China

As of today, with Glencore stock once again trading near all time lows sliding as low at 75p, the company's default risk just hit 54%, the highest in 6 years, as a result of its CDS blowing out past 900 and wider than the intraday spreads hit in September as the following chart from Markit shows.

Government interference by both central banks and regulators (the latter are desperately fighting the “last crisis”, bolting the barn door long after the horse has escaped, thereby putting into place the preconditions for the next crisis) has created an ever more fragile situation in both the global economy and the financial markets. As the below charts and data show, price distortions and dislocations have been moving from one market segment to the next and they keep growing, which indicates to us that there is considerable danger that a really big dislocation will eventually happen.

• Gloomy mood prevails despite calmer commodities (Reuters)
• A Strong Dollar Hurts China More Than the U.S. (BBG)
• China Sets Yuan at Four-Year Low in ‘Stress Test’ (WSJ)
• Dow Chemical and DuPont Are in Advanced Talks to Merge (WSJ)
• Yahoo scraps plan to spin off Alibaba stake (Reuters)

Overnight market action has largely been a continuation of Tuesday's key themes with European stocks falling as a selloff in mining companies extended to a 7th day, even as metals prices rose and crude oil rallied modestly from a six-year low after yesterday's API crude inventory draw. U.S. equity futures have rebounded from modest declines, as emerging-market shares extended their losing streak to a 6th day while Asian stocks dropped to 2 month lows.

Between commodity-backed financing deals and the centrally-planned mal-investment boom-driven excess capacity, China has a lot of 'liquidation' to do to normalize from a credit-fueled smoke-and-mirrors world to a painful reality. As Bloomberg notes, there’s no let-up in the onslaught of commodities from China. While the country's total exports are slowing in dollar terms (as we noted last night), shipments of steel, oil products and aluminum are reaching for new highs, flooding the world with unwanted inventories. China's de-glutting is now the rest of the world's problem as the deflationary tsunami grows ever higher. This is not going to end well. Not for anybody. Other than the arms lobby. What it will do is change geopolitics forever, and a lot.

Chinese Producer Prices have now fallen YoY for 45 consecutive months and November's 5.9% YoY drop is the largest since the crisis in 2009. Following weak trade data overnight (and with The IMF having blessed any and all currency movements), it appears Chinese authorities have decided to do something about and continue the slowest, quietest, stealthiest currency war in the world. With today's Yuan fix, PBOC has weakened the Yuan back below the August devaluation lows, back to its weakest against the USD since August 2011. Judging by Offshore Yuan, there is a lot more weakening to come.

At 1815ET, after trading in a very narrow $1 range for hours, Bitcoin suddenly exploded $17 higher on very heavy volume. Normally this wouldn't warrant an explicit mention, but this time... something odd happened in Chinese currency markets...

Send a Million Troops From All Over the World Pouring Into Raqqa

Oil tanker rates soared to the highest in seven years amid an acceleration in the number of bookings and signs that the ships are being delayed when unloading due to a lack of space in on-land storage tanks. This means that day rates for 2 million-barrel carrying ships sailing to Japan from Saudi Arabia, the industry’s benchmark route, surged to $111,359, the highest since July 2008,

With the oil price collapse accelerating (Brent just dropped below $40 for the first time since Feb 2009), the currencies of major oil-exporting nations - such as the Canadian dollar and Norwegian crown - are plunging...

Sales of American Eagle gold coins at the U.S. Mint surged in November, with gold demand nearly tripling month-over-month. China's gold reserves rose by another 21 tonnes in November, the biggest bout of gold buying since China began disclosing monthly data on it's gold reserves in June

Despite these very high levels of demand, gold prices fell sharply in November - from $1,141/oz to $1,070/oz or 6.6%.

The last week has seen Small Caps first drop into negative territory for the year (joining Dow Transports). Yesterday The Dow joined the un-party. And today, following growth concerns from China trade data, The S&P 500 has tumbled to open in the red for the year...

If you're in the commodities business, this is “not the time for courage” (to borrow a classic Gartman-ism). In the latest example of just how bad things have gotten, Anglo American - the world’s fifth largest miner - just kitchen sink-ed it, announcing a sweeping restructuring, a massive round of layoffs, and a dividend cut. The company will reduce its assets by some 60% while headcount will be cut by a whopping 85,000 or, nearly two thirds.

• Anti-Trump Effort Launches Super PAC (WSJ)
• Muslims decry Trump's proposal to keep them out of US (AP)
• Debate Heats Up Over No-Fly List, Gun Sales (WSJ)
• OPEC Takes Down Oil Majors as Lower-for-Even-Longer Kicks In (BBG)
• Chinese Companies Are Trapped in IPO Logjam (WSJ)
• Republican Ted Cruz vaults into first place in new Iowa poll (Reuters)