• EconMatters
    11/30/2015 - 16:21
    The ISIS group sells most of its crude directly to independent traders at the wellhead for $20-$45 a barrel earning the group an average of $1.5 million a day.

Risk Management

Tyler Durden's picture

Presenting SocGen's 5 Black Swans For 2016

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.

Tyler Durden's picture

S&P Just Warned Asia's Largest Commodity Trader It May Be Junked

As usual, S&P was late, but just over three months after our explicit warning, the rating agency finally came out with the catalyst we have been expecting when moments ago it said that it had "placed its 'BBB-' long-term corporate credit rating on Hong Kong-based supply-chain management service provider Noble Group Ltd. and the  'BBB-' issue rating on the company's senior unsecured notes on CreditWatch  with negative implications." In other words, Asia's Glencore is about to be junked.

Tyler Durden's picture

FOMC Minutes Show Fed Is All-In For December Rate Hike (But Depends On Data)

With everything red since the October 28th "hawkish" FOMC meeting - which greenlit a December rate hike and convinced the world that everything is awesome in America (well why else would The 'smart' Fed raise rates?) - today's minutes suggest an FOMC that is perhaps not quite as "whatever it takes" committed to a December liftoff...


But bear in mind there is a lot of data between now and December 16th (including payrolls) and what if stocks drop? Pre-Minutes: 68% rate-hike odds, S&P Futs 2064, 10Y 2.28%, EURUSD 1.0640, Gold $1070, WTI $40.45

Tyler Durden's picture

For The First Time Ever, Corporate Bond Inventories Turn Negative - What This Means

As we noted previously, for the first time ever, primary dealers' corporate bond inventories have turned unprecedentedly negative. While in the short-term Goldman believes this inventory drawdown is probably a by-product of strong customer demand, they are far more cautious longer-term, warning that the "usual suspects" are not sufficient to account for the striking magnitude of inventory declines... and are increasingly of the view that "the tide is going out" on corporate bond market liquidity implying wider spreads and thus higher costs of funding to compensate for the reduction is risk-taking capacity.

Tyler Durden's picture

The Full Details Of How Goldman Criminally Obtained Confidential Information Form The New York Fed

Anyone else found to have obtained at least "35 confidential documents" from the Fed on at least "20 occassions" would be sent straight to jail with a prison sentence anywhere between several decades and life.  Goldman's punishment? 0.6% of its 2014 Net Income.

Tyler Durden's picture

Despite "Bloody" October, Billionaire Hedgie Says "It's A Good Time To Be Short"

After earlier in the year exposing "the greatest shorting opportunity since 2007-2009" and trading it profitably through September with "front row seats to an imminent market shock," Billionaire Crispin Odey's flagshipfund has suffered recently. As Bloomberg reports, the fund plunged 16.8% in the first 16 days of October, after the fund profited in August and September from Odey’s negative view of the Chinese economy. Odey believes that the only way economies will be able to work their way through the next downturn is by writing off capacity. Therefore, with credit tightening as well, according to Odey, it’s a good time to be short...

Tyler Durden's picture

Systemic Fragility & The Fed's "Hobson's Choice"

The previous Bubble was of the Fed’s making, and our central bank lost control. It became a Hobson’s Choice issue in the eyes of the Fed, and they fully accommodated the Bubble. These days, the Fed and global central bankers face a similar but much more precarious Bubble Dynamic: The Fed specifically targeted higher securities market prices as its prevailing post-mortgage finance Bubble (“helicopter money”) reflationary mechanism. This ensured that the Fed would again be unwilling to impose any monetary restraint before it would then become too risky to remove accommodation (Einstein’s definition of insanity?). In concert, global central bankers now aggressively accommodate financial Bubbles.

Tyler Durden's picture

Teetering Trannies? Oil "Could Get Very Very Ugly, Very Very Quickly"

As WTI Crude tests new lows this morning (Dec contract $45.32) after API reported a huge build, we can't help but wonder "what happens next" in Dow Transports as the exuberant index has decoupled from oil for the 3rd time in a week... the only saving grace for the collapse in oil - Gartman warned "this could get very, very ugly and do so very, very quickly."

Monetary Metals's picture

Hedging in the Gold Miners

For a gold miner with dollar-denominated debt, the right thing to do is to hedge the gold price. It's interesting that at the LBMA conference in Vienna, a panel discussed the epic collapse of hedging. Why?

Tyler Durden's picture

IBM Reports Terrible Q3 Earnings: Worst Revenue Since 2002; Slashes Guidance

Moments ago IBM reported what can be defined simply as abysmal results.

Tyler Durden's picture

Goldman Mocks "Constitutionally Dovish" Fed, Sees December Rate Hike Odds At 60% To Offset "Credibility Problem"

Q: Why do you still expect the FOMC to hike rates in December?

A: Because the FOMC leadership has said that a rate hike by the end of the year is likely if the economy and markets evolve broadly as expected. Our near-term forecast is similar to theirs, so our baseline is also that they hike.

Tyler Durden's picture

What's The Worst That Could Happen?

The 30 stocks of the Dow Jones Industrial Average currently trade for an average of 14.8x next year’s consensus earnings.  But... Everyone knows Wall Street analysts are always too optimistic, so what if we just look at the lowest estimate for each company? The driver of market pessimism sits at the top of the income statement – the Street’s worst case revenue estimates call for a decline of 1.7% in 2016.  Now, Q3 earnings season is unlikely to provide much comfort here; why should corporate managements go out on a guidance limb when their stocks are down on the year?  All this points to further volatility in October, and with a bias to the downside.

Tyler Durden's picture

Humans Are No Longer The Apex Predator In Capital Markets (But We Act As If We Are)

How many of us are bored to tears with the Fed’s Hamlet act on raising rates, and yet have been staring at this debate for so long that we have convinced ourselves that we have a meaningful view on what will transpire, even though it’s a decision where we have zero investing edge and unknowable risk/reward odds. The hardest thing in the world for talented people is to avoid turning a low edge and odds opportunity into an unreasonably high conviction bet simply because we want it so badly and have analyzed the situation so smartly. In both poker and investing, we brutally overestimate the edge and odds associated with merely ordinary opportunities once we’ve been forced by circumstances to sit on our hands for a while. Investment discipline suffers under the weight of dullness and low conviction in at least four distinct ways here in the Golden Age of the Central Banker...

Tyler Durden's picture

HFTs Have Devolved To Two-Bit Criminals Straight Out Of "Office Space"

A quick summary of the latest HFT market-rigging scam: mysteriously, and "erroneously", a change in Latour Trading's code was made, which the firm lacked "direct and exclusive control" over, and which was non-compliant with Reg NMS requirements, yet which mysteriously ended up generating "gross trading profits and rebates by stock exchanges" amounting to $2.8 million. Where have we seen this? Oh yes...

Tyler Durden's picture

Commodity Giant Trafigura Founder, Top Shareholder Claude Dauphin Has Died

In a tragic, if very odd coincidence, a day after we postulated that the real "commodity-trader" risk may not be Glencore after all, but its just as vast, if even more levered competitor, Trafigura, moments ago the privately-held company (with publicly traded bonds), announced that its founder and biggest shareholder, french billionaire Claude Dauphin has died at the age of 64.

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