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Crude Carnage Contagion: Biggest Stock Bloodbath In 3 Years, Credit Crashes

We leave it to Jack to explain what happened this week…

Quite a week!!

  • WTI's 2nd worst week in over 3 years (down 10 of last 11 weeks)
  • Dow's worst worst week in 3 years
  • Financials worst week in 2 months
  • Materials worst week since Sept 2011
  • VIX's Biggest week since Sept 2011
  • Gold's best week in 6 months
  • Silver's last 2 weeks are best in 6 months
  • HY Credit's worst 2 weeks since May 2012
  • IG Credit's worst week in 2 months
  • 10Y Yield's best week since June 2012
  • US Oil Rig Count worst week in 2 years
  • The USDollar's worst week since July 2013
  • USDJPY's worst week since June 2013
  • Portugal Bonds worst week since July 2011
  • Greek stocks worst week since 1987

Some serious intraday volatility this week as hope kept shining through but in the end, reality won. Despite spiking euphoria among US Consumers, concerns over Greek elections, Japanese elections, the GDP-plunge-driven collapse in oil prices (with neither OPEC nor non-OPEC willing to blink yet on cutting production), and contagion to high-yield finallly caught up with stocks after they blindly followed the mainstream media narrative that low oil prices are unequivocally good for every muppet.

Here's why crude matters…

 

No Hindenburg Omen today but it appears the Dow & S&P are pressing down to test their 50DMAs…

 

On the week, The Dow was the laggard… NOT OFF THE LOWS

 

And Energy sector the worst…

 

The Russell 2000 closed the week negative year-to-date…

 

VIX surged this week (ignore the excitement over percentage moves)…

 

Treasury yields collapsed…

 

Leaving the decoupling at epic levels… between bonds and stocks..

 

and between credit and stocks…

 

The Dollar slipped a little today to end the week down over 1%

 

Gold and Silver had great weeks – very stable as the rest of the markets turmoiled – while oil prices

 

Crude is now down 25% from the initial OPEC leaks…back below $58!!

 

Makes you wonder eh? The decoupling began when QE3 was hinted at…

 

and energy credit is near 1000bps now… and is starting to spread to rest of the HY markets…

 

notably worse than stocks (for now)…

*  *  *

But it's all about the fundamentals!! Great Jobs Data, Great Retail Sales Data, and Great Consumer Confidence Data – unless that's all totally manipulated bullshit?

Charts: Bloomberg

Bonus Chart: How much longer can this go on?




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Martin Armstrong Warns Civil Unrest Is Rising Everywhere (And Government Is Digging In Its Heels)

Submitted by Martin Armstrong via Armstrong Economics blog,

Spain-12=10=2014

 

I have warned that governments always turn against the people.

  • Illinois just made it a felony to film police abuse in the USA.
  • The Spanish government has followed the same course.

Despite protests from political, judicial and population, the politicians who are becoming ruthless elite dictators rather than democratic representatives of the people, passed a law which provides extensive fines for protesters who dare to film the abuse of police. They have the audacity to claim filming police  is an “offense against public safety” with fines of up to 600,000 euros. It is the police who protect government – not the people.

So let’s get this straight. “public safety” has become a code word for “government safety” that no longer gives two shits about the people.

Switzerland enacted laws requiring registration of all guns in the country for the first time when. Why? There have not been any incidents of “public safety”.

They too realize that the people are starting to wake up against the abuse of government everywhere. The people have caused this.

As a whole, people watch sports, buy clothes, and go to dinner. Generally at best half even bother to vote. That has sent the signal to government elites the people do not care so corruption has run wild. But now with taxes rising, unemployment rising, pensions vanishing into thin air, and living standards declining, people want real change no words.

Even in the USA, the Republicans wrongly believe their ideas are what the people want. They too raise taxes. This funding bill allowing the banks to repeal Dodd Frank is an example of the corruption behind the scenes. They votes for Republicans because who is ever in power is being tossed out. Come 2016, it will be the Republican’s turn as we see a rise in third-party activity. This repeal of Dodd Frank is a John Andrew Boehner special that goes against the conservative T-Party Republicans.

Politicians will be politicians. What is left to say?




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To Catch a Predator for Sex Workers Coming to A&E

A
new reality series slated for A&E will feature a
cop-turned-pastor intent on saving sex workers’ souls by luring
them to hotel rooms and then lecturing them on national television.
Once he has sex workers cornered, pastor Kevin Brown has eight
minutes to convince them of the error of their whorin’ ways. It’s
like To Catch a Predator meets Pretty Woman!
Which is to say: an abomination that should never, ever have gotten
the greenlight.

