http://www.zerohedge.com/fullrss2.xml/article/article/%3Ca%20href%3D en Is The Oil Implosion Supply Or Demand Driven? Here Is The Very Simple Answer, Thanks To Saudi Arabia http://www.zerohedge.com/news/2014-12-18/oil-implosion-supply-or-demand-driven-here-very-simple-answer-thanks-saudi-arabia <p>There has been much debate whether the crude price implosion has been due to excess supply or not enough demand. Here, courtesy of the oil minister at the world's largest crude supplier, is the answer:</p> <ul> <li><strong>NAIMI SAYS DEMAND FOR OIL SLOWED MORE THAN EXPECTED: SPA</strong><strong>&nbsp;</strong></li> <li><strong>NAIMI SAYS GLOBAL ECONOMY SLOWDOWN LARGELY BEHIND MKT PROBLEM</strong></li> </ul> <p>Which, of course, to anyone with even the most rudiemntary logic and charting skills, should not come as any surprise.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/12/20141218_WTIGDP.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/12/20141218_WTIGDP_0.jpg" width="600" height="316" /></a></p> http://www.zerohedge.com/news/2014-12-18/oil-implosion-supply-or-demand-driven-here-very-simple-answer-thanks-saudi-arabia#comments Crude Global Economy Saudi Arabia Thu, 18 Dec 2014 19:41:45 +0000 Tyler Durden 499313 at http://www.zerohedge.com Deciphering Yellen's Rub-Goldbergian Message http://www.zerohedge.com/news/2014-12-18/deciphering-yellens-rub-goldbergian-message <p><em>Via Scotiabank's Guy Haselmann,</em></p> <p>Through the overly-complex verbiage riddled with a copious number of contingencies, a simple message was actually able to surface.&nbsp; <strong><span style="text-decoration: underline;">The net result is modestly hawkish and one consistent with<a href="http://www.zerohedge.com/news/2014-10-24/forget-lower-longer-feds-new-message-sooner-slower"> our "Sooner but Slower" rate cycle perspective</a>.</span></strong></p> <p><strong>Use of the word “patient” is analogous to “slower”; while Yellen’s comment about how it is “unlikely to begin normalization process for at least the next couple of meetings”, corresponds to a “sooner” lift-off.</strong>&nbsp; The marketplace had expected the first hike to occur in the June-September corridor, but Yellen moved it slightly forward to the April-June range. </p> <p><strong>The word “patient” will likely be used throughout 2015, for fear of unsettling the apple cart of bubble-like financial markets generated after six years of uber-accommodative policies.&nbsp;</strong> In other words, to prevent roiling Treasuries or risk assets too much -- after interfering for several years with the market’s normal price discovery functions – the Fed will have to tread carefully and slowly.</p> <p><strong>A modestly “sooner” hike is one reason why the front end of the Treasury curve is under pressure.&nbsp;</strong>&nbsp;&nbsp; However, a hike in ‘mid-2015’ is still quite far off and not a certainty given the worryingly and quickly changing geo-political landscapes. Therefore, due to carry and ‘roll –down’ benefits, Treasuries will not be able to price too many hikes in too soon.</p> <p><strong>The real hawkish part of the press conference was when Yellen defined the decline in oil as a “tax cut” to the consumer.</strong>&nbsp; The downward pressure it will have on headline CPI over the next few months, she explained as a “transitory” condition.</p> <p><strong>It is counter-factual to know whether economic progress has been the result of a normal business cycle or the result of Fed policy.</strong>&nbsp; After all, is ZIRP (or QE) creating jobs or impacting inflation?&nbsp; The plunge in the velocity of money is a sign that the Fed’s printing was not used as intended.&nbsp; It is a sign of extreme indebtedness.&nbsp; In this sense, Fed policies have borrowed from the future, while encouraging wild market speculation. </p> <p><strong>If economic progress has been more about the business cycle and it begins to turn by ‘mid-2015’ (or should a geo-political event damage rosy economic forecasts), then the Fed could lose its window of opportunity for ‘lift-off’.</strong>&nbsp; Is it possible that the Fed hikes even in the face of worse economic and financial market conditions?&nbsp;&nbsp; If conditions got really bad, it is possible that the Fed may not be able to hike at all in 2015. </p> <ul> <li><strong>This is certainly the risk of not hiking even “sooner” under the nearly ideal current conditions.</strong></li> </ul> <p><span style="text-decoration: underline;"><strong>Such a ‘lower for longer’ potential scenario would then be bad, not good, for risk assets. </strong></span></p> <p>Under such a scenario, <strong>risk asset valuations would look even further deviated from their economic fundamentals</strong>.&nbsp;&nbsp; The fallout in financial markets would likely be severe.&nbsp; The Fed would have to take the blame for focusing too much on its inflation mandate (of which it has little control) and not enough on the current risks to financial stability. </p> <p><strong>Too often times in history, the Fed has been the source of ‘boom to bust’ cycles.&nbsp; It is easy to envision that another one currently unfolding at this very moment.&nbsp; </strong></p> <p><span style="text-decoration: underline;"><strong>Markets are being driven more by fear of missing the upside, and fear of under-performing peers and benchmarks, than by any other factor.&nbsp; This Pavlovian response has worked well in recent years and encouraged by the Fed.