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The attention being brought to bear upon Greece highlights once again the hollow nature of the “recovery” in Greece, Europe and the western world. The crisis is far from resolved - merely to use the very true cliche - kicked down the road. Well we appear to be coming towards the end of the road in Greece and this could set the stage for the next stage of the Eurozone debt crisis.

Ukraine Bonds Crash To Record Low After Economy Minister Asks For More IMF Bailouts

Ukraine bond prices have crashed to new record lows this morning - with even 2015 maturing debt trading at a 25% discount to face - following calls (admissions) by Ukraine's new (Lithuanian) economy minister that the government will need more IMF help on top oif its current $17 billion package. The country may need another $19 billion next year!!!

Frontrunning: December 10

  • New Normal headlines: Global stocks up on hopes of China policy easing (Reuters)
  • China inflation eases to five-year low (BBC)
  • U.S. Lawmakers Agree on $1.1 Trillion Spending Bill (WSJ)
  • U.S. Braced for Blowback as CIA Report Lays Bare Abuses (BBG)
  • CIA tortured, misled, U.S. report finds, drawing calls for action (Reuters)
  • CIA Made False Claims Torture Prevented Heathrow Attacks (BBG)
  • Oil Resumes Drop as Iran Sees $40 If There’s OPEC Discord (BBG)
  • OPEC Says 2015 Demand for Its Crude Will Be Weakest in 12 Years (BBG)
  • Greek yield curve inverted as politics raise default fears (Reuters)

Glenn Greenwald Previews The Senate Torture Report

Curious what to expect out of today's 600-page mega dump by the Senate Intelligence Committee revealing US torture techniques and practices, aka the "torture report"? The the following explainer by the Intercept's Glenn Greenwald should provide some useful pointers.

Frontrunning: December 9

  • China’s Stocks Sink Most Since 2009 as Turnover Jumps to Record (BBG)
  • Greek Stocks, Bonds Tumble (WSJ)
  • China tightens LGFV funding screws (BBG)
  • Crude Rebounds From Five-Year Low Amid Shale-Oil Spending Curbs (BBG)
  • Sexual threats, other CIA methods detailed in Senate report (Reuters)
  • U.S. Takes Security Precautions Overseas Ahead of CIA Report (WSJ)
  • Light-Speed Treasury Trading Governed by Rules Dating to 1998 (BBG)
  • Delhi to ban all internet taxi firms after Uber rape claim (Reuters)
  • Supreme Group Fined $389 Million for Overcharging Pentagon (WSJ)

It Wasn't Only China: Here Is What Else Is Crashing Overnight

It wasn't just China's long overdue crash last night. In addition to the Shanghai Composite suffering its biggest plunge since August 2009, there has been a sharp slide in the USDJPY which has broken its uptrend to +∞ (and hyperinflation), and around the time Chinese gamblers were panicking, the FX pair tumbled under 120, although since then the 120 tractor beam has been activated. Elsewhere, the Athens stock exchange is also crashing by over 10% this morning on the heels of news that the Greek government has accelerated the process to elect the next president and possibly, a rerun of the drama from the summer of 2012 when the Eurozone was hanging by a thread when Tsipras almost won the presidential vote and killed the world's most artificial and insolvent monetary union. And finally, the crude plunge appears to have finally caught up with ground zero, with ADX General Index in Abu Dhabi plunging 3.5%, also poised for the biggest drop since 2009. In fact the only thing that isn't crashing (at least not this moment), is Brent, which did drop to new 5 year lows earlier under $66, but has since staged a feeble rebound.

PBOC Tries To Pop Equity Bubble, Tightens FX & Slashes Collateral/Margin Availability; Yuan Crashes Most Since 2008

Unlike the Federal Reserve - which openly encourages speculative wealth creation/redistribution and has never seen an equity bubble it didn't believe was contained - the PBOC appears, by its actions tonight, to be concerned that things have got a little overheated in its corporate bond and stock markets as hot money ripped into the nation's capital markets on hints of further easing and QE-lite a few months ago. In a show of force, the PBOC simultaneously fixed CNY significantly stronger (implicit tightening) and enforced considerably stricter collateral rules on short-term loans/repos. With Chinese stocks concentrated is even fewer hands than in the US (and recently fearful of the surge in margin trading), it appears the PBOC is trying to stall the acceleration is as careful manner as possible. The result, as Bloomberg notes, is a major squeeze in CNY (biggest drop since Dec 2008), interest-rate swaps ripped higher along with corporate bond yields,  and most Chinese stocks sold off (with two down for every one up) though the latter is stabilizing now.

