Dec 17

Vladimir-Putin

- A Full-Blown Economic Crisis Has Erupted In Russia (Economic Collapse, Dec 16, 2014):

The 8th largest economy on the entire planet is in a state of turmoil right now.  The shocking collapse of the price of oil has hit a lot of countries really hard, but very few nations are as dependent on energy production as Russia is.  Sales of oil and natural gas account for approximately two-thirds of all Russian exports and approximately 50 percent of all government revenue. So it should be no surprise that the fact that the price of oil has declined by almost 50 percent since June is absolutely catastrophic for the Russian economy.  And when you throw in international sanctions, wild money printing by the Central Bank of Russia and unprecedented capital flight, you get the ingredients for an almost perfect storm.  But those of us living in the western world should not be too smug about what is happening in Russia, because the nightmare that is unfolding over there is just a preview of the economic chaos that will soon envelop the whole world.

So far this year, the Russian ruble has fallen nearly 50 percent against the U.S. dollar.  That is a monumental shift.  And as the collapse of the ruble has accelerated in recent days, we are seeing scenes in Russia that are reminiscent of the Weimar Republic.  For example, just consider the following excerpt from an article that just appeared in the New York TimesContinue reading »

Tags: , , , , , , ,

Dec 17

RUB back teaser

- “Ruble Trading To Resume” (ZeroHedge, Dec 17, 2014):

As already noted, yesterday one after another FX broker scrambled to disconnected the Russian currency from the system due to “western banks stopping quoting pricing” and as a result of epic volatility (and as everyone knows, brokers prefer to only trade those pairs where they know with near certainty they can pick 1 pip or so from every trade which is why they prefer stability and orderly markets). However, in the aftermath of today’s announcement that the Russia finance ministry will join the central bank in selling reserves, the RUB has found a bid. And sure enough, here come the FX brokers barging back, advising that Ruble trading is set to resume this afternoon. Continue reading »

Tags: , , , , ,

Dec 17

Putin-Gold

- Surprise! Guess which currency has stronger fundamentals— the dollar or… ruble? (Sovereign Man, Dec 16, 2014):

Last night, the Russian central bank announced a shock decision to hike up its key interest rate from 10.5% to 17%, effective immediately. Incredible.

On Monday alone the ruble declined more than 9% against the dollar, and almost 50% in 2014. It looks like a massacre.

If you listen to conventional financial news, they’ll all tell you that you’d have to be insane to own anything in Russia right now—stocks, bonds, currency, etc.

They’ll tell you that the ruble is in freefall, and that the dollar is the place to be.

But if you have been a reader of this column for any length of time, you know that I am a very data-driven person.

So… just for kicks, I decided to dive into the numbers and make an objective comparison between the US dollar and the Russian ruble.

The results might surprise you.

Continue reading »

Tags: , , , , ,

Dec 17

Gold-Vault

- Commodity Trading Giant Exits Physical Gold Due To “Lack Of Physical With A Documented Origin” (ZeroHedge, Dec 16, 2014):

Back in March, otherwise very under-the-radar Swiss commodities trading giant Gunvor and the fifth largest oil trader in the world, made headlines in the press when one of its then-Russian owners, billionaire Gennady Timchenko (estimated net worth of $8.5 billion), sold his entire 44% stake in the company to his partner in the firm, Torbjorn Tonqvist, just a day before the US revealed its first round of sanctions against individuals affiliated with the Putin regime. Timchenko was among them. As a result of the sale, however, Gunvor avoided falling on the US sanctions list and a Treasury official said that “Gunvor Group Ltd. isn’t subject to automatic blocking from dealing with U.S. persons under Russian sanctions because co-founder Gennady Timchenko owns less than 50 percent of the company.”

