Wednesday, December 30, 2015

Stocks Down, Bonds Down, Gold Down, Crude Down, Dollar Down

Sell Mortimer, Sell!

Financial Armageddon Approaches: U.S. Banks Have 247 Trillion Dollars Of Exposure To Derivatives

by Michael Snyder, The Economic Collapse Blog:

Did you know that there are 5 “too big to fail” banks in the United States that each have exposure to derivatives contracts that is in excess of 30 trilliondollars?  Overall, the biggest U.S. banks collectively have more than 247 trilliondollars of exposure to derivatives contracts.  That is an amount of money that is more than 13 times the size of the U.S. national debt, and it is a ticking time bomb that could set off financial Armageddon at any moment.  Globally, the notional value of all outstanding derivatives contracts is a staggering 552.9 trillion dollars according to the Bank for International Settlements.  The bankers assure us that these financial instruments are far less risky than they sound, and that they have spread the risk around enough so that there is no way they could bring the entire system down.  But that is the thing about risk – you can try to spread it around as many ways as you can, but you can never eliminate it.  And when this derivatives bubble finally implodes, there won’t be enough money on the entire planet to fix it.
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Swiss Army Chief Warns Of Social Unrest, Calls Upon Citizens To Arm Themselves

Swiss army chief André Blattmann warned, in a Swiss newspaper article on Sunday, the risks of social unrest in Europe are soaring. Recalling the experience of 1939/1945, Blattman fears the increasing aggression in public discourse is an explosively hazardous situation, and advises the Swiss people to arm themselves and warns that the basis for Swiss prosperity is "being called into question."

Not "Buying" The Santa Rally: In Week When S&P Rose 2.8%, The Smart Money Sold (Again)

"Last week, during which the S&P 500 rallied 2.8%, BofAML clients were net sellers of US stocks for the second week, in the amount of $0.7bn. (Globally, our colleagues who track EPFR flow data have noted flows out of the US but into Europe and Japan in recent weeks). Net sales were chiefly due to institutional clients last week, who have sold stocks for eight consecutive weeks. Buybacks by corporate clients decelerated vs. the prior week, and YTD are tracking over $40bn, below last year’s record $45bn." So the smart money was selling, companies were not buying back, and stocks rallied nearly 3%.

Martin Shkreli's KaloBios Files Chapter 11: Full Bankruptcy Filing

Thus ends KaloBios' "turnaround in progress" - two months after it was dragged out of bankruptcy by Martin Shkreli in an attempt to crush the company's shorts and unleash a massive squeeze, Kalobios is again, well, bankrupt.

The Catastrophic Threat Of Bail-Ins

Once upon a time, we had strong, vigorously enforced laws that made a bank the safest place to store paper assets. That is no longer. Now banks are where your wealth is most likely to be stolen – and by the bank itself. Thanks to the bail-in, the term “bank robbery” now has an entirely different meaning.

Oil Slumps As Saudis "Won't Change" Policy, Russia Rethinks 2016 Price Forecast

“We will satisfy the demand of our customers. We no longer limit production. If there is demand, we will respond. We have the capacity to respond to demand," Saudi oil minister Ali al-Naimi told reporters on Wednesday, underscoring the kingdom's belligerent stance as "lower for longer" heads into 2016. Meanwhile, Russia's Finance Ministry may reconsider its forecast for $50/bbl crude, a move which could inflate Moscow's budget deficit.

Turkey Foils New Year's Eve ISIS Suicide Plot

Even as Islamic State oil continues to flow from Syria and Iraq through Turkey, Ankara says it's cracking down on ISIS sleeper cells. In the latest example, Turkey has arrested two men the government says were planning a suicide attack on New Year's Eve in the country's capital.

