Central Banks

“We should focus on the meaning rather than individual words"...

The China Nonferrous Metals Industry Association has submitted a request to Chinese regulators to probe "malicious" short-selling in domestic metal contracts amid recent price declines. Becase it is always the "malicious" sellers who are the cause of all the world's problems, never the "malicious" buyers, especially when said buyers are the central banks themselves.

Yes, it’s true that the propping up of the markets by the Fed and Central Banks has gone on longer than we realized, the unraveling of the World’s Greatest Financial Ponzi Scheme is still on its way.

China's aluminum and nickel producers have asked Beijing to buy up surplus metal, sources said, the first coordinated effort since 2009 to revive prices suffering their worst rout since the global financial crisis. China Nonferrous Metals Industry Association had suggested that the state buys 900,000 tonnes of aluminum, 30,000 tonnes of refined nickel, 40 tonnes of indium, and 400,000 tonnes of zinc. Or, in other words, "QE for metals."

The S&P 500 is up 0.44% in the last three days, a solid return for the buy-and-hold'ers thinking about long-term appreciation. However, under the covers of that move is, just as we predicted, a massive and accelerating short-squeeze is underway, dragging the "Most Shorted" stocks up 4.65% since Friday's open as investors bet increasingly on central-bank-inspired expectations that hedge fund blow ups will force domino-like, sequential short squeezes.

• European stocks up, oil slides as concerns ease over Russia-Turkey tension (Reuters)
• ECB discusses two-tiered bank charges, broader bond buys (Reuters)
• New agonies, alliances as Fed debates post-liftoff plan (Reuters)
• A New Military Power Rises in the Mideast, Courtesy of One Man (BBG)
• Russia's Gazprom says halts gas supplies to Ukraine over payment (Reuters)
• Other central banks set to act, but Swiss policy cupboard bare (Reuters)

November has been a banner month for black swans. From Leftist political coups in Portugal to terror attacks in Paris to downed Russian fighter jets in Syria, the market is gradually learning to expect the unexpected. In its latest Quarterly Economic Outlook, SocGen outlines five political and economic black swans that could land in 2016.

This is a commentary which should never have needed to be written. 

While it is hoped that the economy can continue to expand on the back of the "service" sector alone, history suggests that "manufacturing" continues to play a much more important dynamic that it is given credit for.

"The political left is happy to see people cross borders but would gladly restrict the flow of capital and goods. The political right is happy to see capital and goods cross borders but would gladly build a fence to restrict the flow of people. I’m afraid that the compromise might be to restrict people, capital and goods."

"This is the final spasm of a dying bull market that has been entirely fueled by central bank money printing. But if you look at the underlying trends both in the domestic and in the global economy and the outlook for earnings, everything that matters is heading south and the real global recessionary forces are just getting started."

"We have determined that applying a negative rate was a more transparent and fairer solution for our clientele. This decision on negative rates is costing us a lot of money -- pretty much the equivalent of our entire annual profit last year."

In a world where every market is rigged and manipulated - either by central banks, by algos, or by human actors eager to "get rich quick" - we doubt many will care that the New York Attorney General has finally figured that the FX market was also rigged by spoofing (something we have pointed out since 2013), and yet this latest development is worth pointing out. The reason for that is not so much the companies which are named in this latest crackdown on widespread manipulation in the world's most important market (now that all central banks are engaged in currency warfare) but which are not.

The debt to GDP ratio for the entire world is 286%.  In other words, global debt is almost 3 times the size of the world economy.  Both public and private debt are exploding and - despite what mainstream economists think - 141 years of history shows that excessive private debt can cause depressions.