Boom To Bust? Oil The Canary In The Mine?

Baltic Dry Index. 2259 +157         Brent Crude  80.04

Spot Gold 2016                  US 2 Year Yield 4.84 -0.08

"Sooner or later a crash is coming, and it may be terrific."

Roger Babson, speech to National Business Conference, Sept. 5th, 1929.

In the stock casinos a pause or something more?  Roger Babson’s prediction above was off by about six weeks.

No, I’m not expecting a market crash this week, that would ruin the month-end money manager bonuses and probably wipe out the year-end bonuses too, but complacency now rules in every stock casino, and suddenly the Wall Street pros are laying off risk to a gullible public.

Earlier this fall, Morgan Stanley (MS.N) bought $300 million worth of protection against losses on some of its loans from Blackstone Group (BX.N) and other investors, two sources familiar with the matter said.

 

That struggling oil price suggests caution here to me. What if the global economy is finally rolling over from monetary boom to monetary bust?

Asia markets largely rebound from Monday; oil eases slightly on Israel-Hamas truce extension

UPDATED TUE, NOV 28 2023 12:27 AM EST

Asia-Pacific markets were mixed on Tuesday, a day after the region saw all its major indexes end the day in negative territory.

Earlier on Tuesday, oil prices eased somewhat lower after Qatar said the truce between Israel and Hamas has been extended by a further two days.

The Brent futures contract for January fell 50 cents, or 0.62%, to trade at $80.08 a barrel, while West Texas Intermediate crude futures reversed earlier losses to post a 0.4% gain and trade at at $75.16 a barrel.

In Australia, the S&P/ASX 200 gained 0.39% and closed at 7,015.2, ahead of its October inflation readings on Wednesday.

South Korea’s Kospi was up 0.35%, while the small-cap Kosdaq saw a larger gain of 0.49%.

Japan’s markets slipped lower, with the Nikkei 225% and Topix both shedding 0.23% and 0.3% respectively.

Hong Kong’s Hang Seng index lost 0.44%, also extending its losses from Monday, while the mainland Chinese CSI 300 index was marginally below the flatline.

Overnight in the U.S., all three major indexes lost ground on Monday, a day after the major averages posted a four-week winning streak.

Stocks have rallied since the 10-year Treasury yield retreated from the 5% mark it briefly topped in late October. The S&P 500 is up 8.5% so far this month, while the Dow has added 6.9% and the Nasdaq has jumped 10.8%.

On Monday, the Dow Jones Industrial Average lost 0.16%, while the S&P 500 shed 0.2%. The Nasdaq Composite saw the smallest loss, edging lower by 0.07%.

Asia stock markets today: Live updates, oil prices, Israel-Hamas (cnbc.com)

European stocks head for flat open as markets struggle to find momentum

UPDATED TUE, NOV 28 2023 12:50 AM EST

European markets are heading for a flat open Tuesday, continuing lackluster sentiment seen at the start of the week in the region and beyond.

Asia-Pacific markets traded in mixed territory overnight, a day after the region saw all its major indexes end the day in negative territory. Meanwhile, U.S. stock futures were flat Monday night as traders analyzed the strong gains seen throughout November and the trading month nears its end.

European markets live updates: stocks, news, data and earnings (cnbc.com)

Stock futures are little changed as investors assess pause in November rally: Live updates

UPDATED TUE, NOV 28 2023 12:40 AM EST

Stock futures were flat Tuesday as traders analyzed the strong gains seen throughout November and the trading month nears its end.

Dow Jones Industrial Average futures added just 13 points, or 0.04%. S&P 500 and Nasdaq 100 futures were both near flat.

Shares of Zscaler slid nearly 7% in after-hours action on Monday. The cloud security company maintained its expectations for fiscal 2024 billings of $2.52 billion to $2.56 billion. Zscaler otherwise posted adjusted earnings and revenue that came ahead of expectations in the fiscal first quarter.

The moves follow a losing day on Wall Street. The Dow and S&P 500 both finished Monday’s session around 0.2% lower, while the Nasdaq Composite inched down nearly 0.1%.

Monday’s modest retreat comes near the end of November’s strong trading month, which concludes with Thursday’s close. The Dow and S&P 500 are on pace to finish the month 6.9% and 8.5% higher, respectively. The technology-heavy Nasdaq has climbed 10.8% in November.

Investors paid particular attention to stocks tied to online shopping during the Cyber Monday trading session. “Buy now, pay later” stock Affirm popped nearly 12%. Shopify jumped almost 5%, while Amazon advanced 0.7%.

