If anyone is seeing a rate hike announcement on the imminent horizon, it sure isn't the exuberant buyers of today's 2 Year auction.
The Swiss National Bank just threw gasoline on Swiss F.I.RE. Expect to see combustive contagion in the Swiss banking, insurance and real estate giants as knock-on effects spread from so-called hedges
- Oil Drops Below $45; U.S. Stockpiles May Speed Collapse (BBG)
- Pound Drops as Traders Write Off Higher Rates on Inflation Slump (BBG)
- Oil prices down again as UAE defends holding production (Reuters)
- The Politics Behind the ECB's Threat to Cut Greece Funding (BBG)
- France dispatched thousands of police and military personnel to protect synagogues and Jewish schools, as the government warned of continued terror threats after three days of deadly violence (WSJ)
- Chinese Car Dealers Find Days of ‘Printing Money’ Ending (BBG)
- Gold Rises to Highest Since October as U.S. Rate Outlook Weighed (BBG)
- Divers retrieve crashed AirAsia jet's cockpit voice recorder (Reuters)
On the chart below, spot where Bill Gross quit and led to a third (so far) of PIMCO's TRF getting redeemed.
- The year of dollar danger for the world (Ambrose Evans-Pritchard)
- Draghi Says ECB Prepares Action as Deflation Risk Non-Negligible (BBG)
- Obama Pivots to Lawmakers: New Plan to Advance Policy Goals by Working With Congress Draws Skeptics (WSJ)
- Affordable Care Act Creates a Trickier Tax Season (WSJ)
- Oil pares early gains, trades near $57 as supply glut prevails (Reuters)
- Iran says Saudi Arabia should move to curb oil price fall (Reuters)
- Pimco Fund Trails Peers in 2014 After Missing Rally (BBG)
- Piketty rejects Légion d’Honneur award (FT)
- UK manufacturing activity hits three-month low (BBC)
As investors and market participants become increasingly aware of the regulatory failures that allowed for manipulation of LIBOR, FOREX, municipal bond bidding and certain commodities markets, regulatory sources are increasingly expressing concern that they have paid too little attention to potential manipulations of an arguably larger, more systemically important and less regulated market – the CDS market as self-governed, through ‘regulatory license’, by the International Swaps and Derivatives Association (ISDA).
Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."
"I’m tired of being outraged!"
Every year, David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. "I have not seen a year in which so many risks - some truly existential - piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. It feels like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows..."
Once again oil is not even the biggest story today. It’s plenty big enough by itself to bring down large swaths of the economy, but in the background there’s an even bigger tale a-waiting. Not entirely unconnected, but by no means the exact same story either. It’s like them tsunami waves as they come rolling in. It’s exactly like that. That is, in the wake of the oil tsunami, which is a long way away from having finished washing down our shores, there’s the demise of emerging markets. And we're not talking Putin, he’ll be fine, as he showed again yesterday in his big press-op. It’s the other, smaller, emerging countries that will blow up in spectacular fashion, and then spread their mayhem around. And make no mistake: to be a contender for bigger story than oil going into 2015, you have to be major league large. This one is.
"Most investors go about their job trying to identify ‘winners’. But more often than not, investing is about avoiding losers. Like successful gamblers at the racing track, an investor’s starting point should be to eliminate the assets that do not stand a chance, and then spread the rest of one’s capital amongst the remainder." So as the year draws to a close, it may be helpful if we recap the main questions confronting investors and the themes we strongly believe in, region by region.
Do you want to know if the stock market is going to crash next year? Just keep an eye on junk bonds. Prior to the horrific collapse of stocks in 2008, high yield debt collapsed first. And as you will see below, high yield debt is starting to crash again.
- Citigroup is pleased: Obama signs $1.1 trillion government spending bill (Reuters)
- Oil holds below $60 as OPEC, Russia keep pumping (Reuters)
- 5 Things to watch at the December Fed Meeting (WSJ)
- Russia Tries Emergency Steps for 2nd Day to Stem Ruble Rout (BBG)
- Ruble crisis could shake Putin's grip on power (Reuters)
- Apple Curbs Russia Sales as McDonald’s Lifts Prices (BBG)
- Traders Betting Russia’s Next Move Will Be to Sell Gold (BBG)
- China Warms to a More Flexible Yuan (WSJ)
Crude Continues Slide, Ruble Stabilizes, US Futures Rebound As Global Stocks Slump: All Eyes On YellenSubmitted by Tyler Durden on 12/17/2014 06:50 -0500
Previewing today's market: near record low liquidity, with chance of ridiculous volatility in the Ruble, energy and equity markets. While no doubt today's main event will be the "considerable" FOMC announcement and the Fed's downward-revised economic projections followed by Yellen's press conference, what traders will be most excited by is that, finally, Jim Bullard will no longer be bound by the blackout period surround FOMC decisions, and as such can hint of QE4 again at his leisure during key market inflection (i.e., selling) points.
- Sydney Siege Sparks Muslim Call for Calm Amid Backlash Fear (BBG)
- Oil Spilling Over Into Central Bank Policy as Fed Enters Fray (BBG)
- Biggest LBO of 2014: BC Partners to acquire PetSmart for $8.7 billion (Reuters)
- Tremble algos: the SEC has hired... "QUANTS" (WSJ)
- When the bubble just isn't bubbly enough: There’s $1.7 Trillion Locked Out of China’s Stock Rally (BBG)
- Oil price slide roils emerging markets, yen rises (Reuters) - may want to hit F5 on that
- Libya Imposes Force Majeure on 2 Oil Ports After Clashes (BBG) ... and will resume production in days
- Amid Crisis, Pimco Steadies Itself (WSJ)
"...You never want to hear the phrases "low-rate environment," "investment solution," or "tapering" ever again. Or "China's unwind" or "low-return projections" or "quantitative easing" or "I've learned so much working for you these last few years and will really miss the team… but made me an offer I couldn't refuse."" Asset managers, prepare to nod vigorously.