Since then the Geneva-based company rarely appeared in the media which is how the nondescript company lliked it. Until last week, that is, when Bloomberg reported that the company was giving up trading physical precious metals, read gold, less than a year after the commodity house started a business dedicated to buying and selling gold. Gunvor is, or rather was, one of the few large commodity firms that handles precious metals. The move into gold was part of an expansion into non-oil businesses that now include iron ore, industrial metals and natural gas. Gold trading was done by a handful of people in Singapore and Geneva.

Gunvor’s move away from physical commodities trading in itself is not surprising: recall that first it was Germany banking titan Deutsche Bank which announced it would no longer trade physical precious metals last month. Continue reading »

Tags: , , , , , ,

Dec 17

Sure!


crying arab

“Oil May Drop To $25 On Chinese Demand Plunge, Supply Glut, Ageing Boomers” (ZeroHedge, Dec 17, 2014):

Most commentators remain in a state of denial about the enormity of the price fall underway. Some, failing to understand the powerful forces now unleashed, even believe prices may quickly recover. Our view is that oil prices are likely to continue falling to $50/bbl and probably lower in H1 2015, in the absence of OPEC cutbacks or other supply disruption. Critically, China’s slowdown under President Xi’s New Normal economic policy means its demand growth will be a fraction of that seen in the past. This will create a demand shock equivalent to the supply shock seen in 1973 during the Arab oil boycott. Today’s ageing Boomers mean that demand is weakening at a time when the world faces an energy supply glut. This will effectively reverse the 1973 position and lead to the arrival of a deflationary mindset…. Prices have so far fallen $40/bbl from $105/bbl since we first argued in mid-August that a Great Unwinding was now underway. And there have been no production cutbacks around the world in response, or sudden jumps in demand. So prices may well need to fall the same amount again.

Tags: , ,

Dec 16

- Western Banks Cut Off Liquidity To Russian Entities (ZeroHedge, Dec 16, 2014):

As Zero Hedge first reported today, shortly before noon one (and subsequently more) FX brokers advised clients that any existing Ruble positions would be forcibly closed out because “western banks have stopped pricing USDRUB“, over concerns of Russian capital controls. Ironically, it was this forced liquidation of mostly short RUB positions that pushed the RUB higher, which in turn had a briefly favorably impact on energy commodities and risk assets, as the market had by then perceived the Ruble selloff as excessive. Of course, since nothing had actually changed aside from a temporary market technical, the selloff promptly resumed into the close of trading once the market finally understood what we had explained hours previously.

And unfortunately for the bulls, various falling knife-catchers, and those who hope the Russian situation will stabilize imminently with or without capital controls, it appears things in Russia are about to get a whole lot worse because as the WSJ reports, the next driver of the Russian crisis is likely to come from within the banking system itself because global banks are curtailing the flow of cash to Russian entities, a response to the ruble’s sharpest selloff since the 1998 financial crisis.”

Presenting Russia’s banks: now cut off from the outside world as the second cold war goes nuclear, at least when it comes to the financial system:
Continue reading »

Tags: , , , , , , , , , , , , , ,

Dec 16

Total Market Chaos

- Total Chaos: Massive Market Moves Spark Selling-Panic Into Close (ZeroHedge, Dec 16, 2014)

Tags: , , ,

Dec 16

FYI.


- Outspooking The Lehman Apocalypse: Could A Russian Default Be In The Cards? (ZeroHedge, Dec 16, 2014):

Via Mint – Blain’s Extra Porridge,

“Nazhmite Lyubuyu Stavku…“

Extra Comment – this might be getting serious.

russia-cds

Russia’s markets have been spanked hard despite last night’s hike. 19% currency crash and 13% down stocks in a session. Ouch! Cumulatively, over the past few weeks stocks, oil and the Ruble are off 50% plus, and bonds off 40%. This morning felt like free-fall. Expect more action from the Russians to stave off economic catastrophe… imminent capital controls are rumoured, but markets are demonstrating a massive loss of confidence.

Lots of old market hands are talking about how its similar to the Russia default and crash of ‘98 all over again.. Actually.. its worse.