“On balance, equities appear to be in pause mode following strong November returns and in anticipation of holiday spending trends,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “The tug of war between bull and bear camps remains balanced. And that, in our view, suggests that market chop is perhaps more the norm versus exception.”

Traders will follow economic data on topics including housing prices and consumer confidence due Tuesday morning. On the earnings front, CrowdStrike is expected to report earnings after the bell.

Investors will also track a slate of Federal Reserve officials set to deliver remarks throughout the day. Those speakers include Chicago Fed President Austan Goolsbee, as well as Fed Governors Christopher Waller and Michelle Bowman.

Stock market today: Live updates (cnbc.com)

Wall Street gets creative as regulators demand more capital

By Shankar Ramakrishnan  November 27, 2023 11:05 AM GMT

Nov 27 (Reuters) - Earlier this fall, Morgan Stanley (MS.N) bought $300 million worth of protection against losses on some of its loans from Blackstone Group (BX.N) and other investors, two sources familiar with the matter said.

 

The transaction, details of which have not been previously reported, was effectively insurance, structured as a sale of bonds called credit-linked notes, according to the sources and regulatory filings.

By transferring the risk to investors, the $1.4 trillion asset bank could reduce the amount of capital it has to hold against those loans to cover for potential losses.

Morgan Stanley and Blackstone declined to comment.

The deal is one of several such credit risk transfer transactions that U.S. banks are considering in the aftermath of a March crisis in the sector and as regulators look to increase capital they have to hold, bankers, lawyers and investors said.

Interviews with eight people involved in the deals show different forms of credit-linked notes and insurance contracts are being discussed to free up precious capital.

While it is known that banks have been looking to offload risk through such transactions, these interviews offer new details on the types of deals and their terms, providing a rare window into a market that's shrouded in secrecy.

These deals help banks meet capital requirements more efficiently, allowing them to keep lucrative businesses that would otherwise become unprofitable.

But they come with risks. Investors in these deals include lightly-regulated entities like hedge funds, shifting risk to the shadow banking sector. That raises the prospect that regulators will have less visibility and understanding of the dangers that lurk in the financial system. The ability to shed the risk could also encourage banks to get more aggressive on lending, leading to problems later.

"If a bank didn't manage interest rate risk well, does it appreciate potential risks associated with these transactions?" said Jill Cetina, associate managing director at Moody’s. "It raises the need for better and more fulsome disclosure in banks' regulatory filings."

Over the last few months, banks including JPMorgan Chase (JPM.N), Merchants Bank of Indiana and US Bancorp (USB.N), have sold the risk of losses on billions of dollars of loans for cars, multi-family homes, private funds, junk-rated companies, commercial equipment and consumers, these industry sources said.

More

Wall Street gets creative as regulators demand more capital | Reuters

Exclusive: Beijing bourse tells 'major shareholders' to refrain from selling, sources say

November 27, 2023 10:19 AM GMT

SHANGHAI/BEIJING Nov 27 (Reuters) - The Beijing Stock Exchange has de facto implemented a new policy that prevents major shareholders of companies listed on its bourse from selling stock, worried that such sales could douse a long-desired rally, three people familiar with the matter said.

The bourse, launched two years ago, was set up to help facilitate funding for innovative small companies, dubbed "little giants", but had languished due to lack of investor interest.

But the market's benchmark 50 Index (.CSI899050) has surged 46% this month on the back of recent measures by authorities. These include lowering the required amount of funds an investor must have in their stock account to invest, improving trading mechanisms and encouraging mutual funds to participate in the market.

 

A "major shareholder" is one with a stake of 5% or more and is required to make a public filing with the relevant stock exchange before selling shares, according to rules for China's bourses.

The Beijing exchange has been rejecting those filings, said the people who were not authorised to speak to media and declined to be identified.

It was not immediately clear how long this new policy would remain in place, they added.

The Beijing exchange and the China Securities Regulatory Commission did not immediately reply to requests for comment.

The bourse said separately in a statement on Monday morning ahead of this Reuters article that it was closely monitoring trading to ensure normal market order.

The so-called window guidance - where directives are made orally without written documents - is aimed at protecting the rally, the sources said.

One noted that without the guidance, the share price surge "could prompt institutional shareholders to reduce their holdings which could knock the index down again."

The Beijing bourse currently houses 232 companies with a combined market capitalisation of 366 billion yuan ($50 billion).

