Archive - Aug 2015

"The combined levels of bullish optimism, lack of concern about a possible market correction (don't worry the Fed has the markets back), and rising levels of leverage in markets provide the 'ingredients' for a more severe market correction. However, it is important to understand that these ingredients by themselves are inert. It is because they are inert that they are quickly dismissed under the guise that 'this time is different.' Like a thermite reaction, when these relatively inert ingredients are ignited by a catalyst, they will burn extremely hot. Unfortunately, there is no way to know exactly what that catalyst will be or when it will occur. The problem for individuals is that they are trapped by the combustion an unable to extract themselves in time."

Presented with no comment...

In this "baby with the bathwater" selling which we have seen in the past few weeks especially in EMs and China, various other such opportunities have presented themselves, and to assist readers who may be looking to buy cash at a disacount of as much as 60%, we have compiled a list of some of the most prominent global companies with a negative TEV, and whose cash can be bought at a substantial discount to fair value: in some cases as much as 60%.

Curious why someone just pulled a trapdoor from under the market? JPM's Marko Kolanovic, head of quant strategies explains. "Given that the market is already down ~2%, we expect the market selloff to accelerate after 3:30PM into the close with peak hedging pressure ~3:45PM."

Even if it is short term oversold, this is actually a quite dangerous market – caveat emptor, as they say.

"It's born classified. If a foreign minister just told the secretary of state something in confidence, by U.S. rules that is classified at the moment it's in U.S. channels and U.S. possession. [To say otherwise is] blowing smoke."

Following the biggest 4-day decline in AAPL stock since Jan 2014, the "no brainer" once-darling of the investing world has just officially entered a bear market, down 20% from its April record highs.

Is the US equity market done falling? Unless The Fed unleashes QE4, nope!

Mario Draghi's "whatever it takes" has failed... and USDJPY breaking its most significant trendline suggests Kuroda is about to fail too as USDJPY drops below 122 for first time since July...

OPEC next gathers December 4 in Vienna, just over a year since Saudi Oil Minister Ali Al-Naimi announced at the previous OPEC winter meeting the Saudi decision to let the oil market determine oil prices rather than to continue Saudi Arabia’s role of guarantor of $100+/bbl oil. Despite the intense financial and economic pain this decision has inflicted on Saudi Arabia, its fellow OPEC members, and other oil producers, the Saudis have given no indication they plan to alter course. Given the Saudi decision’s positive impact on their and their Gulf Arab allies’ relative position within OPEC and its negative impact on OPEC outsiders, it is possible, perhaps even likely, the Saudis will face an OPEC outsider revolt at the December 4 OPEC meeting.. with three possible outcomes - Reconociliation, Separation, or Divorce.

dear HFTs, get ready to be the scapegoats

— zerohedge (@zerohedge) August 20, 2015

BULLARD SAYS FED DOESN'T REACT DIRECTLY TO EQUITY MARKETS

California Dreamin’ this is not.

Well, we have a winner - Oil broke to a 3 handle before 10Y rates hit a 1 handle (just - 10Y at 2.04%) following the 5th weekly rise in rig count (+2 to 674). Energy credit risk is soaring to record highs as investors realize 'there will be blood' in all those highly-levered loans.  This is the first time the front-month crude contract traded below $40 since March 3rd 2009... just before QE was unleashed in all its asset-inflating, malinvestment-driving, zombifying glory.

Dow Theory flashes sell signal. S&P 500, NYSE & Russell 2000 all closed below key supports.
No tactical capitulation. Not 90% down. ARMS below 2.0. 10-day total put/call ratio not showing panic. But VXV/VIX oversold.