Heisenberg Report

Watch The Throne.

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

Watch the throne” – as it were.

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

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:

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):

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:

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”:

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:

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

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:

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:

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

Volatility on the EM ETF jumped this week:

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:

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:

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

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