Archive - Oct 13, 2014

With three out of four nurses say their hospital hasn't provided sufficient education for them on Ebola, according to a survey by the largest professional association of registered nurses in the United States, it seems the Centers for Disease Control and Prevention (CDC) has decided its time to tamp down some more public fears over the contagiousness of this deadly disease... The CDC will provide an update on the response to the second U.S. Ebola diagnosis - the Dallas nurse who was infected while caring for a Liberian national in her hospital (supposedly due to her 'protocol breach')...

While some are focused on the demise of the dollar, the fact is that it has been appreciating and this is causing some confusion.  See if this helps clarify what is happening. 

Regulators from the U.S. and the UK are in a “war room” today conducting financial war games to see if they can cope with fall-out when the next big bank collapses. "We are going to make sure that we can handle an institution that previously would have been regarded as too big to fail. We're confident that we now have choices that did not exist in the past," Osborne said at the International Monetary Fund's annual meeting.

During every major breakdown in the last five years, the Fed announced a new monetary program. This time around, the Fed is committed to ending QE... So who will save stocks now?

This could be the hidden message of Bill Gross’ departure...

But, but, but... it's a social media platform... but maybe this is why camera-on-a-stick is getting hit hard...

Do not panic. Ebola is not very contagious at all. That remains the mantra from health and political officials in America.. and as far as the nurse who was treating now-dead Dallas Ebola patient Thomas Eric Duncan, it was user error, according to CDC Director Frieden. As Reuters reports, some healthcare experts are bristling at the assertion by a top U.S. health official that a “protocol breach” caused the Dallas nurse to be infected with Ebola while caring for a dying patient, saying the case instead shows how far the nation’s hospitals are from adequately training staff to deal with the deadly virus, "you don't scapegoat and blame when you have a disease outbreak... We have a system failure. That is what we have to correct."

With the cash bond market closed today, we get our cues from an admittedly thin Treasury futures market. Prices are up across the board with 10Y yield down 3bps at 2.25%, 30Y back under 3%, and 5Y down 4bps at 1.49%. The rates market, once again is leading stocks lower - not getting as exuberant as stocks out of the gate... The Russell 2000 is at one-year lows (Oct 9th 2013 to be exact)

With no bond-market-police to corral the machines, it is not entirely surprising that - on the heels of AUDJPY - US equity futures have levitated this morning to provide a comfortably green open (as the world held its breath for a black monday - particularly inappropriate on Columbus Day). However, there's a long way to go in the day and liquidity is - in a word (or two) - non-existent (lowest in at least 18 months). That means intraday volatility will be extreme to say the least...

Perhaps the clearest indication that not even the Saudi's can keep pushing the price of oil much further here is that from a purely technical standpoint, oil is so hated, that the daily RSI has reached oversold only for the 3rd time in six years!

If central banks have learned anything since 2008, it's that waiting around for the panic to deepen is not a winning strategy. Put yourself in their shoes. Isn't this what you would do, given the dearth of alternatives and the very real risks of implosion? Anyone in their position with the tools at hand would not have any other real option other than to buy stocks in whatever quantity is needed to reverse the selling and blow the shorts out of the water. If $1 trillion doesn't do the job, make it $3 trillion, or $5 trillion. At this point, it doesn't really matter, does it?

Today US activity will be very light given the Columbus Day holiday. As DB summarizes, we have a relatively quiet day for data watchers today but the calendar will pick up tomorrow and beyond with a big focus on inflation numbers amongst other things. Indeed tomorrow will see the release of Germany’s ZEW survey alongside CPI prints from the UK, France and Spain. Wednesday’s data highlights will include the US retail sales for September, the Fed’s Beige Book, CPI readings from China and Germany, US PPI, and the NY Fed Empire State survey. Draghi will speak twice on Wednesday which could also be a source for headlines. On Thursday, we will get Industrial Production stats and the Philly Fed Survey from the US on top of the usual weekly jobless claims. European CPI will also be released on Wednesday. We have the first reading of October’s UofM Consumer Sentiment on Friday along with US building permits/housing starts. Yellen’s speech at the Boston Fed Conference on Friday (entitled “Inequality of Economic Opportunity”) will also be closely followed.

While Russia's economy is hurting, desperate to overthrow the tentacles of the Petrodollar, and is urgently pivoting toward Beijing, the cherry on top came moments ago when, as if to assure all involved parties that there will be enough capital support on both sides, the PBOC released a surprising announcement that the central banks of China and Russia signed a 3-year, 150 billion yuan bilateral local-currency swap deal today, according to a statement posted on PBOC website. Deal can be expanded if both parties agree, statement says. Deal aims to make bilateral trade and direct investment more    convenient and promote economic development in 2 nations.

• Privately, Saudis tell oil market: get used to lower prices (Reuters)
• OPEC Members’ Rift Deepens Amid Falling Oil Prices (WSJ)
• Russia Spending $6 Billion Not Enough to Stop Ruble Rout on Oil (BBG)
• Deutsche clampdown on bad behaviour prompts exodus of traders (FT)
• Can't beat the spin: China trade data eases slowdown fears, more stimulus may still be needed (Reuters)
• China’s Exports Buoy Growth as IPhone Inflates Imports (BBG)
• Italy on Sale to Chinese Investors as Recession Bites (BBG)
• Hong Kong Protesters, Antiprotest Activists Clash (WSJ)
• Turkey Offers Military Bases to U.S.-Led Coalition (BBG) ... and the price is a small piece of post-Assad Syria
• Passenger With Flu-Like Symptoms Causes Ebola Scare At LAX (CBS)
• Boston patient deemed unlikely to have Ebola virus (Boston Globe)