The series—working title: 8 Minutes—is being produced
by Tom Forman, who would still be touting extreme home makeovers
and food truck races were it not for a 2013 Los Angeles
Times article about Brown’s “rescue” efforts. Apparently,
Brown has been at his odious task a while. In 2011, he helped form
Safe Passage OC, which conducts “unofficial stings to ‘liberate’
women and minors from a life of servitude,” as the Times
describes it. The group sees their missions “as undercover police
operations—with a dash of prayer.”

Thats right: Brown already spends his spare time hunting down
and harassing sex workers. The description of his group’s work is
truly creepy and fanatical: 

To prepare for the missions, Reese trolls backpage.com or
craigslist for potential victims, particularly those who look like
they might be minors with an “emptiness” in their faces. … The
group practices by using a Bluetooth as a walkie-talkie, driving
around in a caravan and deploying as a surveillance team across
motel properties, with each person assigned a specific role.

Seeing someone’s photo online and then proceeding to track them
down IRL and secretly monitor their movements would, under other
contexts, be considered stalking. But apparently anything goes when
your aim is to “save” women from exerting their own
agency. 

As the Times article makes clear, most of the women
Brown encounters want nothing to do with his savior complex. At
least they’re only subjected to a strange or scary or insulting
conversation. Now Brown’s stalk-and-save efforts come with a camera
crew. 

Forman told Entertainment Weekly that the
“girls” won’t be shown on television without their permission, and
that Brown’s success rate has been about 50 percent. “Sometimes
they turn and leave, but that’s the case when trying to save
prostitutes,” said Forman. (They’re wily like cats, they are!)
A&E has ordered an initial eight episodes of the
show. 

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“What’s Up, You F—ing N—-r?” – What a Debt Collector Hired by Bank of America Said to a Customer

Screen Shot 2014-12-12 at 1.30.18 PMI can’t believe I missed this one. Although the following happened back in 2010, given how captured our entire society remains by the “too big to fail and jail” banks, it’s worth putting this in front of readers. Here’s the disturbing encounter. From ABC News:

Back in 2010, an ABC News investigation found that a Texas-based company Bank of America had contracted to make debt collection calls were using racist and obscene language to try to coax debts from customers.

“What’s up, you f—ing n—-r?” said one of the collection agents in a message to 32-year-old Allen Jones of Dallas, who at the time owed $81 on his Bank of America credit card.

“This is your f—ing wake up call, man,” the debt collector said in a message left at Jones’ home at 6:30 a.m. Then another call: “You little, lazy ass bitch, get your mother f—ing ass up and go pick some mother f—ing cotton fields, bitch.”

continue reading

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And Now, Expert Financial Advice From Jessica Alba

In a world in which neither the Fed, nor the sellside (Goldman was forecasting $100 oil for years to come as recently as October 29), and certainly not tenured economists have any idea what lies beyond the next corner, perhaps the best place to look for financial answers are Hollywood celebrities such as Jessica Alba. So, in our pursuit of truth, financial answers and the Hollywood way, we give you… Jessica Alba.

Yes, the shapely artist alternatively known as Cash Money, was at yesterday’s DealBook conference sharing deep insight. Why? Because among all the other ridiculous capital misallocation opportunities presented to West Coast venture capitalists in recent years thanks to the Fed, her diaper delivery startup, Honest, launched in 2012 and which is unbelievably valued at $1 billion, is preparing for its IPO as reported previously.

Here, courtesy of DealBook, is what she had to say:

1. “I appreciate being an actress now more than ever, because being in business is so stressful.”

 
Thos Robinson/Getty Images For New York Times

 

2. “Board meetings are so long.”

Brian Lee and Jessica Alba are co-founders of Honest Company. 
Brian Lee and Jessica Alba are co-founders of Honest Company. Andrew Renneisen for The New York Times

 

3. Raising money is “like pitching a movie all the time.”

Andrew Renneisen for The New York Times

 

4. “My 30-plus-page deck got condensed into a 10-page deck, with a lot less words, a lot more pictures.”

Andrew Renneisen for The New York Times

 

5. “I had this idea of this brand where people could really outsource their trust.”


Andrew Renneisen for The New York Times

 

6. With a
movie, “it’s not like your whole life is hanging on this thing. With a
business, your whole life is hanging on this thing.”

Andrew Renneisen for The New York Times

 

7. “We don’t test our products on animals. We test our products on our kids. And on ourselves.”

* * *

Finally, for all those who would rather watch rather than listen, here is the 21 minutes clip of Jessica Alba explaining why all one needs to be valued in the hundreds of millions, however briefly, is stunning good looks, B-ish grade Hollywood celeb status, VCs with ridiculous amounts of cash to burn, and the biggest equity bubble in history. Oh yes, and an idea involving excrement.




