goldman sachs

Last December, traditionally permabullish energy trader Andy Hall shocked the world when he became the first casualty of the oil crash after Phibro, his 113 year old employer then owned by Occidental Petroleum after its sale by Citigroup, would liquidate in the US after it failed to buy a buyer. He wouldn't be the last. Overnight, Nexen Energy, a wholly owned subsidiary of China's CNOOC Ltd, reported it too would close its crude oil trading division following a round of job cuts announced last week, four market sources said on Monday.

"The Fed is a reluctant Dollar bull," explains Goldman Sachs, noting that Yellen inadvertently revealed the FOMC's expectation that coming policy changes will boost the greenback. Broadly speaking the rest of the sell-side has herded along into the strong US Dollar camp with only Unicredit (rate shift may slow recent very strong USD momentum) and Morgan Stanley (suggesting USD corrective activity) backing away from full dollar bull though most suggest adding to dollar longs on any dip as the most crowded trade in the world gets crowded-er. Then Stan Fischer added... "DOLLAR WON'T KEEP RISING FOREVER."

"Leverage is risky. Purchasing assets with borrowed money can amplify small movements in prices into extraordinary gains or crippling losses, even default."

- San Fran Fed

The $665 Million Evolution in a Space Nobody Respected a Year Ago - Already Outpacing the Internet Circa 1994

The inverted relationship between gold and the dollar broke down in November 2011. The dollar soared from July to the present, spiking 21% against the other major currencies. Most of the negative commentary regarding gold in recent months misses the rather bigger point that the gold price has held up remarkably well given the extent of dollar’s move.

Debt, Distraction, Currency Wars, Itchy Fingers

"It would be transformative if everybody voted," Obama said during a town hall event in Cleveland, Ohio. "That would counteract (campaign) money more than anything. If everybody voted, then it would completely change the political map in this country." Obama also added that the people who tend not to vote are "young, they're lower income, they're skewed more heavily toward immigrant groups and minorities ... There's a reason why some folks try to keep them away from the polls."

• Fed May Not Hit Neutral Until 10th Anniversary of Lehman Collapse (BBG)... make that never
• Global stocks and bonds roar Fed approval, dollar fights back (Reuters)
• EU to tell Greece time, patience running out (Reuters)
• U.S. likely to delay planned closure of two Afghanistan bases (Reuters)
• Norway Signals Reduction After Unexpectedly Holding Rate (BBG)
• Oil Falls to $55 as Kuwait Comments Refocus on Oversupply (Reuters)
• Tsipras Heads to Summit as Merkel Tries to Defuse Greek Crisis (BBG)
• Yahoo Pulls the Plug on China Operations (WSJ)

• Hilsenrath: Fed to Markets: No More Promises (WSJ)
• Fed set to ditch 'patient' rate vow as it eyes U.S., world growth (Reuters)
• Fannie, Freddie could need another bailout (Reuters)
• Alibaba Stock-Sale Lockup Is Ending (WSJ)
• Netanyahu Sweeps Aside Herzog’s Challenge to Win Israel Vote (BBG)
• Oil Bonds Lose Investors $7 Billion in 10 Days (BBG)
• There’s a mysterious $1.1 trillion in spending cuts in the House GOP’s budget (WaPo)
• ECB's Celebration of Its New $1.4 Billion Tower Is Spoiled by Protesters (BBG)

Things are not going well for the Greeks. Bond yields are at post-default highs, implicitly shutting them out of the capital markets; stocks are cratering; and deposit outflows continue as the cash crunch looms. Even ex-Goldman silver-lining-finder Erik Nielsen stated this weekend that he is "throwing in the towel," on Greece, adding, as Bloomberg reports, that things have gone "plain nuts" in Athens. However, things are going great for the Germans - borrowing costs have never been lower, and the stock market is at record-er highs every day, as Draghi's money-printing fiasco has succeeded in one thing (and one thing only) dividing an already fragile 'union' into ever-greater 'haves' and ever-lesser 'have-nots'.

Greece will need to find €2 billion by Friday in order to repay creditors as Schaeuble, others see no way out. With no contingency plan, Athens' day of reckoning may be at hand. Morgan Stanley is out today with a note diagramming what happens next. 

• Israelis vote as 'King Bibi's' reign hangs in the balance (Reuters), Factbox: Main candidates in Israel's election (Reuters)
• Iran Can Add Million Barrels a Day of Oil If Sanctions Halt (BBG)
• Kremlin rules out handing back Crimea to Ukraine (Reuters)
• Saudi Arabia Needs More Oil to Feed Local Refinery Expansion (BBG)
• How Lafarge’s CEO Went From Holcim Merger Architect to Obstacle (BBG)
• When Yellen Gets Less Predictable She’s Getting Back to Normal (BBG)
• Iran nuclear talks intensify as sides face tough issues (Reuters)
• Debunking $1.4 Trillion Europe Debt Myth in Post-Heta Age (BBG)

Between 2007 and 2012, 200 of America’s most politically active corporations spent a combined $5.8 Billion on federal lobbying and campaign contributions. What they gave pales compared to what those same corporations got: $4.4 Trillion in federal business and support. Here is the visual representation of this stunning finding: for every dollar spent on influencing politics, the nation’s most politically active corporations received $760 from the government.

It started off as the perfect storm for futures: after Sunday night's latest plunge in WTI, which saw it drop to the lowest price since Lehman, the double whammy that has now forced Deutsche Bank to become the first major institution to forecast no growth for S&P500 EPS in 2015, namely the strong dollar, reared its ugly head and the EURUSD seemed dangerouly close to breaching the all important 1.04-1.05 support level we first noted last week. However, overnight parties tasked with preserving "financial stability" appear to have once again stepped in, and not only has the EURUSD rebounded off 1.05, but crude is now just barely down from the Friday close as all firepower is put to the same use, that sent the Shanghai Composite soaring by 2.3% overnight, and which sent the Dax over 12,000 for the first time ever.

The bust of Aussie boom-towns, collapse of the mining industry, dramatic capital outflows, and a bursting housing bubble all have one thing in common, according to billionaire hedge fund manager Crispin Odey - "China is everything to Australia in lots of ways." Simply put, he tells The Australian Financial Review, economies dependent on China for income, including Australia, are headed for recession and central banks will not be able to able to come to the rescue because they have exhausted the arsenal of policy weapons. "We've got a very old-fashioned recession which is spreading across the world," and Australian banks face a tough time ahead too because there are indications bad debt risks are rising.