Despite The Fed's best efforts to crush the business cycle, the crucial credit-cycle has reared its ugly head as releveraging firms (gotta fund those buybacks) and deflationary pressures (liabilities fixed, assets tumble) have led to a soaring market cost of capital and surge in downgrades. In fact, in the latest quarter, the ratio of upgrades-to-downgrades is its weakest since the peak of the financial crisis in 2009. “We’re seeing more widespread weakness across more industry sectors in the U.S... It’s become broader than just the commodity story.”
JPMorgan Misses Across The Board On Disappointing Earnings, Outlook; Stealthy Deleveraging ContinuesSubmitted by Tyler Durden on 10/13/2015 - 16:52
Maybe we now know why JPM decided to release results after market close instead of, as it always does, before the open: simply said, the results were lousy top to bottom, the company resorted to its old income-generating "gimmicks", it charged off far less in risk loans than many expected it would, and its outlook while hardly as bad as it was a quarter ago, was once again dour.
One of the primary arguments by the more "bullish" media is that the current setup is much like that of 2011 following the "debt ceiling" debate and global economic slowdown caused by the Tsunami in Japan. While there are certainly some similarities, such as the weakness being spread from China and a market selloff, there are some marked differences.
And Now The Bad News: Millennials Will Need To Withdraw $270K Per Year From Their Retirement AccountsSubmitted by Tyler Durden on 10/13/2015 - 16:00
As Allianz latest survey notes, 61% of all middle-class Americans, across all income levels included in the survey, admit "they are not sacrificing 'a lot' to save for retirement," which is a major problem as, assuming 2% inflation (the Fed's current target) when millennials enter retirement, they will need to withdraw about $270,000 per year from their retirement plans.
We were curious to observe what the traditionally far more rational, and skeptical, bearish community had to say about the real "quality" of the worst stocks on both the NYSE and the Nasdaq in those two brief weeks when things seemed to be getting back to normal: the stocks which if and when the Fed does lose control, would be the first to "go." Here is the answer.
After several purported incursions into Turkish airspace by Russian fighter jets, Ankara is "irate" at Moscow and now, tensions over Syria threaten to undermine the two countries' energy relationship. Thus, the Nord Stream line to Germany - the capacity of which is set to double - has now become more important than ever for Gazprom.
“I can’t even say with conviction that I’m sure, looking strictly on a cost-benefit basis, that FATCA’s... benefits are going to outweigh the cost.” FATCA constitutes theft. The US government is generating a little bit of revenue and the great expense of foreign banks and governments (not to mention the thousands of Americans who have had to renounce their citizenship because of FATCA’s idiotic rules).
The elephant donkey in the room...
Now What: How Should One Trade In A World Where "Most Indicators Have Lost Their Informational Value"Submitted by Tyler Durden on 10/13/2015 - 13:37
A market which trades day to day on historic "whiplashes", record short squeezes, broken trendlines, and of course, $13 trillion in excess liquidity, got you shaking your head (and burning old Finance 101 textbooks)? Don't despair: here is Macquarie with a guide of how to trade in world where "most leading indicators have lost their informational value."
"Global trade is also declining at an alarming pace. According to the latest data available in June the year on year change is -8.4%. To find periods of equivalent declines we only really find recessionary periods. This is an interesting point. On one metric we are already in a recession."
Global central banks have made a Faustian bargain with our economic soul selling our future for a false stability today. At this stage, absent continuous intervention, a large deflationary crash in the global economy is inevitable. The next Lehman brothers will be a country. The real ‘shadow convexity’ will not come from markets but political unrest or war. Peace is not the absence of conflict. Global Central Banks have set up the greatest long volatility trade in history. Buy the fear and you will be protected from the horror.
In the face of stubbornly low crude prices, it's starting to look like the end of the road in the O&G space. As WSJ reports, all of the proverbial fat that can be trimmed has already been trimmed in terms of layoffs and capex. This means further cost savings will have to come from salary cuts because going forward, cutting jobs altogether would imperil companies’ ability to operate.
We think the market may have gotten ahead of itself, accepting the narrative that the Fed will raise rates as many other countries ease. We believe the market is gradually realizing that the Fed is far less flexible than it hoped it would be, thus causing a re-pricing of expectations. We don't think this will necessarily change the Fed's "desire" to pursue an exit. This re-pricing of expectations may have profound implications for the U.S. dollar, and with it, the price of gold.