2. Iron ore is approaching $40. A "dead cat bounce"? Perhaps.
futures show signs of recovery.
However copper markets remain oversupplied and more production may be coming online next year. It's hard to see a significant rally here.
Some suggest that the stabilization in commodities is due to a weaker USD
. Indeed the DXY index has been softer since the ECB's less-than-bazooka stimulus surprise. However the broad trade-weighted dollar index has actually continued to rise and is now at the highest level since 2003. Watch this index closely in 2016 ...
Turning to oil markets, Brent crude
hit the lowest level in 11 years.
JPMorgan has turned very bearish on crude oil for 2016 partially due to the ridiculously warm weather in the northern hemisphere. The banks also sites persistently strong non-OPEC production (we discussed US production last week) and increased Iranian production.
The warm weather situation is bizarre indeed as near-record temperatures hit much of the United States. New York City temperature is expected to be 70ºF (21ºC) on Christmas day.
1. Brazil's markets are under pressure as investors remain nervous about the new finance minister. The real (BRL
) hit the lowest level since October.
Brazil's domestic bonds sold off, with the 2-year yield moving above 16.6%.
And here is the 10-year bond price. According to Bloomberg, Brazil
is poised for its longest recession since the 1930s.
currency free-float is proceeding reasonably well, as the peso finds a bid. In fact the currency ARS
was up 2.5% on Monday.
One reason for this stability, is Argentina's central bank raising rates by 10% (this is not a typo) in order to cushion the pesos fall.
While drastic, the rate hike beats decimating FX reserves by defending the currency peg - which is what the previous government had been doing for some time.
3. The latest currency to fall is the Azerbaijan
manat, which is down 32% after the nation's central bank decided to follow Argentina by letting currency float.
Now let's look at a couple of developments in Europe.
PPI hit a new post-2009 low (YoY), demonstrating that disinflationary pressures are alive and well in the Eurozone
in spite of all the QE.
2. Swiss monetary base hit a new record as the SNB continues to expand its balance sheet.
To the horror of euro-skeptical Swiss, the SNB's foreign currency holdings also hit record, with the euro being the largest FX component of the balance sheet. In fact the euro is the largest asset on the balance sheet as the SNB was forced to buy euros to keep the Swiss franc from appreciating too much (especially in the face of the ECB's QE).
By the way, the Swiss remain attached to their currency in bank note format. Switzerland
has the highest amount of bank notes in circulation per resident in the world.
At the global level, according to Credit Suisse, "This year’s global industrial production growth was about half the post-1980 trend."
Finally we have a couple of notes on the equity markets.
1. Toshiba's shares are imploding as the firm takes a massive (mostly tax-related) loss and begins restructuring/layoffs.
2. Chipotle gets hit with 5 more e. coli cases in the Midwest.
Turning to Food for Thought, we have 4 items this morning:
1. 7 out of 10 top universities in Europe
are in the UK
2. Is broadband usage in US
homes hitting a plateau? It's cheaper to tap the neighbor's WiFi ...
3. Speaking of a plateau, here is the percentage of women
state legislators in the US.
4. Apparently a farmer in Uttar Pradesh (Northern India
) released bags full of snakes in a government office after the officials there asked for bribe
. This is how we deal with corruption ...
— Edited by Clemens Bomsdorf* Walter Kurtz is an alias
**This is an abridged version of the Daily Shot. To subscribe to the full version, link to the Daily Shot and select the appropriate command. E-mail addresses are never shared with anyone.