Much worse. Continue reading »

Tags: , , , , , , ,

Dec 16

- The Russian Ruble Is Hereby Halted Until Further Notice (ZeroHedge, Dec 16, 2014):

Earlier, we reported that various currency brokers such as FXCM and FxPro, would – as a result of the soaring liquidity in the USDRUB pair – suspend trading in the Russian Ruble (while other merely hiked margins to ridiculous levels). It appears things have escalated again, and as FXCM just reported, instead of just politely advising clients not to open new USDRUB position tomorrow, it has advised anyone long, or short, the USDRUB that their positions will be forcibly shut in moments.

FXCM_0

So for those curious why there appears to be a collapse in Ruble volatility in the past few hours which in turn has sent both stocks and crude soaring, the answer is simple: nobody is trading it!

And this is what happened following the post: as soon as all those short the RUB (long USDRUB) realized they have to take profits, the USDRUB tumbled some 500 pips (!) in the process sending stocks surging.

usrub halted

h/t @Paul_Courtney

 

Tags: , , , ,

Dec 16

- It’s Not Just Russia: Middle East In Freefall, Biggest Plunge In 6 Years (ZeroHedge, Dec 16, 2014):

Dubai’s Financial Market General Index is now down 40% since the peak in oil prices in June this year. For now, only Qatar is clinging to gains year-to-date as the rest of the Middle Eastern equity markets give up 30-60% gains from mid-year and tumble to negative. Dubai and Abu Dhabi alone are down over 8% since Friday. Saudi Arabia is down 7.3% today – the biggest drop in 6 years.

Saudi Arabia’s worst day in 6 years

Tags: , , , , , , , ,

Dec 16

- “The USDRUB Pair Will Be Discontinued Due To Recent Instability Of The Russian Ruble” (ZeroHedge, Dec 16, 2014):

Dear Russian Ruble traders, please find a different sandbox, because “evil speculators” will no longer be tolerated, first at Forex Capital Markets and soon, everywhere else.

Ruble trading discontinued

And now, unless the selloff in US equity futures is immediately halted, expect the first self-help headline in US markets to strike – as usual – within hours.

* * *

Update: And now FxPro:

Continue reading »

Tags: , , , ,

Dec 16

traders brokers hands on face stock market collapse

- Turmoil Spreads: Ruble Replunges, Crude Craters, Yen Surges, Emerging Markets Tumbling (ZeroHedge, Dec 16, 2014):

For those wondering if the CBR’s intervention in the Russian FX market with its shocking emergency rate hike to 17% overnight calmed things, the answer is yes… for about two minutes. The USDRUB indeed tumbled nearly 10% to 59 and then promptly blew right back out, the Ruble crashing in panic selling and seemingly without any CBR market interventions, and at last check was freefalling through 72 74 76, and sending the Russian stock market plummeting by over 15%.

USDRUB

It is so bad, US equity futures which had jumped earlier on hopes of more Chinese intervention following the latest disastrous Chinese PMI print, as well as a French manufacturing PMI beat (don’t laugh), are back to unchanged. Continue reading »

Tags: , , , ,

Dec 16

- Ruble plummets losing more than 20% in a day, hitting new dollar and euro lows (RT, Dec 16, 2014):

No end seems to be in sight for the plight of the Russian ruble, which slumped to new record lows against hard currencies Tuesday. The EUR traded at 93.5 against the ruble, and the USD at 75.

The Russian stock market also went haywire, dropping more than 15 percent as of 2:30pm Moscow time, after it dropped 11 percent the day before. Sberbank, the country’s largest lender, lost 17.77 percent, and VTB, the second biggest bank, fell by 14.29 percent. State-owned oil and gas companies Gazprom, Rosneft, and Surgut also saw shares plummet.

