Faber News Flow

Over the past week, when looking at the details of the Fed's ongoing QE4, we showed out ( here and here ) that the New York Fed was now actively purchasing T-Bills that had been issued just days earlier by the US Treasury. As a reminder, the Fed is prohibited from directly purchasing Treasurys at auction, as that is considered "monetization" and directly funding the US deficit, not to mention is tantamount to "Helicopter Money" and is frowned upon by Congress and established economists. However, insert a brief, 3-days interval between issuance and purchase... and suddenly nobody minds. As we summarized: "for those saying the US may soon unleash helicopter money, and/or MMT, we have some 'news': helicopter money is already here, and the Fed is now actively monetizing debt the Treasury sold just days earlier using Dealers as a conduit... a "conduit" which is generously rewarded by the Fed's market desk with its marked up purchase price. ...

Following ISM's ugly narrative-busting manufacturing data and Markit's rebound-supporting non-manufacturing print, ISM Services is set to break the tie with expectations of a modest rebound in December, and it did, rising from 53.9 to 55.0 (above the 54.5 expectations). A rebound in sales and production lifted US Services' activity to a four-month high in December, indicating the broader economy remains stable in the face of further deterioration in manufacturing. Source: Bloomberg And so for once, both ISM and Markit are in agreement - Manufacturing is weaker and Non-Manufacturing stronger in December... Source: Bloomberg A very different picture between the two sectors of the economy... Source: Bloomberg And this 'soft' survey data is confirmed by 'hard' data as US Factory Orders declined 0.7% MoM in November, down annually for the 4th straight month... Source: Bloomberg However, while the modest rebound MoM will be touted as significant, Bloomberg ...

It's official: the worldwide automotive industry recession is in full swing. Car production in Germany has tumbled to its lowest levels in 23 years, according to Bloomberg . Names like Volkswagen, BMW and Daimler produced 4.66 million cars in German factories last year, which is the weakest number since 1996. The 9% decrease was blamed on waning demand from international markets and estimates are for deliveries to drop to 78.9 million vehicles this year, from 80.1 million in 2019.  Pollution concerns led by Volkswagen's 2015 diesel-cheating scandal have threatened to dethrone Germany as a global manufacturing powerhouse. Combined with the global auto recession, trade conflicts and slowing economies, it's a recipe for falling output. Germany has been more susceptible to emission regulations due to the country's propensity for making high performance vehicles. Brands like BMW, Porsche and Audi have made their names focusing on power and performance.  Meanwhile the ind...

Stock Market Today: Dow, S&P Live Updates for January 8, 2020 - Bloomberg https://www.bloomberg.com/news/articles/2020-01-07/asia-stock-futures-mixed-s-p-500-slips-dollar-up-markets-wrap?srnd=markets-vp U.S. Stock Futures Drop as Iran Retaliation Starts: Markets Wrap Adam Haigh 7 gennaio 2020, 22:40 CET Geopolitical tensions loom over markets on Wednesday U.S. stock futures declined after Iran reportedly started an attack on a military base in Iraq hosting American troops, escalating tensions in the Middle East. Treasury futures and the yen rose. Futures on the S&P 500 Index dropped more than 1%. Oil prices surged as Iran state TV said it started operation "Martyr Soleimani" at dawn with several rockets being fired at the Ayn al-Asad base. Australian shares fell, and Australian bond yields slid as the Asian trading session got g...

Wall Street Is Gaming Out All the Possible U.S.-Iran Scenarios - Bloomberg https://www.bloomberg.com/news/articles/2020-01-07/wall-street-is-gaming-out-all-the-possible-u-s-iran-scenarios?srnd=markets-vp Wall Street Is Gaming Out All the Possible U.S.-Iran Scenarios Sam Potter 7 gennaio 2020, 17:35 CET Iranian mourners carry a symbolic coffin wrapped in a U.S. flag during the funeral procession for Qasem Soleimani in Tehran on Jan. 6. Photographer: Atta Kenare/AFP via Getty Images Constraints 'likely limit escalation,' says Morgan Stanley WM Investors and analysts returning to work this week after the festive break found an unwanted item on their desks: a geopolitical...

"World War Three!"   is trending on social media  the day I return to work after two weeks off deliberately not reading any news for once: ironic given my reputation for being bearish about geopolitics.   Markets, of course, have failed to react much : Middle-East bourses closed down 2-4% on Sunday, which is not exactly end of the world stuff; WTI futures are up around 3%, again not a real panic; while US 10-year yields were down from 1.94% intraday Thursday to 1.79% as of the Friday close - but the weak US ISM survey (47.2 headline; 46.8 new orders; 45.1 employment) could be to blame for that alone. You know what? For once the markets are arguably right, albeit for all the wrong reasons.   Markets think nothing that happens in the Middle East matters because central banks will have their backs regardless .   That is patent nonsense, even if Ben Bernanke is muttering about not ruling out negative rates and further purchases of "private securities" during the next do...

Some are calling it bold, some are calling it reckless, and others are holding their breath in anticipation of what comes next after the United States initiated a  drone air strike  that resulted in the death of one of Iran's top generals, Qassem Soleimani. This move not only caught the Iranian government by surprise but the global markets as well, resulting in a massive spike in the price of oil overnight and into the Friday trading session. Will OPEC+ Members Comply With Its Production Targets in 2020?   (Chart sources,  oilprice ) At one point, both WTI Crude and Brent Crude were trading up over 4%, as a risk premium was slapped on the price of oil due to the potential ramifications in the Middle East over the pre-emptive strike against someone considered by many to be the second most powerful man in Iran. The Pentagon issued their reasoning for carrying out Thursday's air strike, Reuters  reports : "At the direction of the President, the U.S. military has taken decisiv...