&nbsp; However, this pattern is in the 9th inning.</strong></span>&nbsp; Moreover, such herd-like behavior will run into great difficult due to dreadful market liquidity that is the result of regulatory over-reach; indications that were evident in markets over the past few weeks.</p> <p><strong>I asked a trader today what he gleaned from the Fed meeting yesterday.&nbsp; He said, “Nothing.&nbsp; Fed policy was completely unchanged”.&nbsp; If this is true, then the market over-responded.&nbsp;</strong>&nbsp; While I believe the FOMC was slightly hawkish as noted above, the global situation is too fluid to price a Fed that when they finally move will only move gradually.&nbsp; In the meantime, markets need to contend with problems being created by falling oil, Greece, China, Russia and other areas.&nbsp; Could the Ruble go to 100?&nbsp; Putin said he will not bother with it, so why not?&nbsp; How will a devalued Yen and Ruble begin to impact China?</p> <p><strong>It is all about positions into year end.</strong> Rising uncertainties and changing risk/reward distributions for portfolios will keep volatility high.&nbsp; Treasuries 10 years and longer will stay low for a while longer.&nbsp; The post FOMC re-pricings are opportunities to buy the dip in long-dated Treasuries, and pare exposures to risk assets.&nbsp; <strong>Fade the over-reactive moves.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>“I know you think you understand what you thought I said but I’m not sure you realize that what you heard is not what I meant” – Alan Greenspan</em></p> </blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="424" height="263" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20141218_rube.jpg?1418929355" /> </div> </div> </div> http://www.zerohedge.com/news/2014-12-18/deciphering-yellens-rub-goldbergian-message#comments Alan Greenspan Apple China CPI Greece Market Conditions Volatility Yen Thu, 18 Dec 2014 19:31:08 +0000 Tyler Durden 499312 at http://www.zerohedge.com "Not" Stabilized - Crude Crashes 7% Intraday: WTI $54 Handle, Brent Below $60 http://www.zerohedge.com/news/2014-12-18/not-stabilized-wti-crude-hits-55-brent-below-60 <p>Crude is over 7% off its intraday highs.. But "Ignore it" - Yellen said it's great news (and transitory)... <strong>The last time Crude was here, the S&amp;P 500 was 65 points lower... </strong><em>[WTI closed at its lows $54.05 in Jan '15 futures]</em><strong><br /></strong></p> <p>&nbsp;</p> <p>January 2015 WTI Futures $54.35...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_WTI_1%60.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_WTI_1%60_0.jpg" width="600" height="497" /></a></p> <p>&nbsp;</p> <p>entirely decoupled from stocks...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_WTI_2.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_WTI_2_0.jpg" width="600" height="318" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1153" height="955" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20141218_WTI_1%60.jpg?1418929564" /> </div> </div> </div> http://www.zerohedge.com/news/2014-12-18/not-stabilized-wti-crude-hits-55-brent-below-60#comments Crude Thu, 18 Dec 2014 19:07:42 +0000 Tyler Durden 499311 at http://www.zerohedge.com How The Fed Masterfully Punk'd Algos Into A Stock Buying Frenzy http://www.zerohedge.com/news/2014-12-18/how-fed-masterfully-punkd-algos-stock-buying-frenzy <p>Something unexpected took took place yesterday: as we showed just after the FOMC statement hit, while the "hawks" had been pre-advised by the unofficial Fed mouthpieces to watch for instances of the word "patient" as a signal of shift in monetary policy by Yellen, <strong>the "doves" were looking for just one thing: any instance of the phrase "considerable time."&nbsp; </strong>Or rather the Doves' algos, because if the Fed had maintained its "considerable" language it meant the coast was clear to bid up risk to the moon. </p> <p>So what happened: in a completely unexpected twist, <em>the Fed used not only the much anticipated "patient" phrase, but - in what many speculated was a hint to the word-scanning algos that the coast was all clear to buy - it also added the "considerable time" phrase within the same paragraph. <a href="http://www.federalreserve.gov/newsevents/press/monetary/20141217a.htm"></a></em><a href="http://www.federalreserve.gov/newsevents/press/monetary/20141217a.htm">To wit</a>:<em><br /></em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. Based on its current assessment, the Committee judges that it can be <span style="text-decoration: underline;"><strong>patient</strong></span> in beginning to normalize the stance of monetary policy. The Committee sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a <span style="text-decoration: underline;"><strong>considerable time</strong></span> following the end of its asset purchase program in October, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.&nbsp;</p> </blockquote> <p>Some promptly saw right through this cheap attempt at linguistic manipulation of the only kneejerk "<em>market-makers</em>" left that matter: the HFT algos that decide whether to buy or sell based on a nanosecond parsing of the Fed statement in search of specific keywords (such as "<em>considerable time</em>"), and then immediately going all in on the bid or ask side. </p> <blockquote class="twitter-tweet" lang="en"><p>It algos were scanning for "patient" they found it.<br /> If also were scanning for "considerable time" they found it too.