Faber News Flow

Following  Europe's disappointing downturn this morning  (and UK), US' final Manufacturing PMI print for 2019 was expected to confirm a slight deceleration in the late-year rebound. However, it was a disappointment, as the final US Manufacturing data dipped from 52.6 in November (and 52.5 in flash December data) to 52.4... Source: Bloomberg Can Uber Ever Recover After Its Disappointing IPO? Chris Williamson,  Chief Business Economist at IHS Markit said : "The US manufacturing sector continued to recover from the soft-patch seen in the summer, ending 2019 with its best quarter since the early months of 2019. "The overall rate of expansion nevertheless faltered somewhat in December and remains well below that seen this time last year,  suggesting producers are starting 2020 on a softer footing  than they had enjoyed heading into 2019. " Business sentiment about the outlook remains especially subdued compared to a year ago,  reflecting ongoing worries about ge...

Over-the-Counter and Centrally Cleared Derivative Contracts at Banks in U.S. as of September 30, 2019 (Source: OCC) After the epic financial crash on Wall Street in 2008 – the worst since the 1929 crash and ensuing Great Depression – two key reforms were put in place in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to prevent another catastrophic meltdown on Wall Street. The first key reform was that derivatives were to be moved out of the federally-insured, taxpayer backstopped commercial banks, that had been bought up by Wall Street trading houses, into units that could be wound down in a bankruptcy proceeding. It was called the "Push Out" rule. That reform was also meant to prevent the New York Fed from ever again  secretly pumping upwards of $29 trillion  into Wall Street trading houses and their derivative counterparties in order to bail out a corrupt casino banking system. (And yet here we are again today watching  the New York Fed pump hundr...

It was supposed to usher in a market crisis that would prompt the Fed to launch QE4 according to   repo guru Zoltan Pozsar . In the end, the preemptive   liquidity tsunami  unleashed by the Fed in mid-December which backstopped just shy of $500 billion in liquidity, proved enough to keep any latent repo market crisis at bay. The year's final overnight repo operation, which the Fed expanded to as much as $150 billion ended up being just 17% subscribed, as Dealers submitted only $25.6 billion in securities ($15.2BN in TSYs, $2BN in Agencies, $8.35BN in MBS) in the year, and decade's, final overnight repo meant to bridge the financial system's short-term funding needs into 2020. As a result of the Fed's massive, preemptive liquidity backstop, the overnight G/C term repo rate quickly dropped back to a subdued, and quite normal, 1.55% after starting the day north of 1.80%. One thing is certain: last New Year's firework, which saw the overnight G/C repo rate s...

This little monster that feeds beneath the surface of global banking at its core briefly raised one ugly eye out of the water as 2018 turned into 2019. I wrote back then that the interest spike we saw in the kind of overnight interbank lending known as repurchase agreements (repos) was just the foreshock of a financial crisis being created by the Fed's monetary tightening. I said the Fed's continued tightening would eventually result in a full-blown recession that would emerge, likely out of the repo market, sometime in the summer. In the very last week of summer, the Repo Crisis raised its head fully out of the water and roared. When I first wrote of these things at the start of 2019, the Fed had only been up to full-speed tightening for three months, and already it was blowing out the financial system at its core. The stock market had just crashed with the onset of full-speed tightening just as I had said it would. It fell hard enough to where the only index holding j...

"But everyone else was long too, right?" Stock and bond prices were both down today - adding up to the worst combined day since 12/2 Source: Bloomberg US Major equity indices were all lower on the day, despite a valiant attempt at a bounce... Source: Bloomberg Chinese markets were higher overnight... Source: Bloomberg European stocks were lower today... Source: Bloomberg US markets perfectly reflected AAPL today as the buyback machine lifted the market then stalled... US Majors also broke the December uptrend line today... And Nasdaq fell (for the 2nd day) back below the key 9,000 level... FANG stocks have erased last week's gains (biggest daily drop in six weeks)... Shorts were squeezed as Europe closed, and managed to lift Small Caps to green, but could not hold it... Source: Bloomberg A 'mini' rotation today from TSLA into NIO? VIX and stocks continued to decouple... Source: Bloomberg Cre...