Faber News Flow

As we noted earlier,  a huge divergence has opened up between stock and bond market volatility, the former measured by the absurdly calm VIX index, the latter by the surging MOVE... ... whose spike pushed it to the   highest levels since April 2020, suggesting bond traders are increasingly on edge over how the Fed's taper announcement could impact bond prices even as equity markets continue to ignore any and all potential risks. As the next chart shows, we haven't seen a divergence this wide between the two since before the covid crisis: We discussed some of the reasons behind the turmoil in bonds in ""10 To 20 Asset Managers Are Being Liquidated" - Rate Vol Exploding Just As Funds Pile Into Repo Trade That Blew Up Market" and earlier today we showed the ominous collapse in the 5s30s curve, one of the most credible early indicators that not all is well in the economy... ... a signal that was further reinforced by the first ever inversion in the 20s30s curve.

"Every policy-type person is asking – what is the cost of hiking interest rates early?"   said Marcel, our head of research, updating us on the state of such chatter. "Historically, an extrapolation of rate hike expectations leads to a material jump in terminal real rates and an undue tightening in credit conditions," he explained. "The most obvious recent analog branded in policy minds is the 2013 taper tantrum. 5y5y real OIS jumped from -0.75% in 2012 to +1.50% in 2013 with ~75% of that move happening on Bernanke's misstep. A lot of factors contributed to the reversal – 5y5y real OIS returned to –0.75% in 2016." "The bond market is giving policy makers a free pass, at least for now," continued Marcel. "Bloomberg headlines about bond market carnage are true for some micro, leveraged funds but not accurate for the broader asset class. Treasury total return indices were up on the week (+0.5%) and virtually unchanged for the month (-0.07%)

Cow farts are the new 'public enemy No. 1' when it comes to the global battle against climate change. Source:  FT During the COP26 conference in Glasgow on Tuesday, more than 100 countries, including the US, committed to reducing methane emissions by 30% by 2030 -  although a handful of major emitters including - of course - China, Russia as well as India did not sign the "global methane pledge",  which was spearheaded by the EU and US. It also doesn't include Australia,  where major plumes of methane from coal mines have been identified. The pledge commits countries to reducing their emissions of methane from agriculture and waste. Still, the US, which helped spearhead the pledge, has helped recruit dozens of new countries after  only a handful were willing to sign on back in September.  Per  the FT , the number of countries that supported the initiative has grown from just six members when it was initially announced in September, to 105 at its official launch at