- Sovereign QE not working in Europe
- Emerging market capital flight
- Political risk/popularist governments
- US wage inflation
- Increased currency volatility
- Insurance against natural catastrophes
- Saudi Arabia’s New King Probably Will Not Change Current Oil Policy (BBG)
- Saudi King’s Death Clouds Already Tense Relationship With U.S. (WSJ)
- Oil Pares Gains as New Saudi King Says Policies Stable (BBG)
- Kuroda Says BOJ to Mull Fresh Options in Case of More Easing (BBG)
- U.S. pulls more staff from Yemen embassy amid deepening crisis (Reuters)
- Putin Said to Shrink Inner Circle as Hawks Beat Billionaires (BBG)
- A Few Savvy Investors Had Swiss Central Bank Figured Out (WSJ)
Euro Crash Continues Sending Stocks Higher, Yields To Record Lows; Crude Stabilizes On New King's CommentsSubmitted by Tyler Durden on 01/23/2015 07:03 -0500
Today's market action is largely a continuation of the QE relief rally, where - at least for the time being - the market bought the rumor for over 2 years and is desperate to show it can aslo buy the news. As a result, the European multiple-expansion based stock ramp has resumed with the Eurostoxx advancing for a 7th day to extend their highest level since Dec. 2007. As we showed yesterday, none of the equity action in Europe is based on fundamentals, but is the result of multiple expansion, with the PE on European equities now approaching 20x, a surge of nearly 70% in the past 2 years. But the real story is not in equities but in bonds where the perfectly expected frontrunning of some €800 billion in European debt issuance over the next year, taking more than 100% of European net supply, has hit new record level.
History proves a government can’t be fiscally responsible and the policeman of the world. All great empires were befallen by the inability of resources to keep up with ambition. From Alexander the Great to Rome to the great British Empire, hegemony doesn’t last forever. The U.S. government guarantees security to over 35 countries and has troops stationed in over 146 countries. Does such an astounding presence – completely unmatched by previous empires – really sound all that sensible?
"King Abdullah’s life spanned from before the birth of modern Saudi Arabia through its emergence as a critical force within the global economy and a leader among Arab and Islamic nations. He took bold steps in advancing the Arab Peace Initiative, an endeavor that will outlive him as an enduring contribution to the search for peace in the region. At home, King Abdullah's vision was dedicated to the education of his people and to greater engagement with the world."
After first falling ill and being hospitalized in December, Saudi Arabia officials have announced:
*SAUDI ARABIAN KING ABDULLAH DIES, CROWN PRINCE SALMAN SUCCEEDS: STATE TV
As we noted previously when considering this possibility, "a new King can do (almost) anything he wants, including changing oil policy." 79-year-old Crown Prince Salman has been named succesor (and has his own health issues - reportedly suffering from Dementia). Oil prices popped around 80c on the news.
In the short space of an hour - following weeks of battles and a recent standoff in Sana'a with Houthi rebels - all the well-laid plans of the US manipulators has gone astray:
*YEMEN GOVERNMENT RESIGNS, PRIME MINISTER PRESENTS RESIGNATION TO PRESIDENT AMID REBEL STANDOFF
*YEMEN PRESIDENT HADI HAS RESIGNED, AIDE SAYS
This comes after signing a short-term peace deal following an admission that they had lost control. And with oil-prices plunging once again, which means social instability in the middle east is about to explode making the Arab spring of 2011 seem like child's play by comparison, things around the globe are about to take a dramatic turn for the worse.
Led by first-time-buyers from The Middle East (up 23% year-over-year), the London-based auctioneer Christie's saw full-year sales hit record highs in 2014. As The FT reports, Christie's saw total sales rise 16%, topping $5bn for the first time driven by a 30% in 'new buyers' as central bank largesse leaked out of the 1% pockets. The Americas remained the primary driver of growth, accounting for 38% of sales and the largest proportion of new buyers. Thank you Mr. Yellen...
As we further showed, the bulk of foreign demand for New York's most expensive properties, originated in China, Russia and various other oligarch-controlled nations, where the impetus to launder illegally obtained hot money meant an impulse to buy US real estate sight unseen and virtually at any price. And all of it, of course, all cash. No mortgages. That onslaught of foreign oligarch demand is ending, and with it so is the bubble that luxurious New York real estate found itself in on the back of some $12 trillion in central bank liquidity created out of thin air in the past 6 years. Business Week cites Manhattan real estate agent Lisa Gustin who listed a four-bedroom Tribeca loft for $7.45 million in October, expecting a quick sale. Instead, she cut the price this month by $550,000. “I thought for sure a foreign buyer would come in"... They didn't.