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Put Just 3 Percent Down and Own a House! (Or, Fannie Mae Fails to Learn From Its Mistakes)

ForeclosureSubmitted for your approval,
from a
Fannie Mae press release dated December 8:

WASHINGTON, DC – Today, Fannie Mae (FNMA/OTC) announced an
option for qualified first-time homebuyers that will allow for a
down payment as low as three percent. Building upon Fannie Mae’s
successful lower down payment program offered through state Housing
Finance Agencies, the 97 percent loan-to-value ratio (LTV) option
will expand access to credit for qualified first-time homebuyers
that may not have the resources for a larger down payment.

This makes official a federal scheme Stephanie Slade
noted as pending back in October.

For those with short memories, the Community
Reinvestment Act which encoraged home ownership at all costs,
including those of finacial prudence, is implicated by economic
research in the great housing crash of a few years ago. Economists
Sumit Agarwal of the National University of Singapore, Effi
Benmelech of Harvard, Nittai Bergman of the Massachusetts Institute
of Technology, and Amit Seru of the University of Chicago
wrote two years ago:

Our empirical strategy compares lending behavior of banks
undergoing CRA exams within a given census tract in a given month
to the behavior of banks operating in the same census tract-month
that do not face these exams. We find that adherence to the act led
to riskier lending by banks: in the six quarters surrounding the
CRA exams lending is elevated on average by about 5 percent every
quarter and loans in these quarters default by about 15 percent
more often.

Fannie Mae and Freddie Mac (which also joins in the new round of
3 percent-down fun)
feature prominently as major promoters, under HUD direction, of
the federal government’s “affordable housing” scheme to stick
everybody under a roof that they couldn’t necessarily pay for. They
lobbied and arm-twisted banks to make the high-risk loans that led
to such an…interesting result (by which I mean meltdown).

Now, they’re back at it. But it will be different this time,
just because.

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Short-Term Inflation Expectations Have Crashed To 5 Year Lows (In The US)

With all attention firmly focused on Draghi and Europe’s deflationary pressures, it appears the mainstream media forgot to look domestically. With today’s weaker than expected PPI, the 2Y Breakeven inflation rate continues to crash- from over 1.00% just a month ago to just 15.5bps this morning. 5Y5Y forwards continue to slide to near record lows across all the majors.

 

2Y Breakevens are crashing…

 

and 5Y5Y forwards – often discussed as the Central Bankers preferred perspective – are near record lows across all the majors…

 

US 5Y5Y Forward inflation pluinged 15bps today to 2.37% and does that look like Abe has stalled the deflationary ‘mindset’ in Japan?

 

Charts: Bloomberg




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Jonathan Gruber is a Liar. Was He a Liar Under Oath?

Jonathan Gruber is a liar. The
question now is whether Jonathan Gruber was a liar while under
oath. 

In a sworn hearing before the House Oversight Committee on
Tuesday, Gruber, widely cited in the press over the last few years
as an architect of Obamacare, insisted that he did not write any of
the health care law himself. “I didn’t draft the legislation,”
he said,
later reiterating the claim: “I did not write any part of the
Affordable Care Act.”

Asked by Rep. Cynthia Lummis (R-Wy.) why he claimed in 2012 to
have written part of the law, he said that it was “an effort to
seem more important than I was,” and that he “was speaking
glibly.” 

He seems to have spoken “glibly” on multiple occasions.

As The Hill notes,
in a late
2010 lecture to students at the Massachusetts Institute of
Technology, where Gruber is a faculty member, he talked about the
health law and described his role in its creation, saying, “Full
disclaimer: I’m going to describe it objectively, but I helped
write it.”

In another 2010 video, captured by C-SPAN and posted at
Townhall, Gruber also noted his bias in favor of the law while
claiming to have helped write it. “Once again, unabashed, I
helped write the federal [health care] bill as well,” he said. That
remark was made the same month that Obamacare was signed into
law.

Two years later, Gruber hadn’t changed his story. In
a now-infamous
2012 lecture on the law’s health exchanges at Noblis, Gruber
not only said that states that don’t set up exchanges don’t have
access to tax subsidies, he also referred the “the one bit of the
bill I actually wrote.” 

The issue isn’t whether those statements were glib. It’s whether
they were true. (Notably, when asked by Rep. Scott Desjarlais
(R-Tenn.) whether other embarassing videotaped statements were lies
or not, Gruber would only say that his remarks were “glib and
thoughtless and really inexcusable.”)

There is no way to reconcile his multiple past statements with
the statements he made this week while under oath. Either Gruber
spent two years lying about his role in writing the law, or he was
lying this week in his sworn congressional testimony. 