The emergency interest rate hike to 17 percent has failed to halt the ruble’s landslide tumble against hard currencies. The rate increase only calmed the ruble temporarily. Continue reading »

Tags: , , , , , , , , , , ,

Dec 16

17-Year-Old Trading Genius

- 17-Year-Old Trading Genius Who “Made ” $72 Million Actually Just “Made It All Up” (ZeroHedge, Dec 16, 2014):

Yesterday, when we skeptically mocked the NY Mag’s Jessica Pressler coverage of Mohammed Islam, the 17-year-old wunderkind who “allegedly” made $72 million in the market by trading penny stocks, we covered the salient lies and told readers to “feel free to click on the NY Mag’s story about the young “multi-millionaire” – after all that was the whole point.” Sure enough, in the finest tradition of the New Republic’s Stephen Glass, the entire article was nothing more than one epic big clickbait fest.

Oh, did we mention: completely fabricated clickbait.

Because after the entire world learned that young trading whiz-kid Mohammed Islam had “made” $72 million, certainly including the IRS which would promptly come looking for the $36 or so million it was due, the alleged megatrader, who got just the wrong 15 minutes of fame, scrambled to set the record straight, and explained the instead of making money, he actually made nothing, he just made it all up: to wit: “Is there ANY figure? Have you invested and made returns at all? No. So it’s total fiction? Yes. I run an investment club at Stuy High which does only simulated trades.”

Well that clears it up.

Now all he needs is a newsletter and he can claim he is Investment Club 2.0.

For the full story we present the following interview with the NY Observer, where Islam confesses he is nothing but a paper trader.

New York Mag’s Boy Genius Investor Made It All Up  Continue reading »

Tags: , , ,

Dec 16

collapse-crash-meltdown

- We Just Witnessed The Worst Week For Global Financial Markets In 3 Years (Economic Collapse, Dec 15, 2014):

Is this the start of the next major financial crisis?  The nightmarish collapse of the price of oil is creating panic in financial markets all over the planet.  On June 16th, U.S. oil was trading at a price of $107.52.  Since then, it has fallen by almost 50 dollars in less than 6 months.  This has only happened one other time in our history.  In the summer of 2008, the price of oil utterly collapsed and we all remember what happened after that.  Well, the same patterns that we witnessed back in 2008 are happening again.  As the price of oil crashed in 2008, so did prices for a whole host of other commodities.  That is happening again.  Once commodities started crashing, the market for junk bonds started to implode.  That is also happening again.  Finally, toward the end of 2008, we witnessed a horrifying stock market crash.  Could we be on the verge of another major one?  Last week was the worst week for the Dow in more than three years, and stock markets all over the world are crashing right now.  Bad financial news continues to roll in from the four corners of the globe on an almost hourly basis.  Have we finally reached the “tipping point” that so many have been warning about? Continue reading »

Tags: , , ,

Dec 15

20141215_RUB1m

- Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17% (ZeroHedge, Dec 15, 2014):

Following the biggest rout to the Ruble in ages, Russia – unlike Mario Draghi – instead of talking the talk decided to walk the bazooka walk and shocked all those long the USDRUB by unleashing an emergency rate hike (at 1 am in the morning) from the recently raised interest rate of 10.50% to… hold on to your hats… 17.00%, a 650 bps increase!

From the press release:

The Board of Directors of the Bank of Russia has decided to increase from December 16, 2014 the key rate to 17.00% per annum. This decision was driven by the need to limit significantly increased in recent devaluation and inflation risks. Continue reading »

Tags: , , , , , ,

Dec 15

NRA head signals massive release of tainted water

- Report: Massive release of Fukushima radioactive waste being planned — Gov’t Official: I was overwhelmed by amount of contaminated water from reactors, we must dump it into ocean — Experts: Much of melted nuclear fuel is now particles which are inside the water (VIDEO) (ENENews, Dec 15, 2014):