We already did our post-mortem of last night's teleprompted annual evangelizing of Barack Obama's "straight to folks" propaganda that would make both Goebbels and Dzerzhinsky blush. So instead of repeating ourselves, here is AP with its own fact check of what can only be dubbed lie after lie, courtesy of the president of the "free world" and the head of the "most transparent administration ever."
World Leaders Demand "Central Bank Of Oil"; IMF Warns Price Drop Is Permanent; OPEC Expects "Rebound To Normal Soon"Submitted by Tyler Durden on 01/21/2015 10:17 -0500
Because nothing says 'stability' like a Central Bank in charge of things, the smartest richest men in the world have proclaimed in Davos this week that "we need a central bank of oil, like the central bank in financial world." As long as they are not Swiss, of course. Oil has been volatile today amid these calls for stability after Saudi Aramco comments on cutting projects (supply) sent prices higher, and was then talked back by the CEO bringing prices lower. Oman - the largest non-OPEC Middle East oil producer - blasted that "we have created volatility," noting it was having a "really difficult time," and that's "bad for business," demanding OPEC slow production. But it was The IMF that sparked the greatest concerns as it warned oil producers to treat this oil price drop as permanent noting that they expect these economies to lose $300 billion. only to be contradicted by OPEC's al-Badri who noted "oil prices will rebound back to normal soon."
UPDATE: Full SOTU Speech released - "THE SHADOW OF CRISIS HAS PASSED"
By now it is well known that The State of The Union tonight will be about President Obama's Robin-Hood Agenda. Furthermore, it is entirely clear that his proposals have no chance of becoming law. As WaPo's Marc Thiessen notes, Obama is not delusional, his move is completely and transparently political... And just as Eric Cantor suggests will merely serve to inflame the GOP. From taxes to cyber security and from community college to housing... in 50-65 minutes, all will be clear...
It seems like an eternity ago when Obama delivered the following extensively choreographed "Statement by the President on ISIL", in which he praised US anti-terrorist tactics, giving Yemen and its "partners" as an example of "successful" US foreign intervention. To wit: "This counterterrorism campaign will be waged through a steady, relentless effort to take out ISIL wherever they exist, using our air power and our support for partner forces on the ground. This strategy of taking out terrorists who threaten us, while supporting partners on the front lines, is one that we have successfully pursued in Yemen and Somalia for years." He may want to scrub that statement because just 4 months after reading that from the Teleprompter, America's "partners on the Yemen front lines" have officially fled quietly into that good night, abandoning the control of the nation to local Shiite militiamen.
The US Military's Stunning Conspiracy Theory Emerges From The Archives: "ISIS Leader Does Not Exist"Submitted by Tyler Durden on 01/20/2015 10:16 -0500
Having noted that voter angst has been riled, propagandized, and fear-mongered to the point at which the most pressing priority for Congress is to 'fix' terrorism, it is perhaps not entirely surprising that we discover - deep down in the archives - that giving the public someone to 'hate' as opposed to something may have been an entire fiction. As The New York Times exposed in 2007, Abdullah Rashid al-Baghdadi, the titular head of the Islamic State, according to Brigadier General Kevin Bergner - the chief American military spokesman at the time - never existed (and was actually a fictional character whose audio-taped declarations were provided by an elderly actor named Abu Adullah al-Naima). So he was a ghost back then.... is he a ghost again, designed purely to put a face on ISIS and the biggest bogeyman of the current global anti-terrorist mania?
Hours after the IMF cut its global economic growth forecast yet again (which for the permabullish IMF is now a quarterly tradition as we will shortly show), now expecting 3.5% and 3.7% growth in 2015 and 2016, both 0.3% lower than the previous estimate (but... but... low oil is unambiguously good for the economy) and both of which will be revised lower in coming quarters, and hours after China announced that its entirely made up 2014 GDP number (which was available not 3 weeks after the end of the quarter and year) dropped below the mandatory target of 7.5% to the lowest in 24 years, it only makes sense that stock markets around the globe are solidly green if not on expectations of another year of slowing global economies, which stopped mattering some time in 2009, but on ever rising expectations that the ECB's QE will be the one that will save everyone. Well, maybe not everyone: really only the 1% which as we reported yesterday will soon own more wealth than everyone else combined and who are about to get even richer than to Draghi.