China

On Monday, Mauricio Macri, the son of Italian-born construction tycoon Francesco Macri, beat out Cristina Kirchner’s handpicked successor Daniel Scioli for Argentina’s presidency in what amounted to a referendum on 12 years of Peronist rule. Now, Macri faces a trio of daunting tasks: i) restore central bank liquidity, ii) implement a new FX regime, and iii) tackle the ballooning budget deficit. The most most pressing concern: the central bank is literally out of dollars. 

Why Now?

“From the mass psychology perspective, Gold is very close to putting in a bottom.  Sentiment investors, contrarian investors and investors who are familiar with the concept of mass psychology should consider taking a closer look at the precious metal’s sector now”.

The US is on its own and monetary expansion seems the only Holy Grail left...

A former Goldman Sachs Group Inc. employee "hired to help it monitor computer systems for illicit activity" used the company’s own inside information to invest in mergers and acquisitions involving the bank’s clients, the Securities and Exchange Commission said.

• 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)

Following yesterday's dramatic geopolitical shock, U.S. equity index futures rise as Russia has not escalated the confrontation with Turkey as some had feared, while Asian shares fall, reversing earlier gains. European stocks are rallying and the euro is falling on the back of a Reuters report that the ECB is mulling new measures to prop up lending, although it’s not clear at this point what the real impact from these measures would be.

Today's 1.75% rally in copper (ripping vertical at the US open) broke a record 14-day losing-streak after COMEX futures tested towards a '1' handle numerous times for the first time since March 2009 (when the S&P 500 traded around 800). The metals market appears to be increasingly pricing concurrent and/or future weakness in China’s old economy, according to Goldman, as China futures open interest surges, but discussions at the 2015 Shanghai CESCO conference last week exposed the extremely bearish views of Chinese market participants regarding Chinese metals demand in 2016 (notably sentiment was worse than that expressed by investors outside of China) specifically citing a Fed rate hike before year-end as a further bearish factor for metals.

Wondering where the world's economies are in the leverage cycle? Well, wonder no more. SocGen is out with its updated "leverage clock" which shows you where the bank thinks everyone falls in terms of ticking debt time bombs. As you'll see, SocGen's assessment is quite generous...

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.

The financial news continues to confound and confuse investors. The Fed is telling one story. The world economy is telling another.

• Turkey downs Russian warplane near Syria border, Moscow denies airspace violation (Reuters)
• Investors seek safety in bonds, yen after Turkey downs Russian jet (Reuters)
• Donald Trump Is Not Backing Down (BBG)
• Uber's Exposure May Grow as U.S. Drivers Seek 57.5 Cents a Mile (BBG)
• U.S. issues global travel alert as manhunt continues for Paris attackers (Reuters)
• Stung by Oil, Distressed-Debt Traders See Worst Losses Since '08 (BBG)

Once upon a time, luxury jewelry retailer Tiffany was seen as the bellwether for the global market, however not so much in the New Paranormal when as a result of the company over-reliance on China, and a new focus on aspirational middle-class consumers, the stock had recently been trading at levels not seen in over two years. Things went from bad to worse this morning when the company reported its latest disappointing earning, in which it also slashed full year guidance, blaming a strong dollar, lower tourist spending, as well as "volatile, uncertain economic and market conditions in the U.S. and other regions."

It had been a relatively quiet session overnight when as reported previously, the geopolitical situation in the middle east changed dramatically in a moment, when NATO-member country Turkey downed a Russian fighter jet allegedly over Turkish territory even though the plane crashed in Syria, and whose pilots may have been captured by local rebel forces. The news promptly slammed Turkish assets and FX, sending the Lira tumbling, pushing lower European stocks and US equity futures while sending 2 Year German Bunds to record negative yields.