Asahi Shimbun, Dec 13, 2014 (emphasis added): NRA head signals massive release of tainted water to help decommission Fukushima site — The head of Japan’s nuclear watchdog said contaminated water stored at the crippled Fukushima No. 1 nuclear power plant should be released into the ocean… Shunichi Tanaka, the chairman of the Nuclear Regulation Authority, made the comment Dec. 12 after visiting the facility… “I was overwhelmed by the sheer number of tanks (holding water tainted with radioactive substances),” Tanaka told reporters, indicating they pose a danger to decommissioning work. “We have to dispose of the water… We also have to obtain the consent of local residents in carrying out the work, so we can somehow mitigate (the increase in tainted water)… While (the idea) may upset people, we must do our utmost to satisfy residents of Fukushima,” Tanaka said, adding that the NRA would provide information to local residents based on continuing studies of radioactive elements in local waters. Continue reading »

Tags: , , , , , , ,

Dec 15

Gold-Vault

- Why Russia And China Are Buying Gold, According To An Economics Professor (ZeroHedge, Dec 15, 2014) 

We already know that to at least one, sadly all too prominent, career economist gold is held by central banks simply due to “tradition.” Here is how another professor of economics perceives the value of gold to central banks.

To Joshua Aizenman, a professor of economics and international relations at the University of Southern California, dabbling in gold is mainly an attempt by bankers and officials to send a message to the world — one that signals an appetite for power or that broadcasts a desire to challenge a rival. “I doubt that the Chinese or the Russians actually believe that gold is such a great investment in terms of pure returns,” Professor Aizenman said. “But if they’re trying to suggest that they’re unhappy with the dollar or that they want to become a global player, then gold is very powerful.

“The investment is a symbol,” he explained. “It’s made for political, not financial, gain.”

That explains it: not just tradition, but symbolic tradition. Actually, let’s just combined what all prominent economists have recently said about gold, and we get… a 6000-year-old symbolically traditional bubble.

Source: NYT.

 

Tags: , , , , , ,

Dec 15

- WTI Crude Craters To $55 Handle, High-Yield Credit Crashing-er (ZeroHedge, Dec 15, 2014):

Having almost touched $59 overnight, WTI crude has collapsed back to a $55 handle, smashing the Ruble lower and high-yield credit spreads higher. US financial stocks are starting to weaken back towards the credit market’s warnings as counterparty risk concerns spread…

- Goldman Pours More Crude On The Fire: “Oil Prices Can Go Lower For Longer” (ZeroHedge, Dec 15, 2014):

Slowing the rebalancing and creating further downside risk is a very strong consensus view that this pull back is temporary and that oil prices will quickly rebound as they did in 2009. According to a recent Bloomberg survey, the median WTI forecast for 2016 is $86/bbl (even we forecast it going back to $80/bbl). All of these forecasts are based upon now outdated cost data that is shifting as fast as the price. It is precisely this strong view for a rebound in prices and the behavior it creates, that not only suggests that oil prices can go lower for longer, but also that the new normal is far lower than we thought just one month ago. Instead of optimizing against a lower price environment, many oil producers are trying to position themselves for the rebound in prices

 

Tags: , ,

Dec 15

- The Economics of Efficiency: Fake Jobs, Fake Growth, and a Two Class Society (Dark Bid, Dec 14, 2014):

The most efficient outcome is the one without human involvement. That is the problem of efficiency.

Throughout our entire lives, we have been trained to focus on how to get the most work done in the least amount of time. If we did this, we would feel satisfied. But perhaps we have set ourselves on the path to a meaningless existence.

The Luddites experienced efficiency in the early 1800s. They were skilled textile artisans, but stocking frames, spinning frames, and power looms threatened their way of life. What was their response? If this happened today, they would be called left-wing terrorists. The Luddites burned down mills and destroyed the machines that were replacing them. The word “Luddite” allegedly comes from Ned Ludd, a young man who destroyed two stocking looms in 1779. Continue reading »

Tags: , ,