Watch The Throne.

Well, it’s safe to say that all eyes will be on this man over the weekend:

Geo

Watch the throne” – as it were.

Saudi Arabia CDS has blown out above 100bps for the first time since July:

Saudi

Geopolitical jitters and tax reform uncertainty overwhelmed the euphoria that would normally accompany Trump being out of the country, and the Dow broke its eight week winning streak:

Dow

Here’s yields and the dollar on the week (Treasuries extended declines on Friday amid bear-steepening losses in U.K. gilts that weighed on UST long end):

DollarYield

Somebody went batshit crazy on the Comex today when, around 10 minutes after 11, almost 40,000 contracts traded in a space of 10 minutes, delivering a good, hard slap in the face to a slumbering gold market:

Gold

Meanwhile, Bitcoin – that other “valueless valuable” – is now down $1,400 from its post-“hard fork” suspension highs. So you can “stick a fork” in anyone who bought on that news – and stick it “hard”:

Bitcoin

Oil pared its weekly gain as markets ponder what happens this weekend in Saudi Arabia. “We’re waiting to see what’s going to happen over the weekend with the Saudi Arabian situation,” Phil Flynn, senior market analyst at Price Futures Group Inc told Bloomberg, adding that “all the industrials are under pressure. Stocks are weak. The outside market worries seem to be pushing us down.” Still, WTI is up five weeks in a row – the best stretch since October 2016:

Oil

The story of the week was of course junk bonds, where the cracks are starting to show:

HYGJNK

Stocks remained largely blind to that reality right up until Thursday as the correlation between big cap tech and mom-and-pop junk ETFs broke down completely:

SomeoneIsLyingTo

Here’s what BlackRock’s Chief Fixed-Income Strategist Jeff Rosenberg said on Bloomberg TV this morning.

What we are seeing in terms of some of the spread from the idiosyncratic risk to a broad market is because of the vulnerability when you have very tight spreads. It’s not to say we are seeing a lot of economic, fundamental default risk. You have idiosyncratic risk that is spreading through. Most importantly, you don’t have a lot valuation to give a lot of cushion for that.

Right. Actually, you have almost no cushion at all. And don’t forget this from Moody’s:

Moodys2

But remember, this is one thing that won’t be Trump’s fault.

Volatility on the EM ETF jumped this week:

VXEEM

Turkish stocks have fallen four days in a row, but believe it or not, the lira actually managed to log its first weekly gain in two months and the reason why says a lot about sentiment. As Bloomberg notes, the lira rose “in the absence of fresh negative political developments.” In other words: nothing else went too horribly wrong, but that may be about to change because it looks like Robert Mueller is going to travel down the Gulen rabbit hole, and there is one angry Erdogan at the bottom of that. Anyway, for now, a week of respite for the beleaguered currency:

Lira

The Nikkei closed the week on a sour note, falling 0.8% on Friday in a less-than-encouraging follow-up to Thursday’s harrowing price action that subjected traders to the largest intraday swing of the year. But don’t worry, because Japanese equities have still risen for nine straight weeks, the longest run since early 2013:

Nikkei

Oh, and the Asian benchmark is still on the highs, despite Trump stomping around over there all week long:

MSCI

Finally, in a testament to the drama in the Mideast….

LebanonCDS

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3 thoughts on “Watch The Throne.

    • well for one thing, CDS does not blow “up”, it blows “out.”

      but beyond that, pull up a three-year chart of Saudi CDS and look at where we were in January 2016 after Riyadh had just reported a record deficit and after the execution of Nimr al-Nimr led directly to the actual torching of the Saudi embassy in Tehran.

      that should answer your question.

      also, you are grossly misconstruing my argument.

      finally, this isn’t something I am going to discuss with you any further here or anywhere else for that matter, because I already know what you’re inclined to do. you’re inclined to take every, single piece of incremental information and believe it’s evidence to support a theory you have that is based not on real academic research, but on things you’ve read on conspiracy threads and conspiracy websites which you mistakenly think are “news” sources. and here’s the thing: you are not unique in that regard. people like you are all over the place. there’s an entire economy built around the voracious American appetite for that kind of spin.

      I can do that too. I can, for instance, go out into my front yard and discover that there are considerably more acorns in it than there were yesterday on the way to concluding that the squirrels are up to something. they probably are up to something, assuming there’s some connection to the acorns and the squirrels, but the thing is, whatever it is they’re up to is in all likelihood readily explainable by the way squirrels behave. it is not a squirrel conspiracy any more than anything else squirrels do is a conspiracy. maybe they are agitated because sometimes squirrels get agitated. maybe that’s what they do when they are hoarding food for the winter (i.e. shake the acorns onto the ground and then go pick them up). maybe November is a time when squirrels fight and their tree battles dislodged the acorns. so yes, there is a sense in which it is true that “something is up” with the squirrels and the acorns, but that needs to be put in the context of how squirrels normally act and what generally happens to acorns around those actions.

      here’s a great resource for you: https://scholar.google.com/

      note the “scholar” prefix. that’s Google’s search tool for peer-reviewed, academic journal articles. as in: actual, real research conducted by actual real academics.

      click there, enter the search terms for the geopolitical topics you are interested in, and read to your heart’s content. if you find information there to support your theories, well then *now* you have something.

      • here are two quotes from WaPo which demonstrate what I’m talking about:

        “Viewing Lebanon as an ideological battleground for Saudi-Iranian rivalry is neither new nor unprecedented”

        “Although Hariri’s self-orchestrated departure caught the world by surprise, there is nothing shocking about the move.”

        see what I mean? that underscores my main point, which is this: “consequential” and “sudden” are *not* the same thing as “new” and “unprecedented.”

        in the case of the purge, “unprecedented” in terms of *scope* and *brazenness* does not equate to “inexplicable”

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