1.  To make US shale production economical, it required a high price of oil and access to cheap credit. The latter was predicated on the former.   From the exploration and production to the transportation and housing markets in Texas and North Dakota, the whole shale ecosystem is highly leveraged. Therein lies the Achilles' Heel. Mr Crude meet Mr Minsky.  

2.  Many observers see in the fall in oil prices the end of OPEC as a cartel. Yet, when faced with a challenge by higher cost producers, this is precisely what an oligopoly ought to do. Let prices fall to force those alternatives out of the market. It is precisely what J.Rockefeller and A. Carnegie would have done in the 19th century. Don't confuse rational oligopolistic behavior for a return to a competitive market. OPEC:  RIP?  No so Fast.  

3.  Trade-weighted measures of currencies are useful in assessing the economic impact of changes in the foreign exchange market. Despite a 40% decline of the yen on a trade-weighted basis, its trade balance has deteriorated. The Japanese economy contracted in both Q2 and Q3. The US dollar has appreciated by around 28% on a trade-weighted basis since bottoming in 2011. Roughly half of this was seen in H2 14. US exports are at record levels, and the US economy enjoyed its fastest six months of growth (Q2-Q3) since 2003. On a trade-weighted basis, the euro slipped a mere 5.5% from March through October and then recouped a third. It remains mired in near stagnant growth with strong dis-inflationary pressures. Trade-weighted Currencies Reviewed. 

4.  The last FOMC meeting in 2014 took another step toward the normalization of monetary policy. The way the tapering of QE3+ was communicated will serve as the example of what to expect with the first rate hike. The Fed gives investors and other policy makers ample notice of what it will likely do. It then does it. This is transparency and effective communication. Yellen effectively ruled out a rate hike in Q1 15, but mid-2015 still must be seen as the more likely time frame, barring a significant surprise.  Remember neither the contraction in the US in Q1 nor the accelerated job growth distracted the Fed from its measured tapering.  Separately, the Swiss National Bank adopted a negative target rate, effective January 22, the next time the ECB meets. The FOMC and SNB's decisions illustrate the divergence theme that is shaping the investment climate.  

5.  This divergence theme that we have been writing about for more than six months has now become the consensus. Consensus views are often wrong. We look at ways the consensus can be wrong about the divergence. There are three basis ways the divergence consensus can be wrong: The US disappoints. The eurozone surprises to the upside.  Investors are too pessimistic on Abenomics. If everyone agrees, what could go wrong?