Wednesday, December 7, 2016
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
14,855 Blog Posts

EIA Report Showing Glut in Distillates Helps Crude Lower

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Dennis Gartman did nothing wrong. His call for a top in crude is looking good today, with oil down sharply after EIA data showed a bigger than expected build in distillates. Essentially, people are using less gasoline and other refined products.

EIA Petroleum Inventory Data

The EIA reports that for the week ending Dec 2:

Crude oil inventories had a draw of -2.389 mln barrels (consensus called for a draw of -1.032 mln barrels)
Gasoline inventories had a build of +3.425 mln barrels (consensus called for a build of +1.948 mln barrels)
Distillate inventories had a build of +2.501 mln barrels

WTI is on the brink of breaking $50. Again, this is fucking nonsense, since WTI is up 20% over the past week — ever since the Saudis jimmy-rigged prices higher.

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In Time Magazine Interview, Trump Promises to Make Biotech Investors Poor Again; Biotechs Plunge

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The riskiest part of the risk curve is getting its face kicked in this morning, after President elect Trump said he’d bring down drug prices.

Be honest, the only reason why we like high drug prices is to bank coin on the drug stocks. Any rational person would tell CELG to fuck off and to lower prices.

Apparently, that’s precisely what Trump intends to do.

Trump said he doesn’t “like what’s happened with drug prices” and intend to bring them down.

Just that small set of words has the biotech index in free fall mode, with shares losing billions in market cap. One of the chief losers is Bill Ackman’s VRX.

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China’s FX Reserves Drops Most in 10 Months; Yuan at 8 Year Lows

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Whether it’s because China is rigging their currency or staving off capital flight from the mainland, the yuan is dropping almost every day now v the dollar, which is having a deleterious effect on FX reserves. But don’t feel too bad for the great wall’d nation of dog eaters just yet. They still have north of $3t of our dollars stashed away — as we swim in their cheap shit purchased at Walmart.

Reserves plunged by $69.1b to $3.05t in November, the most since January, when the future for China and global trade was bleak and markets got off to the worst start to a new year ever. Good times.

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Rigged economics

When China lost $99b in January, people freaked the fuck out, thinking the end was near and how China would fast run out of cash — as the capital flight picked up steam. Those fears were soon quelled, as the communist command economy slapped the shit out of anyone who dared move large sums of money out and the global hegemony of QE whisked the markets’ problems away.

The fifth-straight monthly decline brings the reduction in the stockpile to almost $1 trillion from a record $4 trillion in June 2014. While authorities have begun tightening capital controls, a $50,000 limit that Chinese citizens are allowed to convert from yuan annually will reset at the start of the new year, potentially adding depreciation pressure on the currency.

“Containing capital outflows is the key to keeping China’s systematic risk in check,” Harrison Hu, chief greater China economist at Royal Bank of Scotland Group Plc in Singapore, wrote in a note after the data. “Market turmoil one year earlier showed the strong feedback loop between capital flight and currency depreciation can destabilize China’s financial system and lead to escalating systemic risk.”

“The announcement of additional capital controls will smooth the fall in reserves for some time but won’t solve the problem,” said Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis SA in Hong Kong. “China isn’t out of the woods.”

“I smell more capital controls, which run against any hopes of reform or internationalization of the yuan or a sharp drop in the yuan,” said Michael Every, head of financial markets research at Rabobank NA in Hong Kong. “And all these fun and games come before we have even seen President Trump.”

The drop in reserves was due mainly to the PBOC injecting foreign-exchange funds into the market, non-dollar currencies falling against the U.S. dollar after the election, and falling bond prices, according to a statement from the State Administration of Foreign Exchange, which executes currency policy.

The yuan fell 1.55 percent last month, the most since a devaluation in August 2015.

These parlour tricks the PBOC played might’ve been ignored by the flaccid Obama administration, who was solely focused on expanding globalism and bringing forth a new world order under the banner of deranged liberalism, but they might not be received with open arms under a Trump administration who was obsessed with China’s currency manipulation schemes throughout his Presidential campaign.

We’re in for interesting times.