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The Devastation Of America’s Working Class

After years of exposing, month after month, the truth about the US labor market – its conversion into a part-time (in 2010!), low-paying job market where Millennials refuse to work (as the job market reality is gruesome so instead they opt to load up on record amount of student loans) and where older Americans, instead of enjoying retirement are forced right back into the labor force leading to record numbers of workers over the age of 55 (thanks to ZIRP crushing the value of their savings and a refusing to participate in an HFT- and central-bank rigged stock market), the mainstream media, having grown tired of spinning the bullshit optimistic propaganda, has finally moved to the “tinfoil” side, and has done something it normally wouldn’t touch with a ten foot pole. Tell the truth.

Enter the NYT with a shocking dose of truthfulness, one which goes to show just one thing: how over the past decade, notwithstanding the tripling of the S&P from its post-Lehman lows on the back of $11 trillion in central bank liquidity, America’s working class has been not only skewed beyond recognition, but is now absolutely devastated. And all thanks to the Federal Reserve skewing the value of money so much that those who should be working aren’t, and those who should be retiring, are serving you Starbucks.

Here are the facts, long overdue but facts nonetheless, from the NYT:

  • At every age, the chances of not working have changed in the last 15 years.
    • Teenagers are far more likely not to work.
    • Older people are retiring later and working more.
  • In the late 1960s, almost all men between the ages of 25 and 54 went to work. Only about 5 out of every 100 did not have a job in any given week. By 2000, this figure had more than doubled, to 11 out of every 100 men. This year, it’s 16. 
  • About 13 percent of the increase in prime-age nonworkers, including a substantial fraction of the younger ones, comes among people who say they are in school.
  • Much of the school-related rise in nonwork, at least since 2007, appears to be less about staying in school than it is about not being able to find part-time jobs (don’t tell that to the trillion+ in student loans though).
  • Some men in school say they would like to be working part time but they’ve given up looking for a job. Others may stop going to school entirely if they could find a job, or if the college wage premium were smaller.
  • About 20 percent of the new nonworkers say they are disabled, a category whose numbers have risen particularly for workers above age 50.

And the really important part, the one that goes to the entire debate about the collapsing labor force. Bottom line: it’s not because baby boomers are retiring (as we have shown time after time). In fact, quite the opposite:

  • Among prime-age workers, early retirement has increased slightly since 2000. Far more drastic changes have occured among workers 55 and older, who have been doing the opposite and putting off retirement.

Of course, this being the liberal NYT, spin was once again unavoidable:

  • The decline of traditional pension plans and rising education levels, which are associated with less physically demanding jobs, may both help explain why the elderly are working longer.

A token pretty chart that shows everything said above:

That’s the NYT’s version. Here is our far simpler chart that says all that and more.

And here, with a 2 year delay, is the NYT admitting what we said back in 2012 in “55 And Under? NoJob For You”

Some countries have developed policies that encourage older people to leave the labor force, so they do not “crowd out” younger workers. But studies across countries and time suggest that crowding-out may not actually be a problem. Economies do not appear to have a fixed number of jobs. When more older people are working, they are earning money that they will then spend in ways that may create more jobs for young people, for example. Even if this is the case, though, the rise of elderly employment in recent years has not provided enough of a lift to put more young people back to work.

And so on.

We won’t waste your time on the rest (you can read it here The Vanishing Male Worker: How America Fell Behind) for the simple reason that once again, we said all of the above and much more years in advance. That said we commend the mainstream media, especially those who are ideologically alligned with the current administration, for finally daring to tell the truth.




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On The Independents: Justin Amash on the Secret Surveillance Bill, Bernie Sanders on Economics, Andy Levy & Jimmy Failla on Torture, Guns, License Plates, Rick Perry, and Sony; and Me on Rolling Stone

They really do! |||Tonight’s episode of The
Independents (Fox Business Network, 9 p.m. ET, 6
p.m. PT, with repeats three and five hours later) features
interviews with two Capitol Hill stalwarts who are part of that
left-right grassroots coalition you sometimes hear about when the
National Security Agency almost gets defunded or
whatnot.

First up is Rep. Justin Amash
(R-Mich.), who will talk about a
terrifying blanket-surveillance bill that passed Congress
this week with little fanfare (read Amash slam the bill on
his Facebook
page). Later in the show, socialist Sen. Bernie Sanders
(I-Vermont) will tussle with Kennedy over
economic policy and his pesidential aspirations.

Party Panel is Red Eye
co-host TV’s
Andy Levy and comedian Jimmy Failla, who will
talk about precisely what I mention in the headline of this post,
only with more verve and wit. And the hostess and I shall discuss
how journalistic catastrophes like the
Rolling Stone gang-rape article
happen.

Follow The Independents on Facebook
at http://ift.tt/QYHXdB,
follow on Twitter @ independentsFBN,
hashtag us at #TheIndependents, and click on this page
for more video of past segments.

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