<br /> Everyone's a winner</p> <p>— zerohedge (@zerohedge) <a href="https://twitter.com/zerohedge/status/545296690321043456">December 17, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>And since the Fed was allegedly shifting to a hawkish posture, yet had managed to invoke the much desired "considerable time" kneejerk response which suggested an indefinite dovish posture, the market exploded higher both in the millisecond following the announcement and in the final print, and the DJIA is now up some 600 points in the past two days on the back of the Fed statement and its successful punking of a <em>few not so bright algos.</em></p> <p>Impossible, you say. The Fed would never stoop so low as the actually collaborate with algo "nuance" analyzers in order to goose the best possible, and thus most bullish response possible. </p> <p>Really? <a href="http://www.bloomberg.com/news/2014-12-18/in-search-of-lost-time-algos-didn-t-wait-on-fed-nuance.html">Here's Bloomberg</a>, 24 hours after our tweet:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The financial press, universally considered to be among the smartest not to mention best-looking humans on the planet, faced a conundrum yesterday when the Federal Reserve’s policy statement came out. </p> <p>&nbsp;</p> <p>Much of the investment universe was fixated on whether the two words “considerable time” would remain in the central bank’s statement in reference to how long policy makers intend to keep their benchmark interest rate near zero. A quick search of the document found the phrase, and so some of the fastest typists dutifully reported its presence.&nbsp; Yet taking the time to actually read the paragraph showed that the Fed was moving away from those two words. The Fed was saying it would be “patient” when it comes to normalizing monetary policy, guidance it then said was consistent with the previous “considerable time” language. As the headline on the Barron’s web site put it seven minutes later: “Fed Keeps ‘Considerable Time’ Phrase – Sort Of.”</p> <p>&nbsp;</p> <p>As humans struggled to understand what nuance, if any, existed between the two catch phrases, <strong>the automated computer programs that do so much of the trading these days immediately reacted and so stocks and Treasuries shot higher in tandem. Did the machines start a buying binge after a simple, successful search for “considerable time?” It’s possible, according to Paul Tetlock, an associate professor at Columbia Business School, who has researched how stocks react to news stories. </strong></p> <p>&nbsp;</p> <p>“But it’s hard to predict how automated news reading programs would react,” he said in an e-mail. “<em>High-frequency trading firms regularly redesign their algorithms to take subtle wording nuances into account and to respond appropriately to other firms’ trading strategies</em>.”</p> </blockquote> <p>Actually, judging by the market reaction - which was a masterfully choreographed universal jerk higher - it was not hard to predict at all: "<strong>the Standard &amp; Poor’s 500 Index (SPX) leapt from the 1,995 level at 1:59 p.m. New York time to 2012.47 at 2:03 p.m., a rise of almost 0.9 percent." <br /></strong></p> <p>Of course, the Fed, like everyone else, merely caters to its audience:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The central bank, of course, must now realize that its audiences stretches well beyond the legions of “Fed watchers” in banks, brokerages and media to the all-important silicon constituency nestled together in exchange data centers.</p> </blockquote> <p>So for all those who predicted that the Fed will indeed stoop so low as to merely engender yet another contrived, and much needed Santa Rally, by punking algos with its announcement, congratulations. </p> <p>For everyone else, Bloomberg has a pun to cheer you up: "The initial rise in Treasuries sent 10-year yields from 2.105 percent at 1:59 p.m. to 2.066 percent by 2:02. The rate climbed back to 2.137 percent five minutes later.&nbsp; In today’s frenetic electronic trading environment, that is -- to borrow a phrase -- a "considerable time."</p> <p>Ha-ha. Now back to BTFATH.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="313" height="317" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/punkd.jpg?1418928711" /> </div> </div> </div> http://www.zerohedge.com/news/2014-12-18/how-fed-masterfully-punkd-algos-stock-buying-frenzy#comments BTFATH HFT Market Conditions Monetary Policy Trading Strategies Thu, 18 Dec 2014 18:59:40 +0000 Tyler Durden 499310 at http://www.zerohedge.com Is Russia Being Driven Into the Arms of China? http://www.zerohedge.com/news/2014-12-18/russia-being-driven-arms-china-0 <p><a href="http://www.goldcore.com/ie/gold-blog/russia-driven-arms-china/"><strong>Is Russia Being Driven Into the Arms of China?</strong></a></p> <p>The “isolation of Russia” idea is one which has been receiving a lot of traction of late. Russia’s recent economic woes have sometimes been covered with barely contained glee despite the hardships that average Russians may have to endure if the rouble continues to collapse … not to mention the inevitable geopolitical backlash.</p> <p><a href="http://dzswc0o8s13dx.cloudfront.net/goldcore_bloomberg_chart1_18-12-14.png"><img src="http://dzswc0o8s13dx.cloudfront.net/goldcore_bloomberg_chart1_18-12-14.png" width="486" height="302" /><br /></a><em>Reuters image of the over 50% drop in the Rouble against the U.S. dollar</em></p> <p>Russia has become isolated from its western neighbours on account of the putsch in Ukraine which led to the predominantly ethnically Russian Crimea seceding from Kiev through a democratic process.