10 Reasons Why A Severe Drop in Oil Prices Is A Problem

Not long ago, we wrote Ten Reasons Why High Oil Prices are a Problem. If high oil prices can be a problem, how can low oil prices also be a problem? In particular, how can the steep drop in oil prices we have recently been experiencing also be a problem? In our view, a rapid drop in oil prices is likely a symptom that we are approaching a debt-related collapse. Underlying this debt-related collapse is the fact that we seem to be reaching the limits of a finite world. There is a growing mismatch between what workers in oil importing countries can afford, and the rising real costs of extraction, including associated governmental costs. This has been covered up to date by rising debt, but at some point, it will not be possible to keep increasing the debt sufficiently. At some point the debt situation will eventually reach a breaking point.

Oil Crash Comes Home To Roost: ConocoPhillips To Slash 2015 CapEx By 20%

With every single hollow chatterbox repeating that crashing oil prices are "unambiguously good" it is clearly the case that the opposite is true.  And sure enough, the first indications that the crude price crash is about to lead to some serious pain in the US came first yesterday from BP, which announced over the weekend that it would "slash 100s of mid-level supervisor jobs" around the globe, and moments ago, from ConocoPhillips, which added that as a result of plunging oil prices, it would slash its 2015 spending budget by a whopping 20%, cutting off some $3 billion in capital spending mostly involving "less developed project: spending which for those who remember their GDP calculation, means a proportional reduction in the US Gross National Product.

Frontrunning: December 8

  • Welcome to the recovery:
    • Euro zone warning hits stocks, currency as oil plumbs depths (Reuters)
    • Japan GDP Worse Than Initially Reported (WSJ)
    • China trade data well below expectations (BBC)
    • German industrial production frustrates forecasts (FT)
  • Oil Extends Retreat With European Stocks as Dollar Gains (BBG)
  • California police, protesters clash again after 'chokehold' death (Reuters)
  • Ruble’s Rout Is Tale of Failed Threats, Missteps (BBG), not to be confused with "Yen's Rout Is Tale Of Keynesian Success, Prosperity"
  • Uber banned from operating in Indian capital after driver rape (Reuters)

Pope Finds 100s Of Millions Of Euros "Tucked Away"; Freezes Ex-Vatican Bank Heads Assets

It's a miracle... The Vatican's economy minister has said hundreds of millions of euros were found "tucked away" in accounts of various Holy See departments that were previously not counted on the city-state's balance sheet. "In fact, we have discovered that the situation is much healthier than it seemed," noted Australian Cardinal George Pell, adding that "it is important to point out that the Vatican is not broke." Indeed a miracle - like hookers-and-blow in GDP data? However, the Vatican finances remain in darkness as Reuters reports, the state's top prosecutor has frozen 16 million euros in bank accounts owned by two former Vatican bank managers and a lawyer as part of an embezzlement investigation into the sale of 29 Vatican-owned real estate in the 2000s.

Citi Faces $270 Million Loss; "In Panic" Over Chinese Port Commodity Fraud

Despite the near-record scream higher in Chinese stocks over the last few months, under the surface China is rattled and nowhere is that more evident than in the collapse of its commodity-backed ponzi-financing deals. Since we first uncovered the fraud at the port of Qingdao, another has appeared that is just as fraud-ridden - Penglai; and Citi and Mercuria Energy are arguing over who pays. According to Mercuria's lawyer Graham Dunning, Citi was "in a state of panic," when they uncovered the fraud. As Bloomberg reports, Dunning exclaimed "it appears that substantial quantities may be missing from the warehouses or may be the subject of multiple pledges," and the bank says it is owed at least $270 million. Other 'banks' have been less forthcoming about their potential losses, but the government probe has so far uncovered almost $10 billion in fraudulent trade, including irregularities at Qingdao, according to the country’s currency regulator.