A week ago the Russian Ruble exhibited intraday volatility that makes the JPY look quiet when it crashed to record lows then soared dramatically on intervention hopes. Since then we have had a Russian Central Bank disappointment and some jawboning which did nothing press the Ruble to record-er lows against the USD. Then today, last week's volatility in the Ruble was dwarfed when USDRUB blew past 48.5 only to be sent soaring (USDRUB lower) below 46 on hope of intervention. Russia is not alone. The Saudi Riyal has seen massive vol in recent weeks and Nigeria, another oil-producing nation, saw the Naira collapse yesterday then soar 8 handles this morning on what is confirmed intervention by the nation's central bank. It appears the strong dollar is becoming an issue for the world's oil-producing nations...
Treasury yields were leaking higher into the print then collapsed on the headlines. Stocks smashed higher on the 'good' news of a lower unemployment rate then read the details and have plunged. Silver prices smashed higher, futures were halted, then tumbled back. Total and utter chaos in the liquid markets... Is "good" news now bad news?
- The $9 Billion Witness: Meet JPMorgan Chase's Worst Nightmare (Matt Taibbi)
- Explains the midterm results: Optimism precedes job data (Reuters)
- EU Dream Ebbs Amid Weak Growth, Putin's Jets, 25 Years After Wall Came Down (BBG)
- SEC Probing Trading Activity at Apple Supplier GT Advanced (WSJ)
- Boehner touts bills to repeal Obamacare, build Keystone (Reuters)
- China Gold Buying Means Price Floor to Standard Chartered (BBG)
- High-Speed Ad Traders Profit by Arbitraging Your Eyeballs (BBG)
- Central Banks Can’t Be ‘Only Game in Town’ Boosting Economies (BBG) - less talking, more getting to work
Yesterday higher oil prices were the catalyst for higher stock prices. Today lower prices - after OPEC slashed growth expectations - were "unequivocally" positive for Americans and sent Trannies soaring. Of course, it was Draghi's promise that there's more to come that sustained USDJPY's levitation and thus stocks. Treasury yields slid 2-4bps higher on the day as the USDollar surged to +1.2% on the week after Draghi's chatter slammed EURUSD below 1.24. Gold and silver were flat (despite USD strength) as oil prices dipped to $78. HY credit diverged notably after EU closed as managers appeared to protect bond positions into the jobs data. VIX pumped then dumped and cracked back to a 13 handle as stocks closed at record highs (right before the uncertainty of tomorrow's NFP).
Ukraine Begins "Large-Scale" Offensive In Donetsk; "War Has Resumed" Rebel Leader Warns; Russian Stocks, Currency CrashingSubmitted by Tyler Durden on 11/06/2014 10:24 -0500
Ebola is solved. Oil price drops are "unequivocally good news". The US election is positive. Draghi promised to do whatever it takes again. And Ukraine is in ceasefire.So why is it that Donetsk's Deputy Prime Minister Andriy Purgin claims Ukrainian security officials have started full-scale fighting, clashing 26 times today according to Ukraine military.y. With tanks advancing, Purgin exclaims, "now there is a full-scale war... attacking us, we are defending." The Ruble has been crushed to new record lows over 46 to the USDollar and Russian stocks are tumbling.
Having served up a large bowl of nothing with the official statement, the job of jawboning 'hope' for future monetary policy idiocy falls once again on Mario Draghi's shoulders as he takes the stage in what may well be a highly contentious press conference. Will he admit the mutiny? Will he 'fess up that OMT is a mirage? Will he admit to being a secretive dictator? Will he remove his spectacles and angrily point at a reporter?
With last night's latest Japanese flash crash firmly forgotten until the next time the trapdoor trade springs open and swallows a whole lot of momentum chasing Virtu vacuum tubes, it is time to look from east to west, Frankfurt to be precise, where in 45 minutes the ECB may or may not say something of importance. As Deutsche Bank comments, "Today is the most important day since.... well the last important day as the ECB hosts its widely anticipated monthly meeting." Whilst not many expect concrete action, the success will be judged on how much Draghi hints at much more future action whilst actually probably doing nothing.
"Everything is all set for Nov. 9," says a senior Catalan regional government official as the region prepares to defy both the central government and the country's highest court and proceed with a much-disputed weekend vote on whether to secede from Spain. And while the Spanish government has not specified what legal consequences Catalan leaders, poll workers or voters might face Sunday, when they go to vote, The LA Times reports that Madrid has reportedly readied thousands of Civil Guard police officers to travel to Catalonia this weekend if needed. As Libertat repots, the presence of military convoys on the roads in Catalonia, specifically Pizarro has been steady throughout the day.
UPDATE: ARABIAN SECURITY SOURCE SAYS FIRE OCCURRED IN AN OIL PIPELINE, NOT TERRORIST ATTACK
It appears Saudi markets are back in play. As Bloomberg's Richard Breslow noted this morning, Riyal forwards have jerked notably higher (implying weakness expected) and the Tadawul All Share Index has dropped 7% in the last 2 days after the killing of Shi'ites by unknown parties and now news that a pipeline has exploded. As Breslow warns, "if that indeed signifies the spread of Islamic State into Saudi Arabia, it would be the first time they crossed Saudi borders. That would be a big deal and a major escalation of problems over in that part of the world, far beyond what it would do to capital markets."
US Services dropped modestly from the 58.9 in September to a final print at 57.1 in October - the lowest since April. This should be no surprise as for the last 5 years, H2 has seen a notable decline in the soft-survey-based data. Despite the plunge, employment remained solid even as the business outlook neared 2-year lows. As Markit notes, the survey "warns of a slowdown as move towards the end of the year," which is odd because the world and his pet rabbit said US was decoupling. For a change ISM Services actually agreed with Markit and printed 57.1, missing by the most since Feb 2014 with New Orders and Prices Paid down.
There is a very strong correlation between the GDP and the demand for gold, even in mature markets!
"Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other" - Oscar Ameringer
House: 435 Seats, 43 Undecided, Results: Republicans 235 - 157 Democrats (Dem -8, Rep +10)
Senate: 100 Seats, 4 Undecided, Results: Republicans 52 - 45 Democrats/Independents (Dem -7, Rep +7) REID CONGRATULATES MCCONNELL ON REPUBLICAN SENATE WIN
And here are 5 things to watch for the day after the election...
"Whichever side emerges victorious, both Republicans and Democrats should face up to a much bigger truth: Neither party as currently constituted has a real future." On this, another election day sham, it is key to not get discouraged. Things are changing at the grassroots for the better. The battle of decentralization vs. centralization, networks vs. hierarchies, will not be easily won, but it will be won. Keep fighting.