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Socgen Warns Markets Are Underestimating Political Risk, Cities Tight Credit Spreads as ‘Worrying’

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The VIX index has an 11 handle.
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Literally, no one gives a shit about anything. Algos are loaded up to buy stocks daily, and traders suck off their milky tits. The perversion of markets has increased by a factor of 10 in recent weeks, with 50% runs in basic material stocks — led by oil and copper — because Trump is sooo friendly towards China (rolls eyes). It’s like a sick practical joke that will end up pulling the rug on everyone, at a time when the last bear concedes.

Socgen is warning investors that this complacency isn’t normal and has diverged from the traditional methods by which risk is priced into markets. Get it?

Here is the chart.

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source: Bloomberg
Political upheaval and the economic policy uncertainty that’s accompanied it have left little impression on the corporate bond market in 2016. And that’s got researchers at Societe Generale SA concerned.

Even as a wave of surprising election results and a rising populist tide ushered in regime changes in major economies, credit spreads globally are near their tightest levels of the year. Meanwhile, one measure of economic policy uncertainty — propelled upwards by the recent Italian referendum, incoming Trump administration, and a color-coded Brexit — has hit an all-time high.

That massive divergence is depicted in what SocGen Head of Emerging Market and Credit Research Guy Stear calls “the most worrying chart we know.”

Spreads should be twice as wide given the current level of economic policy uncertainty, the strategist reckons.

Global credit spreads were formulated using a weighted average of iBoxx U.S., euro, and U.K. corporate bond indexes relative to their respective benchmarks, while using an index developed by the researchers Scott Baker, Nicholas Bloom, and Stephen Davis to gauge economic policy uncertainty.

“This ought to worry the bulls,” Stear writes, who notes that credit markets are underestimating political risk compared to 2008 and 2011, two other occasions when the Baker, Bloom, and Davis index went parabolic. The measure is higher now.

“In 2008 and 2011, the correlation between economic policy uncertainty and credit spreads was very close,” the strategist writes. “As uncertainty rose, so did spreads – but something different is happening now. The Economic Policy Uncertainty index is up at all-time highs, but spreads are at the median levels of the period going back to 2008.”

Economic policy uncertainty might not ease in the near term, with elections next year in France, the Netherlands, and Germany having the potential to further testify to the populism that’s arisen as a major countervailing force to globalization across advanced economies.

In his year-ahead outlook (titled “The big hangover, part II”), Stear recommends that investors underweight credit in 2017 and wait for a buying opportunity to emerge around the middle of the year.

I promise you: buying up here will be ruinous to your net worth in the not too distant future. This complacency that you’re enjoying now will end in a raging river of tears — investors broken across the rocks — strewn out and ruined. Even the idea of a significant market sell off is somewhat laughable to most people, since it appears to be impervious to any and all negative forms of news. This is how tops are built, on the weak and hedonistic bodies of the overzealous.

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Goldman: India’s De-Monetization Scheme Fucked Themselves, Slashes GDP Outlook Amidst Imperiled Consumer Outlook

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India’s efforts to root out graft and corruption has resulted in a massive collapse in the economy. For the moment, naturally, markets are ignoring the horrific backdrop of a mess of a country without currency — which has resulted in lines at banks that stretch for as long as the eye can see. A total and complete mess.

Goldman is out with a note saying GDP will grind lower to 4% from the median estimate of 6.5% — spearheaded by consumer apathy — as a byproduct of the fact that people, literally, don’t have money.

Fucktards.

Goldman Sachs took another axe to its growth forecasts for India on Tuesday, as the tremors from the government’s shocking move to ban high-value banknotes reverberate across financial markets and the real economy.

Economists at the U.S.-based bank, led by Nupur Gupta, cut their estimates for inflation-adjusted output for the fourth quarter of 2016, citing a sharper-than-initially-estimated fall in consumer sentiment and industrial production amid the demonetization drive.

They now reckon Asia’s third-largest economy will expand by a paltry 4.0 percent in the quarter, compared with a median estimate of 6.5 percent from a Bloomberg survey of 12 economists published in late-November. The latter projection, though higher than Goldman’s, is also notably weaker than a previous 7.8 percent estimate. 

Goldman on Tuesday also further downgraded its outlook for the 2017 fiscal year, estimating the economy will expand by 6.3 percent year-on-year, compared with a Bloomberg median estimate of 7.3 percent. Just two weeks ago, the Goldman economists cut their 2017 GDP-growth projection by 1 percentage point to 6.8 percent, citing the potential for business disruptions in light of the liquidity shortage.

