Tag: news

Oil prices are spiking (WTI crude is up $3 off this morning’s lows) following the pipeline explosion in Saudi Arabia. Of course, energy stocks are surging on the news too and we are just waiting for some clever talking head to proclaim this surge as demand-driven showing how strong the economy is…

Oil is surging…

 

Some context for the move…

 

and energy stocks following for now

via Zero Hedge http://ift.tt/1yYJkZW Tyler Durden

The market looks like it’s topping out.

We have a clear megaphone pattern in the S&P 500. We could always stage a final blow off top, but we’re at or near the top already. The next leg down should take us to the low 1800s. If things really begin to accelerate, we could easily go below 1700:

There is certainly no shortage of potential catalysts for this.

1)   Mario Draghi’s “bazooka” in Europe is looking more and more like a water pistol. There may in fact be something of a mutiny going on at the ECB as more and more national central bank heads grow tired of Draghi’s secrecy and policies.

 

2)   Japan’s economy is an absolute disaster. More importantly, the Japanese Bond market is heading towards an implosion. Risk is so mispriced by the Bank of Japan’s policies (QE efforts greater than 24% of Japan’s GDP) that even a general move to market rates could blow up the whole mess.

 

3)   Based on un-massaged data, China is growing at HALF of the official rate. Given than half of all future global GDP growth is expected to come from China, this doesn’t bode well for the world.

 

4)   The US Dollar is rallying hard. We’re already at a four-year high. With the global dollar carry trade somewhere over $3 trillion, this has the potential to blow up a massive amount of investments (see the current commodity meltdown).

The financial world focuses far too much on stocks. The stock market, despite being at record highs (meaning record market capitalizations) remains one of the smallest, and least sophisticated markets on the planet.

Consider that stocks, even at current lofty levels, have a global market capitalization of slightly over $60 trillion.

In contrast, the global bond market is well over $100 trillion.

And the global currency market trades OVER $5.3 trillion per day.

It is currencies, not stocks, where the most significant moves occur. The currency markets are the largest, most liquid markets in the world. They are always first to move when things change.

And the US Dollar is moving up RAPIDLY. Will this blow up the financial system as it did in 2008? We’ll soon find out.

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Best Regards

Phoenix Capital Research

 

 

 

via Zero Hedge http://ift.tt/1tIhbpV Phoenix Capital Research

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 Shiiites 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.”

Yesterday we had attacks on Shi’ites (as Reuters reported)

Saudi security forces on Tuesday shot dead a member of an armed group that killed five people in an overnight attack on Shi’ite Muslims marking an important religious anniversary, al-Arabiya television reported.

 

The late Monday assault on a Shi’ite gathering in al-Ahsa district is likely to test already strained relations between Sunnis and Shi’ites across the Middle East because it coincided with the annual Ashoura commemoration of Shi’ite Islam.

 

The Dubai-based al-Arabiya said security forces who had been hunting suspects in the al-Ahsa attack clashed with and killed “a wanted man” at a rest area in the al-Qassim province, north-west of the capital Riyadh.

… and today, what is allegedly an Aramco pipeline, just exploded near the town of Sudair, south of Riyadh.

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The Region:

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Has sent stocks and the currency reeling.

 

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— ????? ???????? (@SaudiNews50) November 5, 2014

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It would appear the Saudis might need US ‘protection’ after all.. how convenient as they continue their attacks on the US Shale industry

via Zero Hedge http://ift.tt/10mW68l Tyler Durden

The Ruble collapsed another 2% today breaking above 45 for the first time ever as Bank of Russia’s Deputy Governor Ksenia Yudaeva suggested their policy was “quite close” to free floating the currency and desperately tried to jawbone the currency. She suggested that further rate increases were possible, that interventions were part of the “policy package” when repo tool ramps up and, most notably, Moscow could use some of its national foreign currency or even gold bullion reserves – now the world’s fifth largest hoard – to pay for buying imports if Western sanctions over Ukraine continue.

• *BANK OF RUSSIA WILL MEET 2016-2017 INFLATION TARGET: YUDAEVA
• *YUDAEVA: RUBLE SEEN STABILIZING BY YEAR END
• *BANK OF RUSSIA’S POLICY QUITE CLOSE TO FREE FLOAT: YUDAEVA
• *YUDAEVA: WE ARE GRADUALLY MOVING AWAY FROM USING CORRIDOR
• *YUDAEVA: WE ARE GRADUALLY MOVING AWAY FROM USING CORRIDOR
• *RUBLE INTERVENTIONS CHANGE PART OF POLICY `PACKAGE’: YUDAEVA
• *BANK OF RUSSIA DOESN’T EXCLUDE FURTHER RATE INCREASES: YUDAEVA

 

USDRUB just broke above 45 for first time ever

 

which makes you wonder

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/1tcgJLq Tyler Durden

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.