</p> <p>European governments slavishly adhere to U.S. imposed sanctions. So from a western elite point of view, Russia is indeed isolated.</p> <p>Whether antagonising Russia is damaging to Russia is a moot point. Certainly in Russia’s current straits the bankrupt west is in no position to help. European farmers are suffering from a loss of export markets while Europe is still dependent on Russian natural gas.</p> <p>So how “isolated” is Russia in reality?</p> <p>Firstly, it is worth pointing out the obvious fact that countries do not have “friends”, just “interests”. Representatives of countries may have good relationships but these are built on expediency – not friendship.</p> <p>So while there may be a great deal of distrust between the major powers of Asia, these issues are being overlooked for now because it is expedient. Standards of living across the board have been rising in Asia for twenty years. It is in no country's interest to enter into conflict.</p> <p>By contrast, the west – led by the U.S. – has seen a remarkable fall in living standards over the same period. The bubble, prior to the 2008 crash, was not a golden-age for families as increasingly both parents were forced to work to just afford a roof over their heads.</p> <div><img src="http://dzswc0o8s13dx.cloudfront.net/goldcore_bloomberg_chart2_18-12-14.png" width="486" height="302" /> <p><em>Premier Li Keqiang at Moscow’s Tomb of the Unknown Soldier during his Russian trip in October</em></p> </div> <p>The relationship between Russia and China has morphed with these changes. Russia supplies China with hi-tech military hardware. Russia has negotiated two major natural gas deals with China in the last year. China expects to double it’s gas usage by 2030. So from a Chinese point of view it is certainly expedient to keep Russia on its side.</p> <p>China may soon come to Russia’s aid and provide liquidity according to the South China Morning Post:<br />“Russia could fall back on its 150 billion yuan (HK$189.8 billion) currency swap agreement with China if the rouble continues to plunge”.</p> <p><em>If the swap deal is activated for this purpose, it would mark the first time China is called upon to use its currency to bail out another currency in crisis. The deal was signed by the two central banks in October, when Premier Li Keqiang visited Russia.</em></p> <p>“Russia badly needs liquidity support and the swap line could be an ideal tool,” said Bank of Communications chief economist, Lian Ping.</p> <p>The swap allows the central banks to directly buy yuan and rouble in the two currencies, rather than via the U.S .dollar.</p> <p>This highlights the long-term error of the west – pushing Russia into China’s sphere of influence.</p> <p>For the first time in fifty years a country may be bailed out using a currency other than the dollar.</p> <p>This, possibly, paves the way for the Chinese yuan to assume the role of a global reserve currency.</p> <p>Also, it is worth noting that a weak Russia is not in China’s military interest at this time of simmering geopolitical tensions.</p> <p>In the event of problems in the international monetary system, sellers of tangible wealth will want payment in a currency with some intrinsic value.</p> <p><strong>GoldCore Insight:&nbsp;<a href="http://info.goldcore.com/currency_wars_bye_bye_petro_dollar_buy_buy_gold_goldcore_insight_february_2013-0">Currency Wars: Bye, Bye Petrodollar – Buy, Buy Gold</a></strong></p> <p>&nbsp;</p> <p><strong>MARKET UPDATE</strong><br />Today’s AM fix was USD 1,210.75, EUR 982.03 and GBP 773.64 per ounce.<br />Yesterday’s AM fix was USD 1,199.00, EUR 962.36 and GBP 763.16 per ounce.</p> <p>Spot gold fell $7.40 or 0.62% to $1,188.90 per ounce yesterday and silver rose $0.03 or 0.19% to $15.77 per ounce.</p> <p>Spot gold in London rose over 2% after the Federal Reserve stated yesterday that it would take a patient approach towards increasing interest rates. This led to rising stock and commodities markets and hurt the U.S. dollar.</p> <p><a href="http://info.goldcore.com/essential-guide-to-storing-gold-in-singapore">Gold in Singapore</a>&nbsp;rose nearly 1% to $1,202.08 an ounce, and traded at $1,201.11 at 2:49 p.m. in Singapore, noted Bloomberg.</p> <p>U.S. Fed chief, Janet Yellen, said the Fed was not likely to raise rates for “at least a couple of meetings”, this has market participants focused on April 2015.<br />In London, spot gold climbed 1.8% to $1,209.46 an ounce after 1040 GMT.</p> <p>Comex U.S. February gold was up 1.3% at $1,209.90 an ounce. Spot silver gained 3.2% to $16.19 an ounce.</p> <p>Spot platinum was up 2.2% at $1,212.60 an ounce, while spot palladium rose 1.8% to $789.63 an ounce.</p> <p><strong>Get Breaking News and Updates On Gold&nbsp;<a href="http://info.goldcore.com/goldcore_email_subscription_preferences">Here</a></strong></p> <p><a href="http://www.goldcore.com/">www.GoldCore.com</a></p> http://www.zerohedge.com/news/2014-12-18/russia-being-driven-arms-china-0#comments Central Banks China Federal Reserve Janet Yellen Natural Gas Reality Reserve Currency Reuters Ukraine Yuan Thu, 18 Dec 2014 18:54:10 +0000 GoldCore 499309 at http://www.zerohedge.com 5 SCaRY WoRST CaSe SCeNaRioS... http://www.zerohedge.com/news/2014-12-18/4-scary-worst-case-scenarios <p style="text-align: center;"><iframe src="https://www.flickr.com/photos/expd/15782332299/player/" width="1024" height="1005" frameborder="0"></iframe><br /> .