Faber News Flow

Complacency is extreme.  With the put-call ratio near record lows... Source: Bloomberg One measure of risk in the  options market is flashing the reddest of red lights possible,  as dealer's gamma exposure reaches a record high... Source: Bloomberg "Dealers are short calls due to the unprecedented call activity previously mentioned, and as a result have been forced to chase stocks higher to hedge," Chris Murphy, Susquehanna's co-head of derivatives strategy, wrote in a note to clients. "The unwind could potentially be violent given all the excess euphoria. It is more likely a question of when and not if." Small Caps managed gains on the week...But, the gamma unwind is evident as stocks tumbled to push the market to its worst week since Halloween... Which is quite a pathetic fact given the NYSE Composite was only down 0.5%. Leaving Nasdaq unchanged ...

After slowing its rebound in November, US Industrial Production was expected to re-accelerate in December and it did, dramatically. Despite job losses, tumbling retail sales, and soft survery data, industrial production jumped 1.6% MoM in December (massively beating the +0.5% expectation). This is also the biggest MoM jump since July... Source: Bloomberg On a year-over-year basis, industrial production remains down 3.6%. US Manufacturing rose 0.9% MoM, almost double the 0.5% expected, but also remains down 2.8% YoY... Source: Bloomberg This is the 8th straight month of rebounds for US manufacturing. While the "Industrial" Average is soaring back near record highs, dramatically above pre-COVID levels, "Industrial" Production continues to languish below those pre-pandemic highs... Source: Bloomberg The stock market is not the economy... it's just a fogged mirror of liquidity, nothing more (and no, the new stock market is not a discounting mechanism of anything but...

Biden unveiled his 2-step plan of "rescue and recovery" in a 30 minute presentation, which was just as was leaked in advance: a $1.9 trillion stimulus proposal which will encounter immediate Republican opposition due to its big-ticket spending on Democratic priorities including aid to state and local governments, a hike in the minimum wage to $15, and expanded unemployment benefits. "We have to act and we have to act now," Biden said, ahead of laying out a second, even broader economic recovery plan next month at a joint session of Congress. That initiative will include money for longer-term development goals such as infrastructure and climate change, the transition team said.  So even more trillions. As Bloomberg summarized it, "Biden's speech had the flavor of a shorter and more concise State of the Union address, focused of course on the pandemic and economic recovery. He laid out a number of goals and some plans yet basically set broad goals -- and aske...

Commodities are booming.  A lot of people seem to think this is a sign of pending economic growth. But in his podcast, Peter Schiff said it's really a sign of inflation. Most of the investment world continues to focus on the stock market and they're not really paying attention to what going on in the commodities markets. And as Peter put it, that's going to have a big impact on what happens in the supermarket. Agricultural commodities, in particular, are on fire.  We're seeing five-year highs on many commodities. Corn was up 5% on Wednesday (Jan. 13). Wheat was up 4.73%. Oats and rice were up over 2%. It's not just agricultural commodities charting big price increases. Industrial metals are also up. Copper was up 2.13% on Wednesday and hit a 5-year high. What's driving prices for industrial metals, for agricultural commodities, it's not strong economic growth. We're not having record growth. In fact, we still have the pandemic. What's driving commodi...

"Either the well was very deep, or she fell very slowly, for she had plenty of time as she went down to look about her and to wonder what was going to happen next." - Lewis Carroll,Alice's Adventures in Wonderland / Through the Looking-Glass Tapering Paradox Over the past week or so, a few Federal Reserve officials have begun to say that "tapering" its quantitative easing program could occur in late 2021. While on many levels this seems to be a bit of wishful thinking, it is worth exploring what that actually means. In the summer of 2013, Ben Bernanke signaled tapering would occur in the fall. That became known as the "taper tantrum" as yields moved higher and the dollar strengthened. But - as it turns out - the actual tapering in January 2014 did not see a rise in long rates. Instead, long rates were pressured for the next couple years. As it turns out, rhetoric of a taper is far more powerful than the act of a taper. Currently, it is the rhetoric pha...

CPI Rose 0.4% in December with Gasoline the Major Factor The BLS reports a rise in the CPI of four-tenths of a percent in December. Year-over-year the CPI is up 2.4%. CPI Month-Over-Month as the BLS Sees Things Month Over Month Key Points  The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in December on a seasonally adjusted basis after rising 0.2 percent in November The seasonally adjusted increase in the all items index was driven by an 8.4-percent increase in the gasoline index, which accounted for more than 60 percent of the overall increase.  The other components of the energy index were mixed, resulting in an increase of 4.0 percent for the month.  The food index rose in December, as both the food at home and the food away from home indexes increased 0.4 percent.  The index for all items less food and energy increased 0.1 percent in December after rising 0.2 percent in the previous month.  The indexes for apparel, motor vehicle insurance, new vehicles...

Under the leadership of Premier Giuseppe Conte, Italy's government has enjoyed a degree of stability unseen in decades, as the technocratic former law professor - initially brought in to lead a government formed by two anti-establishment parties, the anti-migrant League and left-wing populist Five Star Movement - Conte has already survived the collapse of his original coalition. When League leader Matteo Salvini withdrew from the ruling coalition back in 2019, Conte managed to stave off another election by recruiting new allies from the opposition. Since then, Conte has led Italy through two COVID-19 lockdowns, and as the country lumbers forward, with much of its economy still paralyzed, the PM has his work cut out for him if he wants to get the country's debt burden under control without resorting to punishing austerity measures (which, at this point, would probably spark a full-tilt revolution in the streets of Italy's largest cities). But as Italy staggers out of another...

A look at the 5-year U.S. prime rate (the rate at which commercial entities borrow money) trend shows that interest rates are at multi-year lows. The country has not seen such low rates since the years following the financial crisis of 2008-09. At 0.25% (twenty-five basis points), borrowing money is cheaper than it's been in a while – but not for everyone. And there's the irony: Banks, prosperous multinationals, and high net-worth individuals are the ones that really don't need "cheap money". Yet, that is the precise demography that benefit from ultra-low interest rates offered by banks, insurance companies and other corporate lenders. So, where does that leave the struggling individual that just lost their job? Or, who do people in desperate need to pay off high-interest loans turn to? How can you make ends meet in the short term is you've got bad credit? The answer: You turn to the friendly short-term lender. But, while these providers of short-term financin...

To kick off the New Year, the world's largest economies face a massive global debt overhang due to the coronavirus-downturn; some $13 trillion in debt is coming due and will need to be refinanced in an ultra-low rate environment.  Seven top economies plus several major emerging markets economies "face the heaviest bond maturities in at least a decade, much of the borrowings to dig their economies out of the worst slump since the Great Depression," according to  Bloomberg , adding that these governments will need to roll over at least half of this debt in 2020.  Gregory Perdon, co-chief investment officer at Arbuthnot Latham, said, "government debt ratios have exploded, but I believe that the short-term worrying over a rising debt is fruitless." Perdon said, "debt is leverage and assuming it's not abused, it's one of the most successful tools for growing wealth." Despite surging coronavirus infections, hospitalizations, and deaths weighing on th...