CDS

"... what we are going to see next is a credit cycle, and in a credit cycle you see some losses, but if China's banking system loses 10%, you are going to see them lose $3.5 trillion."

Earlier today everything changed when Saudi Arabia's unveiled what may be a stunning Hail Mary: one which is great news for the suddenly liquidity challenged Saudi government, and is very bad news for the future price of oil. According to the Economist, Saudi Arabia is contemplating taking Saudi Aramco - arguably the world's most valuable company - public. Here are the implications.

Saudi Arabia, which entered 2015 with virtually no debt and an FX reserve war chest that amounted to around three quarters of a trillion dollars, is now viewed as less creditworthy than a country where a coalition of socialists, left-wingers, and communists just overthrew the government.

Two months after the first "Macy's Massacre", the massacre is back with a vengeance, and moments ago the iconic retailer not only reported yet another cut in its guidance, but also announced it would be laying off another boatload of retailers, demonstrating just how strong the "service" economy truly is.

The debt valuation adjustment, or DVA, will no longer be included in net income, according to revisions to the fair-value measurement standard published by the Financial Accounting Standards Board Tuesday.  The DVA rule increased net income when a bank’s bonds tanked, on the theory that the firm could buy back its bonds at a lower price and benefit from the decline in value.

Derivatives like credit default swaps turned a mere bubble in the US housing market into a global financial catastrophe... 

"Given our views on credit contraction in Asia, and in China in particular, let's say they are going to go through a banking loss cycle like we went through during the Great Financial Crisis, there's one thing that is going to happen: China is going to have to dramatically devalue its currency."

On the heels of a tumultuous weekend that saw Saudi Arabia cut diplomatic ties with Iran after the Saudi embassy was torched by protesters angry at the execution of a prominent Shiite cleric, CDS spreads for the kingdom have blown out to six-year wides while the implied odds of the riyal peg finally breaking are hitting new record highs.

The Fed’s crystal ball is in serious need of a recalibration. Fed governors simply haven’t a flippin’ clue what to really expect from the economy. The gold market knows that. It knows that the U.S. economy is like an obese American who has taken up jogging to get into shape... only after the first lap around the track, it’s bent at the knees, huffing and puffing, and feeling like it’s gonna keel over.

For now Noble refuses to throw in the towel, and overnight released the following statement on the Singapore Exchange where its massively beaten down stock trades.

"Moody's downgrades Noble Group to Ba1; outlook negative.... "The downgrade of Noble's ratings reflects Moody's concerns over the company's liquidity," says Joe Morrison, a Moody's Vice President and Senior Credit Officer. The Ba1 ratings also reflect low levels of profitability and consistent negative free cash flow from core operating activities, which exclude proceeds from asset sales."

"Islamic State is invested in the statehood and Caliphate image more so than any other jihadist enterprise. So a formal organization, besides being practical when you control so much contiguous territory and major cities, also reinforces the statehood image."

"The apostate's life and organs don't have to be respected and may be taken with impunity. A group of Islamic scholars have permitted, if necessary, one to kill the apostate in order to eat his flesh."

Weak earnings performance in marketing operations below the current EBIT guidance of $2.4-$2.7 billion could place negative pressure on the Baa3 ratings in the absence of any mitigating measures. A weakening of the company's liquidity position, delays with the planned divestments in 2016 or a material reduction in its working capital funding capacities by the banks, as well as sustained high leverage with adjusted debt/EBITDA exceeding 4x, will also put negative pressure on the Baa3 ratings."