</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">End of the bear...</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">.<iframe src="https://www.flickr.com/photos/expd/15346199323/player/" width="900" height="693" frameborder="0"></iframe><br /> . </p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">Kim Jong Hack...</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">.<iframe src="https://www.flickr.com/photos/expd/15429069824/player/" width="1024" height="768" frameborder="0"></iframe><br /> .</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">.<iframe src="https://www.flickr.com/photos/expd/5962965429/in/photolist-jSEJA6-dgAty2-a5VKSM/player/" width="756" height="1024" frameborder="0"></iframe><br /> . </p> <p style="text-align: center;">A National Security Matter</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">.<iframe src="https://www.flickr.com/photos/expd/16048191025/player/" width="642" height="900" frameborder="0"></iframe><br /> .</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">Abominable Merkel...9,9,9!!!</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">.<iframe src="https://www.flickr.com/photos/expd/15842541417/player/" width="1024" height="1024" frameborder="0"></iframe><br /> . </p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">.<iframe src="https://www.flickr.com/photos/expd/16047261492/player/" width="780" height="1016" frameborder="0"></iframe><br /> . </p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">An unwelcome catch...</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">.<iframe src="https://www.flickr.com/photos/expd/15967612212/player/" width="1024" height="947" frameborder="0"></iframe>.</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">.</p> <p style="text-align: center;"> .<br /> <iframe src="https://www.flickr.com/photos/expd/15842830497/player/" width="1024" height="1024" frameborder="0"></iframe>.</p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;">Useless Christmas Gift...</p> http://www.zerohedge.com/news/2014-12-18/4-scary-worst-case-scenarios#comments KIM national security Thu, 18 Dec 2014 18:51:35 +0000 williambanzai7 499308 at http://www.zerohedge.com Biggest Short Squeeze In 38 Months Sparks Stocks Triple-Decouple http://www.zerohedge.com/news/2014-12-18/biggest-short-squeeze-38-months-sparks-stocks-triple-decouple <p>"Most Shorted" stocks are up 4.75% from yesterday's lows - the biggest squeeze since October 2011. </p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_squeeze1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_squeeze1_0.jpg" width="600" height="304" /></a></p> <p>&nbsp;</p> <p>Sending Small Caps up 4.5%...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_squeeze5.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_squeeze5_0.jpg" width="600" height="620" /></a></p> <p>&nbsp;</p> <p><strong>This squeeze has entirely decoupled US equities from VIX... </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_squeeze2.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_squeeze2_0.jpg" width="600" height="518" /></a></p> <p>&nbsp;</p> <p><strong>from credit... </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_squeeze3.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_squeeze3_0.jpg" width="600" height="335" /></a></p> <p>&nbsp;</p> <p><strong>and from crude oil.</strong>..</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_squeeze4.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12-overflow/20141218_squeeze4_0.jpg" width="600" height="316" /></a></p> <p>&nbsp;</p> <p> But when did any of that matter...</p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="957" height="504" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20141218_squeeze4.jpg?1418928224" /> </div> </div> </div> http://www.zerohedge.com/news/2014-12-18/biggest-short-squeeze-38-months-sparks-stocks-triple-decouple#comments Crude Crude Oil Thu, 18 Dec 2014 18:45:11 +0000 Tyler Durden 499307 at http://www.zerohedge.com Is Russia Being Driven Into the Arms of China? http://www.zerohedge.com/news/2014-12-18/russia-being-driven-arms-china <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">The "isolation of Russia" idea is one which has been receiving a lot of traction of late. Russia's recent economic woes have sometimes been covered with barely contained glee despite the hardships that average Russians may have to endure if the rouble continues to collapse … not to mention the inevitable geo-political backlash.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;"><a href="http://dzswc0o8s13dx.cloudfront.net/goldcore_bloomberg_chart1_18-12-14.png"><br /></a><a href="http://dzswc0o8s13dx.cloudfront.net/goldcore_bloomberg_chart1_18-12-14.png" target="_blank" rel="http://info.goldcore.com/currency_wars_bye_bye_petro_dollar_buy_buy_gold_goldcore_insight_february_2013-0"><img src="http://dzswc0o8s13dx.cloudfront.net/goldcore_bloomberg_chart1_18-12-14.png" width="486" height="302" class="alignnone" /></a></p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;"><a href="http://dzswc0o8s13dx.cloudfront.net/goldcore_bloomberg_chart1_18-12-14.png" target="_blank" rel="http://info.goldcore.com/currency_wars_bye_bye_petro_dollar_buy_buy_gold_goldcore_insight_february_2013-0"></a><em><strong>Reuters image of the over 50% drop in the Rouble against the U.S. dollar</strong></em></p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">Russia has become isolated from its western neighbours on account of the putsch in Ukraine which led to the predominantly ethnically Russian Crimea seceding from Kiev through a democratic process.