The week just ended laid bare any pretensions that there is not something wrong (seriously wrong) within the natural world of both the macro underpinnings of business as well as finance. Unimaginable just a short 6 years ago, the U.S. equity markets closed at a height once again never before seen in human history highs, (it has more than tripled from the 2008 bottom!) but has done so solely on Keynesian fairy tales. The issue now is: does the fairytale end in a nightmare?
- 'Glimmer of hope' for Ukraine after deal at Minsk peace summit (Reuters)
- Ruble Rebounds, Russian Stocks Surge on Ukraine Cease-Fire Deal (BBG)
- Greek PM Tsipras in Brussels as clock ticks on EU bailout (Reuters)
- Emerging-Market Currencies Rout Not Over for Traders (BBG)
- Little noticed, new Saudi king shapes contours of power (Reuters)
- In Wake of Financial Crisis, Goldman Goes It Alone (WSJ)
- AmEx Is Losing Its Millionaires (BBG)
- Thousands to Lose Health Insurance Over Residency Questions (WSJ)
What Denmark has just done is "back-door QE", because as some forget, there are two ways to push the price of an asset higher (thus pushing its yield lower in the case of a bond): increase demand, which is what conventional QE does when central banks buy bonds, or reduce supply. Which is what Denmark just did by completely cutting off all Treasury issuance "until further notice". As a result, paradoxically, increasingly more speculators are betting that the "Trade of 2015" could be doing precisely the opposite of what the Danish central bank is hoping will happen: i.e., shorting the EURDKK (or going long the DKKEUR) in hopes that when the Danish peg finally does break, it too will result in long Swiss France-type profits.
- Saudi Arabia’s New King Probably Will Not Change Current Oil Policy (BBG)
- Saudi King’s Death Clouds Already Tense Relationship With U.S. (WSJ)
- Oil Pares Gains as New Saudi King Says Policies Stable (BBG)
- Kuroda Says BOJ to Mull Fresh Options in Case of More Easing (BBG)
- U.S. pulls more staff from Yemen embassy amid deepening crisis (Reuters)
- Putin Said to Shrink Inner Circle as Hawks Beat Billionaires (BBG)
- A Few Savvy Investors Had Swiss Central Bank Figured Out (WSJ)
While various CNBC anchors may be willing to say that the US is "growing gangbusters" yet again confusing the liquidity-oozing equity markets with the economy, there are a couple hundred million Americans who would bet to differ (which incidentally may also explain why the Comcast channel no longer wishes to have its viewership calculated by Nielsen): the reason is that according to the latest Bankrate survey released today, more than three in five Americans don't have money in their savings accounts to cover any unexpected bills such as a $500 car repair or a $1,000 emergency room visit. In fact, only 38% of respondents said they have enough funds in their bank accounts to cover even the most mundane of spending emergencies.. Most others would need to take on debt or cut back elsewhere.
It was less than a week ago when Zero Hedge broke the news that for CNBC, 2014 Was The Worst. Year. Ever. Much to the embarassment of CNBC, its staunch defender David Rosenberg, and not to mention its advertisers who realized they overspent substantially for the reach they were promised and received instead, the report promptly went viral. Five days after our Nielsen-sourced report before the Comcast-owned channel announced it would no longer be subject to the humiliation of Zero Hedge periodically revealing its crashing viewership and, as WSJ revealed today, "CNBC will no longer rely on TV ratings specialist Nielsen to measure its daytime audience, beginning later this year. Instead, it has retained marketing and research firm Cogent Reports for the task."
Following a disastrous Manufacturing ISM report last week, today it was the turn for its Service cousin to report. And while it wasn't quite the abysmal faceplant that some had expected the seasonally adjusted number to be, printing at 56.2, down from 59.3 and far below the 58.0 expected (but just above the lowest estimate of 56.0), it still was the biggest miss to expectations since September 2013, and the lowest print since June. And while the details were just as atrocious, with every single ISM component declining in December - something that has not happened since the Great Financial Crisis - a report which literallyh said "Obamacare and wages are still the biggest enemies to profitability", all eyes are focused not so much on the tumble in Business Activity and New Orders, but on Prices, which at 49.5, posted their first contraction since September 2009.
