China

2015 was the year of considerable FX drawdown as desperate EM central banks attempted to rescue themselves from reality. As Barry Eichengreen noted, "Intervening to support an exchange rate that’s fundamentally overvalued is a fool’s game and a no-win situation, akin to a sovereign attempting to sustain an unsustainable debt burden rather than yielding to inevitable restructuring."

On the heels of the collapse in China 'B' shares last night, and continued stress in money-markets, China weakened the the Yuan fix to its lowest since June 2011 tonight. This has sent offshore Yuan spiralling lower breaking above 6.5700 for the first time since trhe August devaluation's collapse. Chinese stocks are on the weaker side, extending losses, and we now await the money-markets to see if this stress is escalating.

Even though the odds are never in our favor, there is still hope. Not everyone has to make the extreme sacrifice in order to contribute to the revolution. There are thousands of small acts which will weaken the establishment: "Don’t be a slave to debt. Live beneath your means and accumulate some physical silver and gold. Don’t vote for candidates selected by the vested interests. Spread the message of liberty and freedom to anyone who will listen. Think critically. Do not trust your government. Prepare for the inevitable collapse of this rotten, fetid, corrupt paradigm."

Each year more than one trillion dollars goes up in smoke. More accurately, it is stolen from the middle and working classes and shipped off to the one percent. We are talking about the massive yearly bill to maintain the US empire. What can we do to work for peace in 2016? First we must tune out the lying propaganda served up by the US mainstream media. We must educate ourselves so that we can help educate others.

"Security prices are not low. I wouldn’t say high, but full. So people are thinking cautiously but they’re acting bullish and they’re behaving in a pro-risk fashion. While investor behavior hasn’t sunk to the depths seen just before the crisis, in many ways I feel it has entered the zone of imprudence... The market is not an accommodating machine. It will not go where you want it to go just because you need it to go there."

Congress ended the U.S. crude oil export ban last week. There is apparently no longer a strategic reason to conserve oil because shale production has made American great again. At least, that’s narrative that reality-averse politicians and their bases prefer. Congress’ decision to lift the 40-year U.S. ban on crude oil exports reflects the same misinformed and distorted thinking that declares that the world’s highest cost producer - tight oil - can somehow also be the world’s swing producer.

Apparently, China has finally gotten wise to what the West has known since at least 9/11: namely that you can always justify the state's nasty habits by claiming authorities require new powers to fight "terror." The NPC passed new legislation on Sunday that, in addition to granting Beijing new surveillance powers, also legalizes the PLA's deployment overseas to conduct anti-terror ops.

While everything was awesome last week (apart from the last 10 minutes), it appears lower oil prices this week (WTI just crossed back below Brent's price and under $37 once again) is not "unequivocally good" for US equity markets. Following the bloodbath in China's "B" Shares overnight, traders are hoping this pain will stop once the machines "get back to work" at 930ET...

• The Year Nothing Worked: Stocks, Bonds, Cash Go Nowhere (BBG)
• Oil falls toward $37, near 11-year low, as excess supply weighs (Reuters)
• End of easy money for mini-refiners splitting U.S. shale? (Reuters)
• Shale's Running Out of Survival Tricks as OPEC Ramps Up Pressure (Reuters)
• 'Safe’ Puerto Rican Debt Stirs Worries (WSJ)
• These Will Be Wall Street's Most In-Demand Jobs Next Year (BBG)

The last trading week of 2015 begins on a historic precipice for stocks: as reported over the weekend, the U.S. stock market has not been lower for any year ending in a “5? since 1875. That streak is now in jeopardy, because following Thursday's shortened holiday session which ended with an abrupt selloff, the overnight session has seen continued weakness across global assets in everything from Chinese stocks which tumbled the most since November 27, to commodities (WTI  is down 2.5%) to European stocks (Stoxx 600 -0.4%), to US equity futures down 0.4% on what appears to be an overdue dose of Santa Rally buyers' remorse.

Update: *SHANGHAI B-SHARE INDEX PLUNGES 7.8% - MOST IN 4 MONTHS

We have seen this pattern before. In August, the first thing to tumble was Yuan FX rates, then money market rates exploded, and then the stock market tumbled. While it is a little premature, today's sudden plunge in Chinese stocks (as the afternoon session opens) following last week's spike in money market rates following the previous week's non-stop weakness in the Yuan does have a concerning smell of deja vu all over again.

More and more countries are jumping on the gold bandwagon...

If ever there was a clearer indication of America's "need for war" it was the latest Durable Goods orders data, which confirmed, absent defense spending, the US economy is in a tail-spin. However, as NYTimes reports, foreign arms sales by the United States jumped by almost $10 billion in 2014, about 35 percent, even as the global weapons market remained flat and competition among suppliers increased, thanks to multibillion-dollar agreements with Qatar, Saudi Arabia and South Korea.

Now that the gold-trading company at the nexus of what may have been the world's biggest gold smuggling ring in history has imploded seemingly overnight, vaporizing countless tons of physical gold and unknown amounts of client cash, even more questions remain.