By comparison, the Shanghai bourse is home to 2,256 firms worth 47 trillion yuan in total, while almost 3,000 companies listed in Shenzhen have a total market capitalisation of 31.9 trillion yuan. The Shanghai Composite Index (.SSEC) is up 0.4% this month, while the Shenzhen Composite Index (.SZI) is down 0.8%.

Exclusive: Beijing bourse tells 'major shareholders' to refrain from selling, sources say | Reuters

OPEC+ looking at deeper oil cuts ahead of Thursday meeting

By Alex Lawler and Ahmad Ghaddar  November 27, 2023 4:45 PM GMT

LONDON, Nov 27 (Reuters) - OPEC+ is looking at deepening oil production cuts despite its policy meeting being postponed to this Thursday amid a quota disagreement between some producers, an OPEC+ source said on Monday.

Several analysts have said they expect OPEC+ to extend or even deepen supply cuts into next year in order to support prices, which on Monday were trading just above $80 a barrel , down from near $98 in late September.

An OPEC+ source said he expected there to be an option for a "collective further reduction" on Thursday, without providing details. OPEC+ sources earlier this month said the group was set to consider additional cuts.

 

The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as OPEC+, will begin its online meetings to decide oil output levels at 1300 GMT on Thursday, according to a draft agenda seen by Reuters on Monday.

The meeting was delayed from Nov. 26. OPEC+ sources said this was because of a disagreement over output levels for African producers, although sources have since said the group has moved closer to a compromise on this point.

OPEC member Kuwait is committed to any decisions issued by OPEC, especially those that concern market quotas and oil production, the country's oil ministry said in a post on social media platform X.

More

OPEC+ looking at deeper oil cuts ahead of Thursday meeting | Reuters

Global Inflation/Stagflation/Recession Watch.

Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.

Yesterday I wrote:  In America, the Leading Economic Index is signalling recession ahead. I think it’s actually signalling that the US economy has already entered recession, but that won’t be officially declared for months.

The link below is to a chart that illustrates that likelihood.

US - Conference Board Leading Economic Index vs. GDP

Property giant Signa set to make further insolvency filings - sources

November 27, 2023

FRANKFURT (Reuters) -Austrian property group Signa could see more of its units file for insolvency as soon as this week as the real estate empire is running out of cash, people with direct knowledge of the matter said on Monday.

The group, controlled by an Austrian magnate but whose business is anchored in Germany, held talks with Elliott Investment Management to try to raise funds, according to one of the people, describing the company's scramble for cash.

Signa did not immediately respond to a request for comment. Elliott declined to comment.

Signa, which is an owner of New York's Chrysler Building as well as scores of high-profile projects and department stores across Germany, Austria and Switzerland, is controlled by Austrian magnate Rene Benko.

Its difficulties make the group the biggest potential casualty of a European property crash, triggered by the steepest rise in borrowing costs in the euro's 25-year history, that has hit Germany and Sweden hardest.

On Friday, Signa Real Estate Management filed for insolvency in a local court in Berlin, according to a court filing.

That signaled a worsening of conditions for the group, which, according to another person with knowledge of the matter was seeking to secure fresh financing to see it through until year end.

The group, which values its assets at 27 billion euros ($29 billion), is made up of numerous subsidiaries.

It has borrowed heavily from banks, including Switzerland's Julius Baer, which disclosed that it had an exposure of more than 600 million Swiss francs ($678 million).

Others too have lent, including Austria's Raiffeisen Bank International.

More

Property giant Signa set to make further insolvency filings - sources (msn.com)

Covid-19 Corner

This section will continue until it becomes unneeded.

China's respiratory illness surge not as high as pre-pandemic - WHO official

By Andrew Silver  November 27, 2023 10:27 AM GMT

SHANGHAI, Nov 27 (Reuters) - The spike in respiratory illnesses that China is currently suffering is not as high as before the COVID-19 pandemic, a World Health Organisation official said, reiterating that no new or unusual pathogens had been found in the recent cases.

Maria Van Kerkhove, acting director of the WHO's department of epidemic and pandemic preparedness and prevention, said the increase appeared to be driven by a rise in the number of children contracting pathogens that they had avoided during two years of COVID restrictions.

"We asked about comparisons prior to the pandemic. And the waves that they’re seeing now, the peak is not as high as what they saw in 2018-2019," Van Kerkhove told health news outlet STAT in an interview on Friday.

"This is not an indication of a novel pathogen. This is expected. This is what most countries dealt with a year or two ago," she added.