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">European governments slavishly adhere to U.S. imposed sanctions. So from a western elite point of view, Russia is indeed isolated.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">Whether antagonising Russia is damaging to Russia is a moot point. Certainly in Russia's current straits the bankrupt west is in no position to help. European farmers are suffering from loss of export markets while Europe is still dependent on Russian natural gas.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;"><strong>So how "isolated" is Russia in reality?</strong></p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">Firstly, it is worth pointing out the obvious fact that countries do not have "friends", just “interests”. Representatives of countries may have good relationships but these are built on expediency - not friendship.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">So while there may be a great deal of distrust between the major powers of Asia these issues are being overlooked for now because it is expedient. Standards of living across the board have been rising in Asia for twenty years. It is in no countries interest to enter into conflict.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">By contrast, the west - led by the U.S. - has seen a remarkable fall in living standards over the same period. The bubble, prior to the 2008 crash, was not a golden-age for families as increasingly both parents were forced to work to just afford a roof over their heads.</p> <div class="mceTemp" style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;"> <dl class="wp-caption alignnone" style="border: 1px solid #dddddd; text-align: center; padding-top: 4px; margin: 10px 0px; width: 496px; background-color: #f3f3f3;"> <dt class="wp-caption-dt"><img src="http://dzswc0o8s13dx.cloudfront.net/goldcore_bloomberg_chart2_18-12-14.png" width="486" height="302" style="margin: 0px; padding: 0px; border-style: none;" /></dt> <dd class="wp-caption-dd" style="font-size: 11px; line-height: 17px; padding: 0px 4px 5px; margin: 0px;">Premier Li Keqiang at Moscow's Tomb of the Unknown Soldier during his Russian trip in October</dd> </dl> </div> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">The relationship between Russia and China has morphed with these changes. Russia supplies China with hi-tech military hardware. Russia has negotiated two major natural gas deals with China in the last year. China expects to double it's gas usage by 2030. So from a Chinese point of view it is certainly expedient to keep Russia on side.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">China may soon come to Russia's aid and provide liquidity according to the South China Morning Post:<br />"Russia could fall back on its 150 billion yuan (HK$189.8 billion) currency swap agreement with China if the rouble continues to plunge”.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">If the swap deal is activated for this purpose, it would mark the first time China is called upon to use its currency to bail out another currency in crisis. The deal was signed by the two central banks in October, when Premier Li Keqiang visited Russia.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">"Russia badly needs liquidity support and the swap line could be an ideal tool," said Bank of Communications chief economist, Lian Ping.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">The swap allows the central banks to directly buy yuan and rouble in the two currencies, rather than via the U.S .dollar.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">This highlights the long-term error of the west - pushing Russia into China's sphere of influence.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">For the first time in fifty years a country may be bailed out using a currency other than the dollar.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">This, possibly, paves the way for the Chinese Yuan to assume the role of a global reserve currency.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">Also, it is worth noting that a weak Russia is not in China's military interest at this time of simmering geopolitical tensions.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">In the event of problems in the international monetary system - sellers of tangible wealth will want payment in a currency with some intrinsic value.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;"><strong>GoldCore Insight:&nbsp;<a href="http://info.goldcore.com/currency_wars_bye_bye_petro_dollar_buy_buy_gold_goldcore_insight_february_2013-0">Currency Wars: Bye, Bye Petrodollar - Buy, Buy Gold</a></strong></p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;"><strong>MARKET UPDATE</strong><br />Today’s AM fix was USD 1,210.75, EUR 982.03 and GBP 773.64 per ounce.<br />Yesterday’s AM fix was USD 1,199.00, EUR 962.36 and GBP 763.16 per ounce.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">Spot gold fell $7.40 or 0.62% to $1,188.90 per ounce yesterday and silver rose $0.03 or 0.19% to $15.77 per ounce.