It's the last trading day of the year, nothing has been resolved on the Cliff, the perpetually wrong media has now decided to change its tune and is spin the Wile E. Coyote plunge as a "good thing" (just as we expected), Congress is nowhere, the Senate failed to reach any resolution last night and is resuming the "negotiations" farce at the bright and early hour of 11 am, and yet somehow, in spite of everything, the strong bid under the futures refuses to go away (thank you Kevin Henry). This despite what is becoming clear to even this broken market (InTrade odds of a debt ceiling deal by the end of today are still a substantial 2.3%) that there will likely be no deal until some time in February or March when the debt ceiling extensions expire by which point the only question is how deep the US recession will be. And still everyone will be shocked, shocked, when nothing is done today either. Why? Because the market continues to price in an outcome which demands that it crash for it to be achieved. That so few grasp this is frankly, disturbing. Also, everything else is perfectly enjoyable theatrical noise. And just to keep the excitement factor really high, most rates and FX markets close early today, with rates and FX futures markets close at 1pm New York time while cash bond trading at 2pm.
Not like news matters anymore, but here is what else happened recently, via BBG:
- Greek October retail sales imploded by 18.1% by volume and 17.1% by revenue, the biggest dump in 2 years and proof that despite Greek hedge fund bondholders being made whole, the Greek nation and economy has never been worse.
- Merkel said the economic environment will be more difficult in 2013 than this year, and that Europe’s sovereign debt crisis is "far from over," though progress has been made
- A French court’s rejection of Hollande’s 75% millionaire tax shows the limits on his ability to tap high earners, even as the ruling is unlikely to attract investors and executives back to France
- BofAML Corporate Master Index OAS narrows to 153bps. $54.9b has priced in December. Markit IG widens 1bps to 98bps; YTD low 83bps. High Yield Master II OAS rises 2bps to 530bps; $25.26b has priced this month. Markit HY narrows 5bps to 510bps, YTD low 445bps
- $6.6b ABS priced in December
- EUR/USD falls, trades at $1.3187. Asian, European stocks mixed; U.S. equity-index futures higher. Energy complex lower, precious metals gain.
Oh, and finally today the US finally breached its latest and greatest debt ceiling as reported previously. But just one more hike, and this time the US will get its financial house in order. Promise.
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