The S&P 500 closed at new record-er-est highs (a record 29th day above the 5DMA) providing just the right amount of confidence-inspiring 'wealth creation' to ensure you spend, spend, spend this weekend all those gas price savings (despite 9 of 9 macro data misses today). Dow and Trannies underperformed today as Nasdaq surged on AAPL strength. The USDollar fell for the 3rd day (first time in a month) and Treasury yields tumbled (down 5-8bps on the week) near 18 month closing lows. VIX traded briefly with an 11 handle and lost its inversion (1st day in 6). Gold prices flatlined for the 3rd day (as EURCHF fell) ahead of the Swiss gold referendum this weekend. Oil tumbled to fresh 4-year lows as OPEC hinted at no cuts and copper slipped to fresh 4 year closing lows. Late-day shenanigans sent stocks ripping higher... in a totally rational manner. Turkey prices are at $1.67/lb and have been remarkably stable over the past few years.
Some folks are not going to be beheaded today...
- Top Trade #1: EUR/$ downside via a one-year EUR/$ put spread.
- Top Trade #2: 10-year US Treasuries above 3% but not below 2% in mid-2015, through cap and floor spreads at zero cost.
- Top Trade #3: Long a Dec-2015 Eurostoxx 50 ‘bull’ call spread.
- Top Trade #4: Long US High Yield credit risk via 5-year CDX HY junior mezzanine tranches.
- Top Trade #5: Long an equity basket of EM crude oil importers (Taiwan, Turkey and India).
- Top Trade #6: Short CHF/SEK.
- Top Trade #7: Bearish Copper relative to Nickel, on supply divergence.
- Top Trade #8: Long US Dollar against a basket of ZAR and HUF.
Despite the apparent economic and profit news improvements recently, JPMorgan CIO Michael Cembalest notes there are a few instances where people are still flipping out. It’s worth reviewing them, he suggests, as they're indicative of risks and opportunities in financial markets heading into 2015, and of the continued presence of central banks affecting asset prices.
ISIS Beheads Another American After Report "Jihadi John" Injured In Air Strike; Gen. Dempsey Arrives In IraqSubmitted by Tyler Durden on 11/16/2014 11:05 -0400
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.
We need to restructure the world economy - right this very instant. The US economy is holding up the entire world economy right now and the growth rate is minimal. When we turn the economy down, look out below. These morons have been hunting taxes everywhere and as a result they have shut down global capital flows. Government lives in an illusion. These idiots have destroyed the world economy and we will understand the full impact soon.
RedHack - a Turkish hacker collective - has hacked the website of the Turkey Electricity Transmission Company, and, as TechWorm reports, claim to have deleted the pending bills of Turkish citizens amounting to Turkish Lira 1.5 trillion (a stunning $668.5 billion). The collective, which has many hacktivism projects against Turkey's internet censorship laws, posted a video of how they deleted the debt of millions of Turks.
- Moar central banks! Asian Stocks Rise Amid Stimulus Speculation; Topix Jumps (BBG)
- Syria rebels in south emerge as West's last hope as moderates crushed elsewhere (Reuters)
- Bufett's Berkshire to Buy Duracell Business From Procter & Gamble in $3B Deal (AP)
- Weak Demand, Real-Estate Slump Signal Headwinds for China (WSJ)
- China Slowdown Deepens as Leaders Said to Mull Cutting Target (BBG)
- Saudis Reject Talk of OPEC Market Share War as Oil Slides (BBG)
- Oil Tankers Stream Toward China as Price Drop Sparks Boom (BBG)
There are a number of cause-and-effect mechanisms that are creating a "dangerous spiral" in various emerging markets. As Natixis explains, this five-step vicious circle is currently affecting Russia, Brazil, Argentina and South Africa; and some of the components are now manifesting in Turkey and India.
"Weakness, indecision and unreliability are terrible characteristics in a dangerous world. Strength does not mean bombing everyone. It means having capabilities, choosing one’s spots, and doing what you say you will do." The West might be war-weary, but the jihadis and other combatants in the Middle East are just getting started.
China first delegated the management of gold policy to the People's Bank by regulations in 1983. To our knowledge this subject has not been properly addressed by any private-sector analysts, which might explain why it is commonly thought that China's gold policy is a more recent development, and why even industry specialists show so little understanding of the true position. But in the thirty-one years since China's gold regulations were enacted, global mine production has increased above-ground stocks from an estimated 92,000 tonnes to 163,000 tonnes today, or 71,000 tonnes; and while the west was also reducing its stocks in a prolonged bear market all that gold was hoarded somewhere.
As Deutsche Bank observes, the Fed has been wanting to hike rates on a rolling 6-12 month horizon from each recent meeting but never imminently which always makes the actual decision subject to events some time ahead. They have seen a shock in the last few weeks and a downgrade to global growth prospects so will for now likely err on the side of being more dovish than in the last couple of meetings. They probably won't want to notably reverse the recent market repricing of the Fed Funds contract for now even if they disagree with it. However any future improvements in the global picture will likely lead them to step-up the rate rising rhetoric again and for us this will again lead to issues for financial markets addicted to liquidity. And so the loop will go on for some time yet and will likely trap the Fed into being more dovish than they would ideally want to be in 2015.
"This is simple payback for Washington's threats, banking fines and penalties against institutions and nations de jure that fail to march to the US tune of dictating trade and financial arrangements. The world is now ganging up on the United States because Washington has terrorized smaller nations around the world for decades as the big bully on the block."
Instead of a global recovery, a sudden, broad consumer slowdown – with a plunge in China.
Gold has been in a bear market for three years. Technical analysts are asking themselves whether they should call an end to this slump on the basis of the "triple-bottom" recently made at $1180/oz, or if they should be wary of a coming downside break beneath that level. The purpose of this article is to look at the drivers of the gold price and explain why today's market value is badly reflective of gold's true worth.