Archive - Aug 2015

"The market closed above last Monday's high, which was a gap downside. And it also closed above the prior Friday's close. And that led to exhaustion. We should see the market drift lower for the next month or so. And we could probably make a new low, the low of last week's low, before the market finally bottoms."

Is Andy Hall calling in every favor possible, and painting the tape to save his career? Or just an epic short squeeze ramp to the 50DMA at $49.36?

If not for the squeeze at the end of last week, this would have been European stocks' worst week since Lehman. However, with the 'save' Stoxx 600 (Europe's S&P 500) dropped almost 9% - its biggest drop since the peak of the EU crisis in 2011...

The equity market momo-igniters tried USDJPY - and failed. Then they tried XIV - and failed. So what next? WTI crude of course which has just exploded back to Friday's highs, with Brent Crude also breaking back above $50.

German bonds are under significant pressure again this morning - despite equity weakness and US Treasury strength. This raises the rather interesting question of whether - after decimating Treasuries last week, is China turning to its Bund holdings and liquidating them to raise cash?

"It is estimated that sub-Saharan Africa will have 900 million more inhabitants in the next twenty years. Of these, at least 200 million are young people looking for work. The chaos of their countries of origin will push them further north." That is the future. It will no more go away by itself, and by ignoring it, than the present crisis, which, devastating as it may be, pales in comparison. Europe risks being overrun in the next two decades.

With the biggest miss sicne April 2013, Dallas Fed's 2-month dead-cat-bounce has collapsed to -15.8 (against expectations of -4.0). This is practically the weakest level for the manufacturing index since 2009. The entire report is a disaster - Fisher's exit seems well timed? - as New Orders crash from +0.7 to -12.5 and Pries Paid craters from +0.1 to -8.0.Even worse, 14 of the 15 'hope' indicators declined and as one respondent warned "the quantitative easing hangover is starting." We have 3 simple words - "not unequivocally good."

With corporate profits falling, margin debt at all-time highs, the Fed preparing to raise rates, China’s fake economic system imploding, currency wars breaking out across the globe, emerging markets in turmoil, oil dependent countries in the Middle East seeing budgets go deeply in the red, Greece and the other insolvent southern European countries nearing collapse and tensions rising between Russia, Europe and the U.S., there is plenty to fear in this central banker created debt bubble world. History teaches us this isn’t over. It’s only just begun. The bubblevision assertions that the worst is behind us is false. They will insist all is well until you’ve lost half your net worth. When fear overtakes greed, neither monetary easing, propaganda, nor acts of desperation by politicians, government bureaucrats, or central bankers will turn the tide.

The current VIX level of 26 is equal to the median VIX level over the last three recessions. As Goldman warns, while extreme VIX levels periodically occur, our analysis shows that VIX levels in the high-twenties to low-thirties for extended periods of time are rare outside of recessions. Furthermore, this was foreseeable as equities were ignoring potential warning signs from other asset classes prior to the recent sell-off.

The illiquid algo-induced idiocy that are the 'markets' is nowhere more evident than in WTI crude futures this morning...

Amid the Ukraine government's vote for constitutional changes to give its eastern regions a special status (that it hopes will blunt their separatist drive) protests have turned deadly as RT reports 50 Ukrainian nation guards have been injured in a greande blast near parliament in Kiev.

Following this morning's ISM Milwaukee disappointment, missing for the 8th month sof the last 9 (printing 47.67 vs 50.00 exp and hovering at 2 year lows) with production and prices plunging, Chicago PMI just printed a slightly disappointing 54.4 (against expectations of 54.5). After last month's surprise bounce, this slowdown suggests there is little to no momentum in any 'recovery' stemming from a Q2 bounce. Weakness under the surface is broad and as purchasers warned "failure of New Orders to materialize "within the next few weeks" could put firms at risk of being over-inventoried and curtail producton levels." Perhaps most worrying though is the 4th consecutive contraction in employment... but the recovery? Judging by the market's response - it appears bad news is now bad news.

It's a busy week for the market, and not to mention the Dow Jones-dependent Fed, which will have to parse through reports on Chicago PMI, Construction Spending, ISM (Mfg and Services), ADP, Productivity and Labor Costs, Factory Orders, Trade Balance, and the weekly highlight: Friday's Jobs reports.

With 'truths' like this, is it really surprising that he’s close to catching Wall Street-handler Hillary Clinton?

The head of a Keynesian pinhead...