5 in a row, and lowest since April.

 

Markit notes:

“The October survey data running at a level consistent with GDP rising at an annualized rate of 2.5% at the start of the fourth quarter.”

 

“Meanwhile, a solid increase in payroll numbers was maintained during the latest survey period, but service providers’ confidence towards the business outlook was the least positive since July and close to its lowest for two years.”

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And then came ISM Services, missing by the most in 8 months…

 

But catching down to Markit

 

The breakdown:

What the cherry-picked respondents are saying:

• “Business is steady with new product launches.” (Information)
• “The general business outlook is favorable. Approaching 2015 with cautious optimism.” (Finance & Insurance)
• “Healthcare market continues to see challenges and uncertainty.” (Health Care & Social Assistance)
• “Economy appears to be slowing. Fears of ISIS, Ebola, etc.” (Professional, Scientific & Technical Services)
• “It appears that customers are beginning to engage which is producing sales. Not where we want to be, but continuing to see improvement.” (Retail Trade)
• “Sales very sporadic. It’s up and down weekly.” (Accommodation & Food Services)
• “Business activity remains robust here.” (Utilities)
• “The past few months have been record months for us in terms of sales, but we are seeing margin pressure.” (Wholesale Trade)

And keep in mind: all of the above is then “seasonally-adjusted” – here is what the key “New Orders” data looks like unadjusted.

 

It is at the unadjusted level that we find that the number of respondents seeing “worse” conditions is at the highest since March, offset by those seeing “better”, which in turn is lowest sincethe Polar Vortex.

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Finally… this makes one wonder…

Well, so long as we’re all on the same page http://ift.tt/1AivG8m

— Not Jim Cramer (@Not_Jim_Cramer) November 3, 2014

via Zero Hedge http://ift.tt/1tcgJLg Tyler Durden

With the BOJ having stolen the limelight in the past week with its unprecedented, and unexpected, QE expansion it is easy to forget that following the Fed’s halt to QE3, there is still a substantial gap of flow that must be filled to keep the markets comfortably levitating (as Citi explained recently). Enter the ECB, which tomorrow will conduct its November meeting together with the traditional post-meeting press conference. But while all eyes will be on Draghi to see just how bad the mood in the room is surrounding the text-messaging central banker, who as Reuters reported yesterday, is now facing a full blown mutiny from anywhere between 7 and 10 regional central bank peers, the bigger question is what will the ECB do and how to trade it.

Not unexpectedly, in the aftermath of the BOJ’s Banzainomic, the consensus is for a major dovish announcement from Draghi. A case in point comes from the bank that first, one year ago, floated the idea of European QE: BNP (see “Next From The ECB: Here Comes QE, According To BNP” from November, 2013). The same BNP now says:

We maintain a short EURUSD recommendation (target 1.18) and on Monday published a near-term bearish FX option recommendation covering the ECB event. Like the JPY, there is a strong probability that the EUR weakens sharply following the meeting as we do not believe the market is sufficiently positioned for a dovish ECB. EUR positioning is at -14 vs JPY at -28 (on our scale of -50 to +50). Below we discuss five possible scenarios for tomorrow’s ECB meeting from an FX perspective.

And here is the full matrix of possible actions that the ECB can undertake, from adjusting the TLTRO, to shifting the deflation inflation message, to revising its balance sheet target, and finally, to launching a broader QE, and how these could impact the EURUSD based on how Draghi frames them.

 

But is the EURUSD the only trade? Not at all. In the table below, Deutsche Bank compares the developments in some key variables since the last ECB meeting on 2-October to determine the best risk-reward trades ahead of the ECB. Here are its preferred trades based on whether the ECB will “disappoint” or “deliver”

Disappointment trades

• On this simplistic risk-reward perspective iTraxx Main spread wideners, long euro/usd and Bund ASW wideners offer the best risk-reward for ECB disappointment trades.

Delivery trades

• The conclusion regarding ECB delivery is a bit more complicated. If we ignore 10Y Bunds which could rally if the ECB announces a broad based QE including government bonds we are left with 2Y Euribor-OIS spread tighteners, long 2Y1Y inflation swaps (which might remain under pressure due to the decline in oil prices) and paid positions on the long-end of the EUR curve.

via Zero Hedge http://ift.tt/1tcgKig Tyler Durden