Archive - Jan 15, 2015

The kneejerks are over and now the fallout. US equity markets have tumbled back to yesterday's lows (and beyond), US Treasury yields are in total free-fall (down another 10bps, led by 7Y and 10Y yields crashing). Crude prices have reversed the entire post-SNB surge and is heading back to yeaterday's pre-ramp levels... Gold is pushing notably higher at $1265

How the world's markets - from FX to global stocks to crude - reacted to the SNB's shocking decision...

Given the potential for financial losses triggered by oil's price collapse to cascade into the financial sector at large, the Fed may well be forced to intervene either directly or indirectly... Unleash the oil weapon...

We suspect there will be a few more "taps on the shoulder" tonight...

Swiss 10Y rates crashed over 10bps by the close (having plunged as low as 3.3bps at one point) but the entire Swiss curve is negative at any maturity less than that. EURUSD crashed over 200pips back below 1.16 - the lowest since November 2003. Swiss stocks crashed around 15% before bouncing back to a 8-9% loss - the biggest drop since 1989. Away from Switzerland (and Greece) European stocks and sovereign bonds saw initial dips bought on ECB QE implications but EU Sovereigns did bleed back wider. European VIX spiked from sub-29 to over 32 and all the way back down to close lower on the day.

"By our calculation the FX reserves portfolio on FX alone will have lost in the region of 60bn CHF, assuming EURCHF at 1.03 and USDCHF at 0.88. Though some of this is likely to have gained on bond holdings; this would be far outweighed by losses on FX." - Citi's Stephen Englander

“Right now with oil prices down and a glut of oil on the global marketplace, the answer is no, we don’t need Keystone right now...”

The Swiss National Bank just threw gasoline on Swiss F.I.RE. Expect to see combustive contagion in the Swiss banking, insurance and real estate giants as knock-on effects spread from so-called hedges

This morning's decision by the Swiss National Bank has polarized the investing community. From the 'smartest men in the room' to the 'most renowned newsletter writers in the world', the reactions could not be more different...

With the biggest miss since August 2011, The Philly Fed Factory Index crashed from 21 year highs in November to the lowest since Feb 2014. The headline 6.3 print, missing expectations of 18.7, follows last month's drop for the biggest 2-month drop since Lehman. Under the surface things are even worse with the employment sub-index plunging to its worsdt since June 2013 and the outlook for CapEx slashed in half from 24.8 to 13.2. But but but fundamentals...

Thanks to the SNB surprise this morning - and FX market volatility (and illiquidity) at insane levels - liquidity in the S&P 500 e-mini futures contract is at its lowest in at least 3 years... (i.e., prepare for volatility)

Have a fractal trading day...

And to think so many otherwise very bright people still don't get it.

Another day, another Kermit kicks the can. .