An Endless Sea Of Energy

With crude oil prices in a strong corrective mode, energy depletion is understandably not on people’s minds these days. However, this is a scenario that many of us might have to deal with at some point in our lifetimes. We might be swimming in oil for now, but this should be no reason to become complacent. Our children and grandchildren will thank us for it.

Price Discovery And Emerging Markets

... things like a 50%+ drop in oil prices happen. Which at some point will lead more people to wonder what the real numbers are. For emerging nations, those numbers will not be pretty for 2015. They’re going to feel like they’re being thrown right back into the Stone Age. And they’re not going to like that one bit, and look for ways to express their frustration. Volatility is not just on the rise in the world of finance. It also is in the real world that finance fails to reflect. At some point, the two will meet again, and Wall Street will mirror Main Street. It will make neither any happier. But it’ll be honest.

ECB's Coeure Exposes Europe's Confusion Over Greece, QE, Oil & Deflation

And these are the 'smartest people in the room that the world is entrusting to save the status quo. In one brief interview, ECB's Coeure explained how lower oil prices are great for the EU economy (but that low oil prices hurt deflation and thus QE should be used to stoke inflation - and thus higher oil prices?) and then said discussions of a Greek exit from the euro are "meaningless," that "no one is preparing for the exit," and that "restructuring ECB Greek bond holdings is illegal." One wonders what he will do when Greece just decides to stop paying...

Europe's Largest Bank Stock Suspended, Admits Need For $8.9 Billion Capital Raise

All is clearly not well below the surface. Europe's largest bank (by market value) has admitted in a regulatory filing that it needs to raise capital. As WSJ reports, Banco Santander SA said it would raise up to €7.5 billion ($8.88 billion) in a capital hike, a bid to address long-running concerns among investors and analysts that its financial cushion was weaker than peers. European banking stocks are up over 2% today as Italian banks surge limit up (BMPS +13%) on speculation that they will be purchased by Santander (who 'pumpers' believe are raising this capital to go on a spending spree) and 'old' Draghi headlines.

10 Key Events That Preceded The Last Financial Crisis Are Happening Again

History literally appears to be repeating. The mainstream media and our politicians are promising Americans that everything is going to be okay somehow, and that seems to be good enough for most people. But the signs that another massive financial crisis is on the horizon are everywhere.

FOMC Minutes Preview: The 3 Key Issues The Sell-Side Is Looking For

The December FOMC statement revealed a lack of agreement among Fed officials over communication, BofAML explains, as evidenced by the complicated extension of the forward guidance language and the dissents from both sides of the hawk-dove spectrum. While Standard Chartered expects the Minutes to show The Fed in no rush to raise rates, UBS warns the Minutes “could upset market perceptions of what is important to the Fed’s decision-making process."

First Euroarea Deflation Since Lehman Sends Futures Higher; Brent Tumbles Below $50 Then Rebounds

Things in risk land started off badly this morning, with the worst start to a year ever was set to worsen when European equities came under early selling pressure following news of German unemployment falling to record low, offset by a record high Italian jobless rate, with declining oil prices still the predominant theme as Brent crude briefly touched its lowest level since May 2009, this consequently saw the German 10yr yield print a fresh record low in a continuation of the move seen yesterday. However, after breaking USD 50.00 Brent prices have seen an aggressive bounce which has seen European equities move into positive territory with the energy names helping lift the sector which is now outperforming its peers. As a result fixed income futures have pared a large majority of the move higher at the EU open. But the punchline came several hours ago courtesy of Eurostat, when it was revealed that December was the first deflationary month for the Eurozone since the depths of the financial crisis more than five years ago, when prices dropped by -0.2% below the -0.1% expectation, and sharply lower than the 0.3% increase in November, driven by a collapse in Energy prices.

Russian Default Risk Surges To New 6-Year Highs As Ruble Rubble Returns

Just when you thought it was all over... Having bounced post-CBR intervention and somewhat stabilized, the re-collapse in crude oil prices and continued weakness in Russian macro data provided just the impetus for a re-plunge in the Ruble (back above 63.5/USD) and surge in Russian bond yields (back to 14%). While Russian stocks are also retesting towards recent lows, it is Russian CDS that is the most telling as it closed to day at 595bps - the widest since March 2009. While these violent gyrations are new for recent history, they are not a new phenomenon, but are quite characteristic of the country’s financial history.

As Japan Opens, Nikkei 225 Down Over 500 Points From Overnight Highs - Below 17,000

UPDATE: Nikkei 225 Futs lose 17k - trading 16,985

Time for some GPIF asset re-allocation and spuriously repititive headlines about Abenomics, 3rd Arrows, growth, anti-deflation, or some such bollocks (as they say in Japan). For now, JGB Futures are at all-time record high prices, USDJPY sits back under 119.50, and Nikkei 225 Futures are holding just above the crucial 17k mark - down over 500 points from last night's highs.

The Gloves Come Off: Germany Says Grexit "Manageable" As Tsipras Demands Greek Debt Writeoff

Today, concerned that Tsipras' ascent to power will mean precisely that, namely more "blackmail" by Greece of Germany and the Eurozone, as a Grexit opens the way for a collapse of the monetary union and a return to the DEM which would cost Germany far more than continuing the annual charade of keeping Greece in the Euro, Spiegel is out with another piece saying "Bundesregierung hält Ausscheiden Griechenlands aus dem Euro für verkraftbar", or loosely translated, the Federal Government considers Greece's exit from the euro manageable. Why is this coming out today? Because moments ago, Tsipras made it quite clear just what he will demand once he gets the power: "Germany had most of nominal value of debt written off in 1953, same should be done for Greece in 2015", adding that Greece wants writedown on nominal value of Greek debt. And so the gloves come off, and the real bluffing begins.

Obama's Hawaiian Vacation Is Over: Here Are The Next Steps

It is with great regret we inform our readers that, following 14 consecutive days of updates (by the Associated Press no less) and others regarding Barack Obama's daily activities during his Hawaiian vacation including his exercise, swimming, executive order and golfing regiment, today is the last such day of can't miss headlines surrounding the Glorious Free World Leader's time away from reading from the TOTUS. So what to expect next? Here is the answer.

2015 Starts As 2014 Ended: Crude Crumbles To Fresh Lows, WTI Tests $51 Handle

Reading headlines and social media commentary in last night's thin trading, one could have been excused for thinking the collapse of global crude oil prices was over and a new renaissance had begun as 'watchers' proclaimed WTI's spurt above $55 (for a nanosecond) as indicative of the lows being in. However, just hours later, following weak European data (and a recognition of massively offside speculative positioning), WTI has collapsed over $3 from the highs and is testing towards a $51 handle.

Scottish Government Confirms Ebola Diagnosed In Glasgow Patient

We wonder if England will be reconsidering the secession vote?


After Japan's stock market slid overnight following reports of Ebola in Tokyo, one wonders what a recurrence of Ebola headlines will do to risk complacency this time? Perhaps, since the Ebola Tzar's work is done in America, they can lend him out to The Scots?