Frontrunning: December 30

  • Oil rebound fizzles, sending global shares lower (Reuters)
  • Saudi Arabia Won’t Change Oil Production (WSJ)
  • China suspends forex business for some foreign banks (Reuters)
  • Republicans come up short in search for diverse voters in 2016 election (Reuters)
  • Oil Prices Become a Problem for U.S. Steelmakers (BBG)
  • Oil-Producing States Battered as Tax-Gushing Wells Are Shut Down (BBG)

Global Stocks, Futures Dragged Lower By Commodities As Oil Slumps Back Under $37

With just two days left in 2015, the main driver of overnight global stocks and US equity futures remains the most familiar one of all of 2015 - crude oil, which, after its latest torrid bounce yesterday has resumed the familiar "yoyo" mode, and again stumbled dropping below $37 on yesterday's surprising API 2.9 million crude inventory build, as well several more long-term "forecasts" by OPEC members, with Kuwait now budgeting for $30 oil, while Venezuela's Maduro said the oil price fell to $28/bbl and is "headed downward." As a result U.S. futures declined and European stocks fell, extending their worst December drop since 2002 in thin volume on the last full trading day of the year.

The Big Short's Michael Burry Warns "The Little Guy Will Pay" For The Next Crisis

"We are right back at it: trying to stimulate growth through easy money. It hasn’t worked, but it’s the only tool the Fed’s got. The biggest hope I had was that we would enter a new era of personal responsibility. Instead, we doubled down on blaming others, and this is long-term tragic..."

China Suspends Foreign Banks' FX Trading As Offshore Yuan Spread Signals Massive Outflows

For the first time since the August collapse, Offshore Yuan is trading over 1000 pips weaker (relative to the USDollar) than onshore Yuan, signalling outflows are once again escalating. Following the chaos in HIBOR money-markets, Offshore Yuan has crashed to 6.5970 (below August spike lows) to the weakest since Dec 2010. On the heels of this recent divergence between on- and off-shore Yuan, China has suspended some foreign banks from FX trading, we suppose to try and stem the capital outflows.

In Latest NSA Spying Scandal, World Learns Obama Lied Again; Congress Furious it Was Spied On

"The bottom line is that people around the world, regardless of their nationality, should know that the United States is not spying on ordinary people who don’t threaten our national security, and that we take their privacy concerns into account in our policies and procedures.  This applies to foreign leaders as well." - Barack Obama, January 17, 2014

Trey Gowdy Show Season 2 Cancelled!

from The Marshall Report:

In Gowdy’s first event to support Rubio he got slammed with negative questions. Let it be known this will get worse. Social media is already going viral, just not in the way the GOP establishment wanted. It is a major backlash. The publicity is that of outrage, not of votes.
This is another wake up call that once again proves the establishment thinks we are mindless sheep that can be herded. They really don’t understand why the people liked Gowdy, nor do they have a clue why it is that now they don’t. Did they really believe we were rock star stupid here?
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Where’s the “Dumb Bid” in the Junk-Bond Rout?

from Wolf Street:

There is a reason why the Focused Credit Fund, a mutual fund that specialized in junk bonds, imploded on December 11 – the first fund to do so since the Financial Crisis. It experienced a run by its beaten-up investors and had to dump assets to cover the redemptions. This “forced selling” drove down prices even further. Finally, the fund blocked withdrawals. It would liquidate its assets gradually and pay the remaining investors the leftover subway tokens at some later time.
It was a classic liquidity mismatch, where a mutual fund held “illiquid” junk bonds, while investors were entitled to daily redemptions. This was exacerbated by the “first-mover” advantage in these kinds of open-end funds: the first investors out the door where made whole; those left behind ended up holding the bag [read… It Starts: Junk-Bond Fund Implodes, Investors Stuck].
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OPEC Predicts Oil Prices WILL NOT Return To Triple Digits Until 2040: “Strikingly Bearish”

by Mac Slavo, SHTFPlan:
With oil trading under $40 and threatening to unhinge the entire industry from Texas to Russia, analysts the world over are working overtime to predict what happens next. Some, like financial investment firm Goldman Sachs, say the price could go as low as $20 per barrel because of a major supply glut evidenced by the scores of full oil tankers anchored off the coast of the United States and elsewhere. At the same time, others suggest the next spike to $100 could be just around the corner.
This week the Organization for the Petroleum Exporting Countries (OPEC), which essentially controls the supplies behind the majority of the world’s oil production and has thus far refused to reduce oil output, released a report indicating that low oil prices are here to stay and that it could be at least two decades before prices return to triple digit levels:
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