Archive - Mar 20, 2015

The inverted relationship between gold and the dollar broke down in November 2011. The dollar soared from July to the present, spiking 21% against the other major currencies. Most of the negative commentary regarding gold in recent months misses the rather bigger point that the gold price has held up remarkably well given the extent of dollar’s move.

The latest red light: Global equity 12-month forward EPS has turned to the tune of 7% negative on a YoY basis.In fact, as the chart below shows, global forward EPS is now plunging at the fastest rate since Lehman, and is down to levels last seen in 2011.

Debt, Distraction, Currency Wars, Itchy Fingers

"Perhaps the central bankers and economists from all over the world should take a break from the theory and their focus on economic models and instead have a look at the real world and spend some time talking to Volcker in order to remember that deflation is not the disaster they imagine it to be."

Presenting the XBI Biotech ETF. And since this time is different, no commentary is necessary.

Varoufakis' middle finger was useful in one specific way: to rip away the facade of solidarity and freidnship in Europe, and reveal just how ugly the undelrying truth is, and to hint just how much uglier it will become once the money runs out not only for Greece, but for everyone else, or as Varoufakis himself who in a blog post today summarized his "middle finger" best when he said that it "has sparked off a kerfuffle reflecting the manner in which the 2008 banking crisis began to undermine Europe’s badly designed monetary union, turning proud nations against each other."

The percentage of homeowners underwater in the US was flat from Q3 to Q4 which doesn’t sound all that terrible until you consider that this figure had fallen for 10 consecutive quarters. Things look particularly bad in Florida and the midwest where more than 25% of borrowers are sitting in a negative equity position. A new report from Zillow says negative equity will become a permanent fixture in the housing market.

Just as we warned not even two hours ago, things on quad-witching get exciting... and volatile. And sure enough, after starting out the overnight session calmly and without much fanfare, US equity futures have proceeded to surge on absolutely no news, but merely what appears to be the latest market-wide stop hunt, or as the CME's central bank liquidity rebate program is being put to good use.

And then there were none. Like dominoes, US allies have fallen in line on the heels of the UK's decision to join the China-sponsored Asian Infrastructure Investment bank and now, the stanuchest supporter of Washington's position on the venture looks set to defect as well.

Moments ago, the German DAX roared gingerly back over 12,000 dragging US equity futures alongside it, with the catalyst cited as the somewhat optimistic tone following the three hours of talks held late last night to try to break an impasse that risks sending Athens stumbling of the euro zone. As a result, a smiling if only through his teeth, Tsipras said Greece was "moving swiftly to meet creditors' demands for a detailed economic reform plan" and assured euro zone leaders his leftist-led coalition would speed up work to avert bankruptcy. Alas, even a best case scenario which sees some €1.9 billion in payment unlcoked, will not be enough: as Bloomberg calculated, "The country’s cash shortfall is projected to hit 3.5 billion euros ($3.7 billion) in March, according to Bloomberg calculations based on 2015 budget figures."

"An eclipse blocks the sun in just a few minutes, though, leading to a potential sudden drop of up to 35,000 megawatts of generation capacity. That is the equivalent of about 20 large coal-fired power plants coming off the grid at the same time. Conventional electricity suppliers will have to seamlessly substitute power to prevent blackouts, and then they must shut down capacity as solar power rebounds," WSJ notes, as some parts of Europe witness a total solar eclipse.

• Clinton Charity Tapped Foreign Friends (WSJ)
• Dollar Set for Worst Week Since ’13; S&P Futures Rise (BBG)
• Shale Producers Have Found Another Lifeline: Shareholders (BBG)
• BOJ Kuroda says no sign of 'currency war' brewing in world (Reuters)
• Fed Is Pushing and Pulling on Rates Riddle (WSJ
• Brent oil falls towards $54 on OPEC output, Iran (Reuters)
• Iran Talks Stall Over Ending of Sanctions (WSJ)

Quad-witching days are volatile on normal days, so in an environment of virtually zero liquidity, in which the market careens from one extreme to another simply based on whether the Fed utters one single word, in which volatility across asset classes is soaring, and in which it is all about igniting algo momentum, today's quadruple withicng should be memorable, which is good since there is virtually no macro data today to speak of.