China's National Health Commission spokesperson Mi Feng said on Sunday the surge in acute respiratory illnesses was linked to the simultaneous circulation of several kinds of pathogens, most prominently influenza.

The spike became a global issue last week when the World Health Organization asked China for more information, citing a report on clusters of undiagnosed pneumonia in children by the Program for Monitoring Emerging Diseases.

China and the WHO have faced questions about the transparency of reporting early in the pandemic, which emerged in the central Chinese city of Wuhan in late 2019. The WHO said on Friday no new or unusual pathogens had been found in the recent illnesses.

Health officials urged local authorities on Sunday to increase the number of fever clinics, as hospitals are warning of long waits in northern areas like Beijing and Liaoning province where cases among children appear to be especially high.

Spread by young adults in the workplace and children at school, new cases of respiratory illnesses could peak in the next couple of weeks, Li Tongzeng, the chief physician at the infectious diseases department at Beijing You'an Hospital told the Global Times newspaper.

In the report published on Monday, Li also warned of the potential for a second wave peaking during the New Year holidays, as the elderly could become more at risk of infection during family gatherings.

China's respiratory illness surge not as high as pre-pandemic - WHO official | Reuters

Technology Update.

With events happening fast in the development of solar power and graphene, among other things, I’ve added this section. Updates as they get reported.

Alibaba's research arm shuts quantum computing lab amid restructuring

By Casey Hall  November 27, 2023 10:07 AM GMT

SHANGHAI, Nov 27 (Reuters) - Chinese tech giant Alibaba (9988.HK) has cut a quantum computing laboratory and team from its research arm, donating both the lab and related experimental equipment to Zhejiang University, the company said on Monday.

 

A spokesperson for Alibaba's DAMO Academy, Alibaba's in-house research initiative which included the lab, said the academy would continue to focus on technology research with the aim of being a leader in artificial intelligence (AI) research.

Earlier, a person with knowledge of the matter had told Reuters that the lab, and its 30 employees, represents a small part of Alibaba's overall R&D team.

The source said Zhejiang University would try and recruit the affected employees to work on its own quantum research.

DAMO Academy was launched in 2017 by Alibaba Group to research advanced technologies such as AI and machine learning.

The closure of the lab is the latest internal change at Alibaba, which said in March it would split its business into six units and spin-off its cloud division.

That spin-off was scrapped this month, and new CEO Eddie Wu said each of Alibaba's businesses would face the market more independently and that they would conduct a strategic reviews to distinguish between "core" and "non-core" businesses.

Alibaba's research arm shuts quantum computing lab amid restructuring | Reuters

"The high tide of prosperity will continue."

Andrew W. Mellon, Secretary to the Treasury, 1928.

The Rise and Fall of Andrew Mellon.

October 14, 2019

---- Mellon never had as much control over the private financial system and industry as the elder Morgan did. However, after his appointment as treasury secretary, Mellon did have one source of power Morgan did not: a large administrative state, and in that difference lay his power. Mellon, more than Morgan, would fuse government and business to make the world safe for monopolists. Throughout the 1920s, Mellon ran the Treasury Department, set tax and government debt policy, and sat as the chairman of the Federal Reserve.

----Patman had been threatening impeachment of Mellon for the past year, but few believed him. Now he spoke for an hour, laying out his case in crisp terms that revealed his training and experience as a county prosecutor. Members of Congress scrambled to understand the charges, and the peculiar process of an impeachment, with “page boys moving like shadows about the chamber, rushing for law and reference books.”

He unveiled the charges, one by one. He started with an old anti-corruption statute prohibiting the secretary of the treasury from being involved with commerce or seagoing vessels. The charges grew more incendiary. Mellon had, as treasury secretary and thus boss of the Bureau of Internal Revenue, given his own companies tax refunds. He held bank stocks while serving as chair of the Federal Reserve. He also owned a massive distillery while enforcing Prohibition, and illegally traded with the Soviet Union. Patman even noted that Mellon had had the Treasury Department launch a magazine dedicated to the use of aluminum in architecture, while controlling the Alcoa aluminum monopoly. The basic accusation was self-dealing; Mellon had been transacting his own business at the Treasury Department, and had retained control, if not formal ownership, in over three hundred corporations engaged in global commerce.

----On February 4, 1932, less than a month after Patman filed his articles of impeachment, Mellon resigned. Hoover appointed him ambassador to England, where he would attempt to work out loans accrued during the war. 

More.

The Rise and Fall of Andrew Mellon - The American Prospect