- Marchers again swarm New York to protest death at hands of police (Reuters)
- N.Y. Police Chokehold Evidence to Stay Secret as Protests Spread (BBG)
- Obama to announce choice of Ash Carter for defense chief Friday: White House (Reuters)
- Boehner vows to avoid government shutdown with help from Democrats (Reuters)
- Brent Heads for 5-Year Low as Saudi Discounts Spur Competition (BBG)
- Will Cheap Oil Lead to Big Mergers? (WSJ)
- Bank of Russia Ramps Up Ruble Support (WSJ)
- China Bad-Loan Level Seen Understated After Economy Slows (BBG)
- Uber Snags $41 Billion Valuation (WSJ)
- Fall of the Bond King: How Gross Lost Empire as Pimco Cracked (BBG)
- Hong Kong 'Occupy' leaders surrender as pro-democracy protests appear to wither (Reuters)
- Ashton Carter, Ex-Pentagon No. 2, Emerges as Obama Favorite for Defense Secretary (WSJ)
- Oil, the Ruble and Putin Are All Headed for 63. A Russian Joke -- for the Moment (BBG)
- New U.S. oil and gas well November permits tumble nearly 40 percent (Reuters)
- Swedish government on brink of collapse (AJ)
- China says Britain has no moral responsibility for Hong Kong (Reuters)
- Indian Labs Deleted Test Results for U.S. Drugs, Documents Show (BBG)
As reported two weeks ago, following to a stunning announcement by the head of Ukraine's central bank, Valeriya Gontareva, we learned that (virtually) all of Ukraine's gold was gone, or - in the parlance of Jon Corzine - had "vaporized." And as we also predicted two weeks ago, it was only a matter of time before Ukraine's people - the vast majority of whom are innocent pawns in a vast game of realpolitik between the west and east - finally got angry and demanded some answers. That time came earlier today when as Interfax.ua reported "a Kyiv-based court has instructed Kyiv prosecutors to bring an action against National Bank of Ukraine (NBU) Governor Valeriya Gontareva on charges of abuse of power or misuse of office to obtain illegal profit, the Vesti newspaper reported on Tuesday."
The selling is because the dominant Common Knowledge regarding energy sector stocks is that they move up and down with the price of oil. Common Knowledge is not what everyone knows; that’s the consensus. Common Knowledge is what everyone knows that everyone knows, and it’s the driving force behind the Game of Sentiment. Everyone knows that everyone knows energy stocks are tied to oil prices, we just took another sharp leg down in oil prices, and so energy stocks must be sold. The fact that energy stocks are down “proves” the relationship (a wonderful example of Soros’s concept of reflexivity), which adds to the selling. The reality (not that it matters) is that energy stocks are barely correlated with the price of oil, and their correlation with each other is barely driven by oil prices. What’s really driving this across-the-board decline is the fact that “long energy” has become a very crowded trade.
In a surprise development involving the leader of the Islamic State, Abu Bakr al-Baghdadi, earlier today security officials announced that the Lebanese army had captured the wife and daughter of Islamic State leader Abu Bakr al-Baghdadi as they crossed from Syria nine days ago. According to Reuters, the woman was identified as Saja al-Dulaimi, an Iraqi, by a Lebanese security official and a senior political source. The Lebanese newspaper As-Safir reported she had been detained in coordination with "foreign intelligence." The official spin is clear: in Reuters' words, "the arrest is a blow to Baghdadi and could be used as a bargaining chip against his group, which has captured many foreign, Iraqi and Syrian prisoners and declared a caliphate in territory it has seized in Syria and Iraq." Unless, of course, it isn't, and it merely sets off the ISIS leader even more.
It is no wonder Venezuela is suffering... Venezuelan bond prices have collapsed around 51 - the lowest close in at least 5 years as yields surge to around 21% yield. The market is pricing in extremely high probability of default (around 63% over 2Y, and 80% based on 5Y CDS) which, as Bloomberg reports, is surging as "every $1 drop in oil is around $770 million of lost revenue, so their ability to pay has taken a big hit."
What was truly notable in Weidmann's statement is his open jab at the stupidity of Keynesian economics itself. To wit from Bloomberg: ECB Governing Council member Jens Weidmann says at event in Berlin that consumer prices in euro area “are strongly influenced by the energy prices, which are at the moment experiencing a positive supply shock.” The punchline: "There’s a stimulant effect coming from the energy prices - it’s like a mini stimulus package." But wait a minute, isn't deflation under Keynesian voodoonomics, the biggest bogeyman imaginable? It turns out deflation is only bad when it impacts... the S&P 500.
