OPEC

There was something for everyone in last night's much anticipated Chinese PMI data, with the official number sliding to the lowest in over 3 years, suggesting the PBOC will need to do more stimulus and is thus bullish, while the unoffocial Caixin print rising to the highest since June, suggesting whatever the PBOC is doing is working, and is also bullish. Not unexpectedly, global stocks decided to take the bullish way out, and have risen across the globe led by Asia, where stocks rose as much as 1.8%, Europe also green and US equity futures up 10 points as of this writing.

After a subdued end to last week as a result of the US Thanksgiving holiday, this week will see markets served a deluge of data and tier 1 releases. 

As noted earlier, after last week's snoozefest, this week starts off with a bang when the IMF announces in a few hours it will accept the Chinese Yuan in the pantheon of world reserve currencies alongside the USD, EUR, GBP and JPY the only question being what the alotted weighing of the currency will be. Things then progress to tomorrow's global PMI numbers, Yellen speeches on the economy to the Economic Club of Washington and Congress (Weds/Thurs), the eagerly anticipated ECB meeting on Thursday and finally Friday's OPEC meeting and US payroll print - the last before the FOMC in 2 weeks time.

• Dollar rises versus euro, oil drops before ECB, OPEC meetings (Reuters)
• Smog chokes Chinese, Indian capitals as climate talks begin (Reuters)
• Obama: COP21 Paris Climate Talks Could Be ‘Turning Point’ For Planet (BBG)
• China plans to launch carbon-tracking satellites into space (Reuters)
• Scientists Dispute 2-Degree Model Guiding Climate Talks (WSJ)
• At NATO, Turkey defiant over downing of Russian jet (Reuters)
• ECB Left With No Choice But Action After Draghi's Priming (BBG)

Without a rerun of last Friday's Chinese stock market rout, European traders could focus on what "really matters", namely how much of the ECB's upcoming 20 bps rate cut and €20 billion QE expansion (with Commerzbank saying Draghi may even hint at Europe's QE3) is priced in, and whether the ECB's actions are just modestly priced in, or more than fully, and just how big the "sell the news" event will be.The result: the Euro falls to a new 7 month low, the dollar spot index hits a new all time high, and European stocks and US futures stage another remarkable overnight comeback on the usual low volume levitation and central bank intervention.

• European stocks up, oil slides as concerns ease over Russia-Turkey tension (Reuters)
• ECB discusses two-tiered bank charges, broader bond buys (Reuters)
• New agonies, alliances as Fed debates post-liftoff plan (Reuters)
• A New Military Power Rises in the Mideast, Courtesy of One Man (BBG)
• Russia's Gazprom says halts gas supplies to Ukraine over payment (Reuters)
• Other central banks set to act, but Swiss policy cupboard bare (Reuters)

On Friday Nov. 20th we sold a half unit each of nearby January WTI trading at or near to $41.85 and nearby Brent trading at or very near to $44.23, giving us an average of $43.04. Our stated risk, was 2% on the position, so the stops were set at $42.10 and $45.11 respectively, and we used our “hour or so” methodology; that is, we’d want to see crude trade through those levels “for an hour or so” before activating the stops in question. Those stops have been activated. The Saudis caught us off. We are gone… now!

It had been a relatively quiet session overnight when as reported previously, the geopolitical situation in the middle east changed dramatically in a moment, when NATO-member country Turkey downed a Russian fighter jet allegedly over Turkish territory even though the plane crashed in Syria, and whose pilots may have been captured by local rebel forces. The news promptly slammed Turkish assets and FX, sending the Lira tumbling, pushing lower European stocks and US equity futures while sending 2 Year German Bunds to record negative yields.

The government of Venezuelan President Nicolas Maduro is investigating a report that the U.S. government has been spying on executives of the state-owned Petroleos de Venezuela, or PDVSA, over the past decade. “The oil industry is the backbone of the Venezuelan economy,” Maduro said on state television. “The U.S. empire for a long time … has intended to sabotage [Venezuela’s] oil industry and defeat the [Caracas] government in order to steal the oil.”

The oil producers are rapidly learning from the central banks how to jawbone markets higher. With both Brent and WTI sliding as recently as ten minutes ago, suddenly a buying frenzy was unleashed following a Bloomberg headline which cited the Saudi Press Agency, according to which the world's largest crude exporter was ready to pull a Draghi and would do "whatever it takes" for a stable oil market, and that it would cooperate with OPEC and non-OPEC members for stable prices.

As a result of the global commodity weakness, global stocks have fallen for the first time in six days as the sell-off in commodities continued, dragging both US equity futures and European stocks lower. However, putting this in context, last week the MSCI All Country World Index posted its biggest weekly gain in six weeks: alas, without a coincident rebound in commodity prices, it will be merely the latest dead cat bounce.

A big catalyst for the ongoing collapse in the Bloomberg commodity index which just hit a fresh 16 year low, is the relentless surge in the dollar, with the DXY rising as high as 99.98 the highest since April, as a result of rising prospects for a December U.S. rake hike (odds are now at 70%, up from 36% a month ago) boosting currency differentials and flows into the USD, making commodities more expensive for buyers in other currencies.

While talk of record backlogs of supertankers and an unprecented 3 billion barrels of crude oil stock-piles sound impressive - and are weighing on crude prices - the following stunning image provides some context for just what this means...

Bombing wont stop them; it will just make more of them. Ironically, what can stop them is the Assad government and the ground forces of its Hezbollah and the Iranian Republican Guard allies. Its time to let them settle an ancient quarrel that has never been any of America’s business anyway. But Imperial Washington is so caught up in its myths, lies and hegemonic stupidity that it can not see the obvious. And that is why a quarter century after the cold war ended peace still hasn’t been given a chance and the reason that horrific events like last week’s barbarism in Paris still keep happening.