Price Action

With China now "murdering" Yuan shorts, markets are content that the Chinese debacle seems to be contained if only for a while, and so the attention of both traders and algos alike has focused on oil, which earlier in the session dragged global equities lower as it dropped by 3%, just shy of the $30 level, a new 11 year low, before staging another dramatic rebound in minutes, wiping out all losses in the aftermath of what appears to have been a deadly suicide bomber terrorist explosion on a square the middle of Istanbul's historic district.

"Shorter-term traders will feel that many moves have gone a long way very quickly and hence appear ripe for a brief rebound. The catalyst is that, in the height of a market panic, prices can become dislocated from fundamental valuations, as margin stops get triggered and “weaker” positions get cleaned out. The counter-argument is that distortions caused by the extraordinary monetary policies of global central banks mean markets might have been disconnected from traditional fundamentals for several years."

We used to have notions of ‘proprietary programmed code’ but the Investment Banks learned that they could make their life a lot easier by working together instead of cross purposes.

The half-life of the latest "market supporting" intervention by the Chinese government: just about 12 hours.

Before we go into details of the overnight carnage, this is where we stand currently: S&P futures now down 33 points or 1.63% while 2Y Treasury rallies pushing its yield back below 1% as EU stocks extend their drop after China weakened its currency, North Korea says it tested a hydrogen bomb; Brent crude falls to lowest level since 2004.

We have reduced our estimate of Q4 real GDP growth by one full percentage point to 0.5%, and this still might be too high in light of what could be much larger inventory liquidation than what we have assumed.

The last two years rents have been rising primarily due to supply and demand issues.

Imagine if Casinos told you in advance what the next card from the deck in a game of Blackjack was going to be?

After a furious three day "dash for trash", no volume, no breadth, commodity-driven rally, even Santa is now exhausted and overnight US equity index futures were little changed with European and Asian shares mixed. The dollar has declines as gold, silver gain, with WTI initially continuing its recent meteoric rise (up over 8% in the past three days, nearly hitting $38), only to reverse and give up all overnight gains moments ago. Copper falls after Chinese stocks see a second day of weakness, down 0.7% while an unexpected tumble in the USDJPY to 7 weeks lows has dragged the Nikkei (-0.5%) and its futures down.

With just a handful of trading sessions left in the year, this is how the major global markets look as 2015 is about to close. As of this moment, and in keeping with the Christmas spirit, the biggest question is whether the S&P500 will close green or red for the year.

It has been a seesaw session with U.S. stock index futures following their dramatic buying burst in the last half hour of market trading yesterday by first rising, then falling, then rising again alongside European equities both driven almost tick for tick with even the smallest move in the carry trade of choice, the USDJPY, even as Asian shares trade near intraday highs after China’s leaders signaled they will take further steps to support growth.

In a weekend of very little macro newsflow facilitated by the release of the latest Star Wars sequel, the biggest political and economic event was the Spanish general election which confirmed the end of the PP-PSOE political duopoly at national level.  As a result, there was some early underperformance in SPGBs and initial equity weakness across European stocks, which however was promptly offset and at last check the Stoxx 600 was up 0.4% to 363, with US equity futures up nearly 1% after Friday's oversold drubbing. In other key news, the commodity slide continues with Brent Oil dropping to a fresh 11-year low as futures fell as much as 2.2% in London after a 2.8% drop last week.

 I am sure corporations, wildcatters and trading firms are all making business decisions based upon these low natural gas prices, and they are not from the bullish side of the equation.