- Oil Seen in New Era as OPEC Won’t Yield to U.S. Shale (BBG)
- Alberta Producers With World’s Cheapest Oil Face Cascading Woes (BBG)
- Bundesbank’s Weidmann Rejects Calls for German Stimulus Plan (WSJ)
- Google Should Be Broken Up, Say Euro MPs (BBC)
- Calm comes to troubled Ferguson; protests dwindle across U.S. (Reuters)
- Russia’s Banks Feel Capital Squeeze in Grip of Sanctions (BBG)
- Italian Unemployment Rate Rises to Record, Above Forecasts (BBG)
- National Guard, police curb Ferguson unrest as protests swell across U.S. (Reuters)
- Ferguson Reaction Across U.S. Shows Complex Racial Split (BBG)
- Democratic senator Schumer: Democrats Screwed Up By Passing Obamacare In 2010 (TPM)
- Veto threat derails Reid tax deal (Hill)
- Justice Department Investigating Possible HSBC Leak to Hedge Fund (WSJ)
- Merkel hits diplomatic dead-end with Putin (Reuters), and yet...
- Merkel Said to Reject Ukraine NATO Bid as Rousing Tension (BBG)
- HSBC, Goldman Rigged Metals’ Prices for Years, Suit Says (BBG)
Is the price of oil today driven more by global growth and supply/demand factors or by monetary policy factors? We hope it doesn’t surprise anyone when we say that we think monetary policy dominates ALL markets today, including the global oil market. What’s the ratio? Our personal, entirely subjective view is that oil prices over the past 3+ months have been driven by 3 parts monetary policy to 1 part fundamentals. How do we come up with this ratio? For the past 3+ months the oil Narrative has been dominated by public statements from influential answer-suppliers talking up the oil price dynamic of a rising dollar and monetary policy divergence. That’s the source of our subjective view of a 3:1 dominance for monetary policy-driven factors over fundamental-driven factors. However – and this is the adaptive part where we play close attention to Narrative development and dissemination – the noise level surrounding this Thursday’s OPEC meeting is absolutely deafening.
We've previously written about how the percentage of sociopaths within a group of humans becomes increasingly concentrated the higher you climb within the positions of power in a society, with it being most chronic amongst those who crave political power (see: Humanity is Rising). The reason for this is obvious. Those with the sickest minds, and who wish to act upon their destructive fantasies, understand that they can most easily get away with their deeds if they are protected by an aura of power and ostensible respectability. They believe that as a result of their status, no one would dare accuse them of horrific activities, and if it ever came to that, they could quash any investigation. Unfortunately for us all, this is typically the case.
- They go all in: China’s PBOC Cuts Interest Rates for First Time Since 2012 (BBG)
- And all in-er: ECB's Draghi throws door to quantitative easing wide open as recovery wanes (Reuters)
- Global Markets Rally: ECB Head Says Central Bank Is Ready to Expand Stimulus Program After China Cuts Rates (WSJ)
- Obama unveils U.S. immigration reform, setting up fight with Republicans (Reuters)
- U.S. increasing non-lethal military aid to Ukraine (Reuters)
- Russia warns U.S. against arms to Ukraine as Biden due in Kiev (Reuters)
- Ukraine slashed gold holdings in October, Russia added more - IMF (Reuters)
- Abe Dissolves Japan’s Lower House of Parliament (WSJ)
After weeks of relentless flashing red headline barrage whose only purpose was to force snap algo buying of the USDJPY pair time after time after time, Japan is once again out of FX algo danging carrots after moments ago Abe confirmed what everyone had known already: he called a snap election to seek a mandate for his decision to delay by 18 months a further sales-tax increase that had been planned for next year; he also said he would dissolve the lower house of parliament on Nov. 21 in preparation for an election in December, without specifying a date. Cited by the WSJ, Abe said "To ensure the success of Abenomics, I’ve concluded that it shouldn’t be carried out next October and instead be postponed by 18 months,” the prime minister told a nationally televised news conference, stressing that the additional tax burden would risk putting the economy back into deflation. “I will seek the people’s judgment over our economic policy."
ISIS Beheads Another American After Report "Jihadi John" Injured In Air Strike; Gen. Dempsey Arrives In IraqSubmitted by Tyler Durden on 11/16/2014 10:05 -0500
Perhaps in prompt and direct refutation that the infamous executioner "Jihadi John" had been injured, a few hours ago, ISIS release its latest execution video. Yet, oddly, as in several previous instances, the 15-minute video released Sunday doesn’t show the beheading according to the WSJ, but closes with a masked man clad in black standing above what he claims is Mr. Kassig’s severed head. The extremist spoke with a British accent, and appeared to be the same man who appeared in four videos released over the past few months showing the killing of British and American hostages, i.e., the same Jihadi John who was said to have been injured.
Simply put, the dollar's rise could destabilize the entire global financial system. To understand why this is so, we have to start with the source of the risk: the world's central banks.