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">Spot gold in London rose over 2% after the Federal Reserve stated yesterday that it would take a patient approach towards increasing interest rates. This led to rising stock and commodities markets and hurt the U.S. dollar.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;"><a href="http://info.goldcore.com/essential-guide-to-storing-gold-in-singapore">Gold in Singapore</a>&nbsp;rose nearly 1% to $1,202.08 an ounce, and traded at $1,201.11 at 2:49 p.m. in Singapore, noted Bloomberg.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">U.S. Fed chief, Janet Yellen, said the Fed was not likely to raise rates for "at least a couple of meetings", this has market participants focused on April 2015.<br />In London, spot gold climbed 1.8% to $1,209.46 an ounce after 1040 GMT.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">Comex U.S. February gold was up 1.3% at $1,209.90 an ounce. Spot silver gained 3.2% to $16.19 an ounce.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;">Spot platinum was up 2.2% at $1,212.60 an ounce, while spot palladium rose 1.8% to $789.63 an ounce.</p> <p style="color: #333333; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-size: 13px; line-height: 19px;"><strong>Get Breaking News and Updates On Gold&nbsp;<a href="http://info.goldcore.com/goldcore_email_subscription_preferences"><em>Here</em></a></strong></p> http://www.zerohedge.com/news/2014-12-18/russia-being-driven-arms-china#comments Central Banks China Federal Reserve Janet Yellen Natural Gas Reality Reserve Currency Reuters Ukraine Yuan Thu, 18 Dec 2014 18:31:54 +0000 GoldCore 499306 at http://www.zerohedge.com White House Confirms Sony Hack Is "National Security" Matter, Merits "Approporiate Response" http://www.zerohedge.com/news/2014-12-18/white-house-confirms-sony-hack-being-treated-national-security-matter <p>Absent YouTube clips of young North Korean hackers actually attacking Sony, the Obama administration appears to have made up its unequivocal mind that they are responsible... <a href="http://www.zerohedge.com/news/2014-12-18/someone-lying">(even as they say the Sony hack origin is still under investigation)</a> and now...</p> <ul> <li><strong>*SONY HACK BEING TREATED AS NATIONAL SECURITY MATTER: EARNEST</strong></li> <li><strong>*EARNEST SAYS SONY HACKING MERITS 'APPROPRIATE RESPONSE'</strong></li> </ul> <p>The White House spokesman added that daily meetings are being held on the attack. We wonder just how soon it will be before the Nobel Peace Prize winner decides it's time to take 'action'.</p> <p>Additionally...</p> <ul> <li><strong>*EARNEST DECLINES TO SAY IF N. KOREA RESPONSIBLE FOR SONY HACK</strong></li> <li><strong>*EARNEST DECLINES TO SAY IF OBAMA, ABE TALKED SONY HACK ON CALL</strong></li> <li><strong>*EARNEST SAYS U.S. SIDES WITH ARTISTIC EXPRESSION ON SPEECH</strong></li> <li><strong>*EARNEST: PULLING `THE INTERVIEW' A DECISION SONY SHOULD MAKE</strong></li> </ul> <p>Of course, there's another reason...</p> <ul> <li><strong>*EARNEST REITERATES CONGRESS SHOULD PASS CYBERSECURITY BILL</strong></li> </ul> <p><a href="http://variety.com/2014/biz/news/sony-hack-white-house-considering-responses-for-serious-national-security-matter-1201382706/"><em>As Variety reports,</em></a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>The Obama administration is viewing the massive hack attack against Sony Pictures Entertainment as a “serious national security matter” and is considering a range of possible options as a response,</strong> Press Secretary Josh Earnest said Thursday.</p> <p>&nbsp;</p> <p><strong>The Sony Pictures situation was the first question Earnest faced at Thursday’s midday press briefing.</strong> Earnest was careful not to say that the White House believes North Korea was behind the attack. He emphasized that the investigation into the attack is “progressing” at the FBI and Justice Department.</p> <p>&nbsp;</p> <p>Earnest made it clear that the issue has engaged top administration officials who have <strong>held daily meetings on the matter </strong>in recent days. He said the administration is considering its options once the investigations are complete. He wouldn’t specify other than to say that a response would be “consistent with how will we protect against, monitor and respond to cyber-incidents. <strong>This is something that is being treated as a serious national security matter.”</strong></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="315" height="198" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20141218_noko.jpg?1418926371" /> </div> </div> </div> http://www.zerohedge.com/news/2014-12-18/white-house-confirms-sony-hack-being-treated-national-security-matter#comments FBI national security North Korea Obama Administration White House Thu, 18 Dec 2014 18:13:29 +0000 Tyler Durden 499305 at http://www.zerohedge.com Russia Has Begun Selling Its Gold, According To SocGen http://www.zerohedge.com/news/2014-12-18/russia-has-begun-selling-its-gold-according-socgen <p>A few days ago, we first reported a rumor that was floating around Wall Street desks, and which, according to some, was the "reason" that gold was being kept lower even as sovereign risk was exploding around the globe. The rumor was that Russia was selling its gold holdings:</p> <blockquote class="twitter-tweet" lang="en"><p>Rumor Russia selling gold</p> <p>— zerohedge (@zerohedge) <a href="https://twitter.com/zerohedge/status/544579338713432065">December 15, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>This led to Bloomberg speculating, and us rhetorically asking, if "<a href="http://www.zerohedge.com/news/2014-12-17/will-putins-next-step-be-sell-gold">Putin's next step will be to sell gold</a>"</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>"Russia is at a critical juncture and given the sanctions placed upon them and the rapid decline in oil prices, they may be forced to dip into their gold reserves, if it happens it will push gold lower." That is what, according to some people Bloomberg has quoted, is in the cards.