Morgan Stanley

For the first time in three years and before that the recession, the total volume of freight moved by road, rail, pipeline, inland waterways and air has fallen Y/Y. Meanwhile, on the high seas, the Baltic Dry has collapsed under 400. 

With Erdogan calling (loudly) for lower rates and 5 of 7 MPC seats opening up between April and November, some fear Turkey may eschew policy normalization leading directly to what Morgan Stanley calls "a vicious cycle" of a depreciating currency, rising inflation, and lower real policy rates.

European shares tumbled, wiping out gains from a two-day rally, Asian stocks slid and the cost of insuring corporate debt rose as investor concern over global growth prospects resurfaced. U.S. equity-index futures pared gains of as much as 0.9 percent. Government bonds rose, with yields falling to records in Japan and China amid anxiety over the world economy. U.S. crude prices stabilized after dropping below $30 a barrel on Tuesday to touch the lowest since 2003 as Iran moved closer to boosting exports.

As WSJ reports, a banker from Industrial & Commercial Bank of China "said the number of people wanting to change yuan for dollars has increased significantly during the past three weeks—a period during which the Chinese currency has declined about 2%." Over the weekend for instance, "ICBC received an urgent notification from China’s central bank warning of a dollar shortage."

Rand Paul’s signature “Audit the Fed” legislation failed to garner the 60 votes needed in the Senate to move the measure forward. Of course, this is merely the latest in a never-ending series of banker victories, and a truly devastating blow against liberty, free markets, transparency and any hope for government by the people and for the people. Ensuring that light is never shined on the Fed’s shady, corrupt and unaccountable bailout activities has always been a key goal of the American oligarchy, and they succeeded once again.

Russia has just taken significant steps that will break the present Wall Street oil price monopoly, at least for a huge part of the world oil market. The move is part of a longer-term strategy of decoupling Russia’s economy and especially its very significant export of oil, from the US dollar, today the Achilles Heel of the Russian economy.

The funny thing is that I am sure he worked on this Food Analogy, as these are great in the analyst community for selling to clients, but nobody at MS called out on the inherent fallacy.

While the media attention was directed to the shale oil boom in the US, the Saudis created a giant offshore oil project called Manifa. With one single project Manifa added 1 million barrels a day to the world oil glut. Manifa will expand its capacity the coming year, adding a further 500 million barrels a day to world markets.

In what may be the latest bad news for Hillary Clinton, whose various "previous life" scandals - from emails, to Clinton foundation donations - refuse to go away, the Hill reports, citing Fox News, that the FBI has expanded its investigation of Hillary Clinton's use of a private email server during her time as secretary of State to determine whether her Clinton Foundation work violated public corruption laws.

Another algo-induced stop-run has tried and failed to maintain its gains this morning as Morgan Stanley becomes the latest (after Goldman) to join the "oil in the $20s is possible" bandwagon. Despite hopeful bullishness from Andy Hall who sees production destruction leading (an industry that couldn’t function at $50 certainly can't function with prices below $40) inevityably leading to higher prices, Morgan Stanley warns, "in an oversupplied market, there is no intrinsic value for crude oil. The only guide posts are that the ceiling is set by producer hedging while the floor is set by investor and consumer appetite to buy. As a result, non-fundamental factors, such as the USD, are arguably more important price drivers."

Yuantervention overnight steadied the Chinese currency and despite a plunge in Asian equities, stabilized US equities thanks to an incvessant bid for USDJPY. However, this morning has seen PBOC's Ma crawl out from under the desk to attempt to calm investor panic with two-faced comments about the nation's new FX regime. Noting that PBOC will focus on stability of Yuan vs their new CFETS basket, Ma then back-handedly said two-way volatility was expected to increase (in a clear nod to stopping carry traders piling on). Of course, the crude oil algos loved it and surged, USDJPY jumped, but for now US equities and bond are unimpressed.

• David Bowie, musical legend behind Ziggy Stardust, dies at 69 from cancer (Reuters)
• With No Powerball Winners, Jackpot Grows to Estimated $1.3 Billion (ABC)
• Stock Gains Short-Lived as Chinese Volatility Hurts Oil, Metals (BBG)
• China's yuan spikes higher, but stocks tumble (Reuters)
• Arch Coal Files for Bankruptcy (WSJ)
• Yuan Loan Rates Soar in Hong Kong as PBOC Halts Currency's Slide (BBG)
• China stocks close down at lowest level since September (Reuters)
• Fed Eyes Margin Rules to Bolster Oversight (WSJ)

Initially both European stocks and US equity futures were grateful that China has picked at least one asset class to prop up overnight, and rose in an extremely illiquid market with European shares gaining for first time in 4 days, as S&P futures rise even as the MSCI Asia Pacific ex-Japan index just fell to the lowest level in more than 4 years. However, as of moments ago the Stoxx 600 had faded all its earlier gains and was trading near the flatline, as an algo takes out all stops on the top and bottom once more, and looks set to move on to US futures shortly.

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

Iin an interview to be aired tomorrow on Wall Street Week, Hayman Capital's Kyle Bass says that "this has been one of the worst years in the last ten"as a result of his dogmatic views on energy prices. And yet, instead of backing out the Texan is doubling down: "If you are going to allocate capital for the next three to five years, you should do it now" into the energy space over the next 6 months. Will he be right this time? Find out in 12 months.