August 15th - The Date Which Will Live In Monetary Infamy

August 15, 2016 will mark the 45th anniversary of President Nixon’s decision to close the gold window. U.S. citizens and the government are now beholden to the consequences of years of accumulated debt and weak productivity growth that have occurred since that day. Now, seven years after the end of the financial crisis and recession, these consequences are in plain sight. The Fed finds themselves crippled under an imprudent zero interest rate policy and unable to raise interest rates due to fear of stoking another crisis.

For Those Who Still Care About Fundamentals, A Troubling Chart

We realize that fundamental analysis, especially in light of recent events, is dead and buried, but for those few who still keep track, here is a troubling chart showing how fast the S&P's cash flow is sinking relative to its debt load. As Bank of America helpfully points out, the USA is now trading at 13x EV/EBITDA, a 90th percentile since 1995.

Is This Where All Those Companies "Leaving England" Will Go

As companies evaluate whether to depart the UK for France, they may want to consider scenes such as the following showing relentless local protests, now stretching for months, against the much maligned anti-labor reform.

Banks Are Spending Billions On Stress Test Preparation

After failing the Federal Reserve's annual stress tests in March 2014, the WSJ reports that Citigroup hired multiple consulting firms, and spent about $180 million on stress tests during the second half of 2014 in order to address regulator's concerns. It turns out that banks are spending tens of billions in order to prepare for stress tests, creating quite a lucrative business for consultants.

Scathing New Report Shows Just How Bankrupt Social Security Really Is

The government is publishing this data in black and white. They’re telling anyone who’s willing to listen that Social Security has dug itself into an impossible hole. More importantly, they’re telling us there’s a 0% chance that the government will be able to honor its existing commitments. They’ll either have to radically raise taxes, or simply reduce (or eliminate) the Social Security benefits that they’ve been promising taxpayers for decades.

After Three Years, This Remains The Best Trading Strategy

One strategy that has worked unusually well for the last several years is a simple positioning trade of selling the 10 most overweight stocks and buying the 10 most underweight stocks by active managers. This single trade has yielded over 16ppt of alpha year-to-date

WTF WTI

WTI Crude has now soared 9% in the last 2 days ripping back to pre-Brexit highs above $50...

The Real 'Fear' Index Just Went To '11'

A funny thing has happened below the surface of the markets since late last year. As first The Fed, then The BoJ, and The ECB respectively saw their credibility crushed into a mumbling excuse pool of elite utterances as global bond yields crashed along with global growth and inflation expectations, professional investors have been busily buying crash protection.

The Algos Are Winning Again (In Trading The Brexit Chaos)

As we warned heading into the Brexit vote, it appeared that many human investors had quite a bit of misplaced confidence in the Remain vote, and it ultimately turned out that we were right. It also turns out that the algos have traded the event better than humans as well.

Brexit, A Step In The Right Direction: The Optimistic View

In the conventional narrative, Brexit is about immigration, escaping the EU's bureaucrats of Brussels, class war or political theater. It may be about all of these, but beneath these surface issues lies a deeper dynamic: a recognition that the entire system is broken and a new arrangement of power, responsibility and risk is required. In this view, Brexit is a positive step in the right direction, away from centralization and central planning and towards decentralized arrangements that enable more dynamic, localized solutions.

BofA: To Save Markets Central Banks Just Made Inequality And Populism Even Worse

"Today’s extraordinary monetary policy backdrop is likely adding to voter angst and exacerbating the theme of rising wealth inequality, rather than reducing it.  The irony of recent events is that the combination of risk-off sentiment and expectations of further central bank support has caused another surge in negative yielding debt…which will only compound the issues of wealth inequality and populism."

- Bank of America