</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/news/2014-12-15/why-russia-and-china-are-buying-gold-according-economics-professor">While some suggest the accumulation was "tradition"</a> it is still nonetheless an impressive aggregation of the barbarous relic:</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12/20141217_putin.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12/20141217_putin_0.jpg" width="600" height="303" /></a></p> <p>&nbsp;</p> <p>So given the efforts to build this gold-backing for their nation's currency, <strong>do we really expect Putin to now dump his physical: <a href="http://www.zerohedge.com/news/2014-12-03/russias-monetary-solution">or perhaps more strategically suggest a true gold-backed currency and jawbone the currency that way?</a></strong></p> </blockquote> <p>So what is the truth? Well, we won't for sure until the next official report by the Central Bank of Russia hits the IMF database,&nbsp;<strong>&nbsp;</strong>but in the menatime, SocGen just reported that the selling may have started:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/12/gold%20vs%20oil_0.jpg" width="600" height="337" /></p> <p>&nbsp;</p> <p>Looking at the correlation between gold and oil prices, the chart above illustrates that both commodities were moving closely in tandem over the July to September period. However, this link was broken in early October when gold embarked upon the new rally on weaker US dollar and some physical support, while oil prices continued to slide. The rally, nonetheless, proved to be short lived, as gold returned to its downtrend after hitting the $1,250 level on 21 October, and continued to move down, along with oil, for the remainder of the month.</p> <p>&nbsp;</p> <p>Starting from November we have seen gold and oil prices moving in opposite directions again. As we mentioned earlier, oil prices came under significant pressure on concerns about a growing global oil supply glut. On the contrary, gold recovered some of its earlier losses, supported by fresh buying interest in India on the news that the Reserve Bank of India (RBI) was reviewing gold import restrictions that were introduced last year. Towards the end of November, the RBI surprised the markets by announcing the withdrawal of the 80:20 rule, which saw gold imports surging to 150 tonnes that month, according to the latest statistics from the Indian Ministry of Commerce and Industry. In addition, worries over the potential impact of stronger US dollar on the global economy spurred some safe-haven buying.<strong>&nbsp;</strong></p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p>It is not surprising that Russia has been tackling its financial problems by selling the gold they have been accumulating. According to the IMF data this year, one of the world's largest oil exporters acquired 115 tonnes in the January to September period, and added another 18.9 tonnes to their reserves in October. Russia has been purchasing the yellow metal at a faster pace this year, taking advantage of lower gold prices and, perhaps, preparing for the possibility of a long-lasting restrained relationship with the West and economic downturn. <strong><span style="text-decoration: underline;">It appears possible that the Central Bank of Russia has started to sell off some of its gold reserves in December, with some sources reporting that official gold reserves dropped by $4.3 billion in the first week of the month.</span><br /></strong></p> </blockquote> <p>Of course, it should be noted that SocGen and its "sources" have a conflict: in an indirect way, none other than SocGen is suddenly very interested in Russia stabilizing its economy because as we wrote before, "<a href="http://www.zerohedge.com/news/2014-12-16/russia-contagion-spreads-european-banks-french-socgen-austrian-raiffeisen-plummet">Russia Contagion Spreads To European Banks : French SocGen, Austrian Raiffeisen Plummet</a>" which also sent SocGen's default risk higher in recent days. So if all it will take to stabilize the RUB sell off, reduce fears of Russian contagion, <em><strong>and halt the selloff of SocGen stocks </strong></em>is a "source" reporting what may or may not be the case, so be it.&nbsp;</p> <p>In any event, keep a close eye on the next update of Russian official gold holdings: it may well be the next big story of where gold is headed and, if true, an even more important question will be who is Russia selling its gold to.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="131" height="98" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/putin%20gold.jpg?1418925375" /> </div> </div> </div> http://www.zerohedge.com/news/2014-12-18/russia-has-begun-selling-its-gold-according-socgen#comments default Global Economy India None Raiffeisen SocGen Sovereign Risk Sovereign Risk Thu, 18 Dec 2014 18:05:25 +0000 Tyler Durden 499304 at http://www.zerohedge.com