stern objections of Israel and the Saudi lobby (for a good example of this the most recent soundbites by Prince bin Talal ). But despite the shifting commodity winds and the superficial political jawboning, the reality is that nothing threatens the US dollar's hegemony in what many claim is the biggest pillar of the currency's reserve status - the petrodollar, which literally makes the USD the only currency in which energy-strapped countries can transact in to purchase energy. This may be changing soon following news that the Shanghai Futures Exchange could price its crude oil futures contract in yuan, its chairman said on Thursday, adding that the bourse is speeding up preparatory work to secure regulatory approvals.
The following Top Ten Market Themes, represent the broad list of macro themes from Goldman Sachs' economic outlook that they think will dominate markets in 2014.
- Showtime for the US/DM Recovery
- Forward guidance harder in an above-trend world
- Earn the DM equity risk premium, hedge the risk
- Good carry, bad carry
- The race to the exit kicks off
- Decision time for the ‘high-flyers’
- Still not your older brother’s EM...
- ...but EM differentiation to continue
- Commodity downside risks grow
- Stable China may be good enough
They summarize their positive growth expectations: if and when the period of stability will give way to bigger directional moves largely depends on how re-accelerating growth forces the hands of central banks to move ahead of everybody else. And, in practice, that boils down to the question of whether the Fed will be able to prevent the short end from selling off; i.e. it's all about the Fed.
After the DJIA and S&P briefly crossed the key resistance levels of 16000 and 1800, the upper bound on the markets has been looking increasingly more distant and this morning's lack of an overnight ramp only makes it more so. Perhaps the biggest concern, however, is that with both Yellen and Bernanke on the tape yesterday, the S&P still was unable to close green. This follows on Monday's double POMO day when the S&P once again closed... red. Not helping things was the overnight announcement by the Japanese government pension fund, the GPIF, in which the fund announced it would lower its bond allocation further however the new law to reform the GPIF could be written by spring 2015. This was hardly as exciting as the market had expected, and as a result both the USDJPY and the ES-moving EURJPY find themselves at overnight lows. Will the EURJPY engage in its usual post 8 am ramp - keep a close eye, especially since the usual morning gold and silver slam down just took place.
Pushing the neo-liberal argument further than it wants to go, with interesting results.