- Average 10-year yield of U.S., Japan and Germany dropped below 1% for the first time ever: Free Money in Bond Markets Shows Global Economy Still Struggling (BBG)
- Brent falls below $52 as oil hits new five and a half year lows (Reuters)
- China Fast-Tracks $1 Trillion in Projects to Spur Growth (BBG)
- Saudi Arabia Raises Price of Main Oil Grade for Asian Buyers (BBG)
- Oilfield Writedowns Loom as Crude Slump Guts Drilling Values (BBG)
- Biggest Oil-Rig Drop Since 2009 Spells Tough Year Ahead (BBG)
- CIA says its inspector general is resigning at end of month (Reuters)
- Pipeline IPOs Climb on Demand for Returns Immune to Oil (BBG)
- Natural Gas No Savior for Investors Seeking Oil Refuge (BBG)
- Euro zone economy ended 2014 in poor shape (Reuters)
David Rosenberg, formerly of Merrill Lynch and currently of Gluskin Sheff, who famously flip-flopped from being a self-described permabear to uber-bull last summer for the one reason that has yet to manifest itself in any way, shape or form, namely declaring that wage inflation as imminent (it wasn't, but perhaps Mr. Rosenberg was merely forecasting the trajectory of his own wages) and generally an end to deflation, has a rhetorical question for his paying clients, as asked in his letter to investors from January 2. To wit: "THIS IS WHAT PASSES FOR ANALYSIS?" We too follow up with an identical question not only for Mr. Rosenberg's clients, but for our own readers.
Another year of putting lipstick on the zombie known as the global economy, kept walking only thanks to $11 trillion in liquidity injections by the world's central banks and tens of trillions of new Chinese credit created out of thin air and promptly misallocated and embezzled, and the results are in. The bottom line: according to Nielsen, is that despite the S&P recording a whopping 53 all time highs, and the Dow rising over 18,000, the channel that was once must watch financial TV for mom and pop, and has since devolved into endless cheerleading of failed policies and rigged markets, namely CNBC, just suffered its worst year in, well, ever.
- U.S. agency gives quiet nod to light oil exports (Reuters)
- China’s Stocks Fall to Pare Biggest Monthly Advance Since 2007 (BBG)
- The Cartel: How BP Used a Secret Chat Room for Insider Tips (BBG)
- BRICs Busted as Stocks Diverge Most on Record on Outlook (BBG)
- Petrobras deadline prompts some bondholders to push for default (Reuters)
- AirAsia Captain at His Happiest When Flying, Family Says (BBG)
- UK housing crisis: brick stocks hit record low (Telegraph)
While the cancellation of 'The Interview' wiped billions off the US Box Office take in 2014 (</sarc>), ticket sales in North America will total roughly $10.5 billion, according to The NY Times, the lowest since 2000 (after inflation). Regal Cinemas and AMX Theatres have seen profits collapse and Carmike Cinemas has plunged to a loss as major movie delays (from Pixar and Universal), "pirating" of several movies (The Expendables 3 and Annie) before their release, and studios suffering one dud after another (Warner Bros.) the 4% YoY decline - for what is ultimately an affordable luxury - suggests the gas-price-savings are going anywhere but discretionary spending (just as we noted previously).
- Shale operaters Goodrich, Oasis Petroleum cut spending for 2015 as oil slides (Reuters)
- Greece to hold elections in January if president vote fails (Reuters)
- Norway’s Shock Rate Cut Drives Krone to Lowest Since 2009 (BBG)
- ‘Severe Downturn’ Threatening Norway, Central Bank Governor Says (BBG)
- Russia’s Fifth Rate Increase Fails to Halt Ruble Slide to Record (BBG)
- SNB Says Deflation Risks Increased as Franc Cap Maintained (BBG)
- China eases bank lending restrictions, PBOC targets 10 trillion yuan in loans for 2014 (Reuters)
- Mobius Says China’s Bull Market Is Just Getting Started (BBG)
- How Wal-Mart Made Its Crumbling China Business Look So Good for So Long (BBG)
After last night's marvelous Bloomberg profile of Bill Gross' last days at PIMCO, we were confident that no written material today could surpass Mary Child's fascinating narrative of the fallen bond king. And then we read Cannell Capital's activist letter to one James J. Cramer, of CNBC and TheStreet director infamy, which is hands down the blockbuster reading material du jour.
- Fall of the Bond King: How Gross Lost Empire as Pimco Cracked (BBG)
- Hong Kong 'Occupy' leaders surrender as pro-democracy protests appear to wither (Reuters)
- Ashton Carter, Ex-Pentagon No. 2, Emerges as Obama Favorite for Defense Secretary (WSJ)
- Oil, the Ruble and Putin Are All Headed for 63. A Russian Joke -- for the Moment (BBG)
- New U.S. oil and gas well November permits tumble nearly 40 percent (Reuters)
- Swedish government on brink of collapse (AJ)
- China says Britain has no moral responsibility for Hong Kong (Reuters)
- Indian Labs Deleted Test Results for U.S. Drugs, Documents Show (BBG)