The economists’ bearish lurch this week reflects the fact that soft data and anecdotal evidence suggest the cash shortage is beginning to take a toll, a challenge that will weigh on the Reserve Bank of India on Wednesday when it meets to decide its crunch-fighting strategy.

The Goldman note states:

“Given a limited quantity of new currency notes, the first few weeks since the currency reform have seen a shortage of cash, and consequently a significant reduction in consumption activity given that nearly 80 percent of overall consumption takes place in cash. Some of the impact is being mitigated by the substitution of cash with credit cards or electronic wallet payments, or with informal credit, but it is clear that the shortage of cash is having a significant impact on near-term activity.”

Clearly, the fast growing Indian economy transacting business in cash is something that is rueful by our multi-national debt slavers. Since all previous efforts to move India off the cash tit have failed, the government made sure the message was clear by one day banning money. Poof. Fucking gone, all in the name of fighting corruption.

India remains a heavily cash-based economy, meaning government reforms pose a headwind for growth. The bank noted that the country’s currency-to-GDP ratio is nearly 5 percentage points higher than the emerging market average, citing Haver Analytics Inc. On this basis, they conclude that some 60 percent of transactions in the real economy are now imperiled by a shortage of cash that will shave 80 basis points off real GDP growth in the 2017 fiscal year. They add that growth could fall lower than this base assumption if the cash crunch doesn’t improve notably by mid-February.

Nothing happening here. As you were.

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Chinese Consumerism is On the Rise; A Crop of New Debt Slaves Emerge

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After every last morsel of meat has been picked clean from the American landscape, the globalist scum will need a new country to rape and pillage. By all measure, China is being groomed for such a gracious gift. Over the next century, if current trends persist, America will devolve into a true banana republic. We might even be forced to sell Hawaii one day to the Chinese, paid for with the dollars they made from pillaging from us.

According to new statistics, the globalist plot to convert Chinese savers into debtors is progressing very nicely.

Look at all of that debt, boy.

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Source: Bloomberg

China’s savers, who sock away cash like almost no one else in the world, are racking up more debt as borrowing options proliferate.

Ninety-four percent of consumers used a credit or loan in the past year, up from 85 percent two years ago, according to a survey by market researcher Mintel Group Ltd. Peer-to-peer lending via online lenders jumped, while car loans and mortgages nearly doubled, the poll showed.

Huo zai dang xia, or living in the moment, is the new buzzword. It’s especially prevalent among consumers in their 20s, according to Aaron Guo, a senior analyst for Mintel in Shanghai.

“Compared with their parents’ generation, who tend to save more and are sometimes thrifty, youngsters are willing to spend more on products with special features or tailored services,” he said.

That’s a profound shift in attitudes for a nation where saving has long been the bedrock principle of personal financial management and a prerequisite for big milestones like cars, homes and kids. Deposits stand at 59.6 trillion yuan ($8.67 trillion), People’s Bank of China data show.

The newfound willingness to borrow from the future to enjoy the present could help support consumption in coming years and nudge the nation’s rebalancing away from old traditional drivers. China’s gross domestic product rose 6.7 percent in the third quarter from a year earlier on the back of resilient retail sales, which expanded 10.3 percent in the year to date.

The borrowing could be just getting started. China’s household outstanding loans will continue to rise at a rate of 14 percent for the following five years and exceed 60 trillion yuan by 2021, the Mintel report said.

The joys of globalism and the culture to produce debt slaves.

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The Coverup Continues: Howard Stern Takes #PIZZAGATE Call, Dismissing it as ‘Fake News’ Created by the Russians

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Let me be perfectly clear about Pizzagate. When I first read the Podesta emails I thought something was awry with how the term pizza was used. In private discussions with iBC staff, my theory was that they were making reference to drugs, not children. The Comet Pizza joint never even came to mind, until it started to spread like wildfire on the 4Chan and Reddit forums.

