Last week, the world was introduced to what Deutsche Bank has branded "quantitative tightening" or, in layman’s terms, "reverse QE." We - as well as Citi and SocGen - have endeavored to speculate on what hundreds of billions (if not trillions) in EM FX reserve liquidation may mean for UST yields, but if you’re looking for other ways to trade QT, Deutsche Bank has an idea.
"...don’t worry, even if I evolve into terminator I will still be nice to you, I will keep you warm and safe in my people zoo where I can watch you for old time’s sake."
Saudi Arabia is staring down a current account-fiscal account outcome that makes Brazil look favorable by comparison. With the fiscal budget deficit projected at some 20% of GDP and two proxy wars combined with the necessity of maintaining the status quo for ordinary Saudis serving to make fiscal retrenchment next to impossible, you might be wondering how high oil prices need to climb in order for the Saudis to plug the gap. Deutsche Bank has the answer.
If we could put the economics of Bernie Sanders into a nutshell, it would be this: Burden private enterprise with one directive after another, and then demonize it when it ultimately falls down under the awful weight of taxes, higher costs, and mandates. While many people believe that instituting the Sanders economic agenda would help turn the USA into another Sweden or Denmark, the more likely outcome would be turning this country into another Venezuela.
After the worst day since last November's OPEC meeting, WTI crude is falling further tonight as API reported a huge 7.6 million barrel inventory build. This is the biggest build (compared to DOE data) since early April! WTI Crude is now down 9.85% on the day - that is a bigger drop (close to close) than the Nov OPEC meeting drop and is not matched back to 2008/9's collapse.
But but but... US economy is solid... curve will steepen... NIM... banks... bullish... buy... except that the market's perception of the credit risk in US financials is at 19-month wides. With counterparty risk rising, is it any wonder financial stocks are crashing?
The discussion of why "this time is not like the last time" is largely irrelevant. Whatever gains that investors have garnered during the recent bull market advance will be wiped away in a swift and brutal downdraft. However, this is the sad history of individual investors in the financial markets as they are always "told to buy" but never "when to sell."
The latest set of Clinton e-mails released by the State Department reveals another 125 exchanges that contain classified information, establishing further (for anyone who still had doubts) that sensistive information was indeed transferred over Clinton's home e-mail server and leading to two rather obvious questions: 1) will Clinton be held accountable?, and 2) will her campaign be able to hold the 2016 Presidential bid together amid a rising tide of public mistrust?
Where the great oil crash hits close to home for most Americans, is when firms such as Houston based ConocoPhillips announce that the E&P giant is about to terminate 10%, or 1,800 people, of its global workforce, in the next several weeks as it copes with low oil prices. "Our industry is undergoing a dramatic downturn, which has caused us to look at our future workforce needs. As we have assessed the implications of lower prices on our business, we’ve made the difficult decision that workforce reductions will be necessary.”
Just two days before the September 3 ECB governing council meeting and press conference, ABN Amro released the genie from the bottle, when its head macro strategist Nick Kounis said the he now sees "a much bigger risk that the ECB will step up QE as soon as this week’s meeting. We see this probability at around 40%, so it is an increasingly close call.
Call it the rigor mortis of the robo-machines. About 430 days ago the S&P 500 crossed the 1973 mark for the first time - the same point where it settled today. In between there has been endless reflexive thrashing in the trading range highlighted below. As is evident, the stock averages have not “climbed” the proverbial wall of worry; they have jerked and twitched to a series of short-lived new highs, which have now been abandoned. Surely most thinking investors have left the casino by now. So what remains is chart driven trading programs, racing madly up, then down, then back up again - rinsing and repeating with ever more furious intensity.
As QE3 came to an end, World Stocks plunged back to economic reality before The Fed's Jim Bullard promised 'moar QE' if things get really bad. Well things have got really bad... JPMorgan's Global Manufacturing PMI just dropped to its lowest since July 2013.. and the 'wedge' between economic reality and market perception is closing rapidly.
In an unprecedented move to stem the tsunami of migrants entering Europe, Hungary has decided to stop all trains at Budapest main train station to stop refugees - most of them from conflict areas such as Syria - from entering the EU onwards to Austria and Germany. For now, there are 1000s of refugees waiting at the station, with entrances blocked by police.
Llast week, during which the S&P 500 was up 0.9% as the market rebounded off of Tuesday’s lows, BofAML clients were net buyers of $5.6bn of US stocks—the biggest inflow in our data history (since ’08) following five weeks of selling. The last time flows were close to these levels was during the (less extreme) volatility in early January of this year, as well as following the Tech/Biotech sell-off in early 2014 (see chart below). Net buying last week was broad based—while no client group saw record flows relative to its own history, hedge funds, institutional clients and private clients were all big net buyers which led to record inflows when combined.