After reviewing the material produced thus far, it looks like a witch hunt. The evidence is all circumstantial, but the owners of that place do themselves no favors — with a litany of questionable Instagram pics, as well as other social media posts that I rather not get into right now. I am not interested in participating in the speculative side of the story. I am, however, supremely curious about the fervent and aggressive media cover up of this singular story — protecting this small business in DC — which has hosted numerous fund raisers for some of the elite’s most powerful in Washington.

The other day a person walked into the shop with a gun, allegedly. As far as I can tell, there hasn’t been any eyewitnesses to corroborate the story. The only witness is a guy named Sharif Silmi, who was invited to the Alex Jones show the other day to discuss what he saw. Needless to say, he didn’t hear any gunshots or see any gun.

Mr. Silmi is a DC area immigration attorney.

In a CNN report about the incident, take a shot everytime you read the word fake and I promise you will get drunk.

The alleged gunman, Edgar Welch, is an actor whose father has ties to foster children services.

Much to my surprise, during my morning drive, Howard Stern took a call about Pizzagate and his sidekick Robin immediately called it ‘fake news.’ The whole ‘fake news’ buzzword has my spidey senses on tilt and the manner in which Stern talked about Pizzagate, blaming it on the Russians, the Chinese and idiots, sounded so scripted, one would think he was pitching one of the many ridiculous products that sponsor his show.

One thing of particular interest to readers is the rumor that Comet Pizza might’ve hired Obama’s PR firm, which would explain the sudden media blitz to preserve this national treasure that has inspired so many to investigate and paint as a place dedicated to the most heinous of crimes.

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CNBC Shills Attempt to Derail the Farage Train, But Fail Miserably

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Nigel Farage is promising ‘big shocks’ in 2017, post BREXIT, Trump, and Italian referendum. He’d like to redefine populism as the new democratic form of government, one that eschews crony Clintonism and the incestuous EU style of governance.

During the CNBC interview, two cucks (Lee, Nathan) attempted to assail Trump’s approach to media, which is to avoid it entirely by talking directly to the people via Twitter, but failed to make any headway — as Farage steamrolled them and made them look like bitter Neandertals in search of a warm cave.

I find it to be hysterical that people are so butthurt over Trump’s twitter account, constantly criticizing it and doubting whether he could effect substantive change with it. Wake up call, fucked faces, he defeated the world’s best political machine, using a very small amount of money to do it, primarily driven by his direct approach to the people — via social media.

The fire rises.

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Stocks Advance Again, Led By Banks, Homebuilders and Airlines

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You don’t get more American than seeing the market rip led by banks, homebuilders and airlines, do you? Jingoism is in the air. Trump is making deals on a daily basis, making his enemies look like prehistoric dinosaurs — deserving of the glass enclosure at the museum and away from national politics.

The only real underperformers were found in gold and silver today, as the engine of risk revved up and peeled off.

To play ‘America First’ one must think local, which is why the homies are of particular interest to me. If we are to believe higher paying jobs are coming back to America, then there will be richer folks in search of homes. Plain and simple, stocks like $TOL, $BZH and $KBH are buys. Rates going higher only emboldens potential buyers to lock in rates and close deals — before they go up. I like the homies here and throughout 2017.

We’re in need of an olde fashioned bubble to get the speculative juices flowing again. But said bubble must be in an industry that is growing rapidly. To see oil stocks run higher, after being destroyed, isn’t a bubble. That’s just stupid horseshit.

I’d love, more than anything else, for the market to be a place where true wealth could be created again. As part of my 2017 investing plan, which will start with a clean slate and a much more active Fly, I will try to identify some of these sectors that might get going under a 3-4% GDP growth America.

 

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Trump: Softbank to Invest 50 Gagillion Dollars, Will Help America Become Great Again

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Trump met with the CEO of Softbank today, who was summoned to Trump Tower. After his meeting, he tweeted out the following messages.

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If I was Hillbot, I’d be in self-destruct mode now (extra Inspector Gadget). I mean, the man isn’t even President yet and he’s making deals like this. Although I’m a Trump fan and would love, more than anything else, for this deal to be real. But it has the feel of craziness, the sort of shit one reads out of the Onion website, then passes it on to an unsuspecting family member in an attempt to trick them.

Should Softbank invest all of that money here and create jobs, I will print out this article and eat it. Paint me skeptical, but I don’t think Softbank is in the business of making America great again — nor hiring workers in the very expensive US of A.

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