Archive - Sep 8, 2015

When it comes to crisis, SocGen notes that there is an abundance of case studies; and against the backdrop of the uncertainty shock delivered by China and the subsequent market tumult, market participants have been looking to the history books for clues as to what could happen next. While individual crises create their own risks, SocGen warns, the overriding risk  is that markets are taking less comfort today from the idea that central banks may step in with further QE-style liquidity injections to save the world.

Six years after we first explained the only thing that matters for this "market", JPMorgan finally figured it out.

Liar loans are back from the dead which means that if you look under the hood, you might just have a shoddy credit or two hiding in the collateral pool of your triple-A mortgage-backed paper. Meanwhile, in a further sign that we've learned nothing since the crisis, non-Agency RMBS is set to stage a comeback.

News That Matters

Earlier today we got the most glaring confirmation there had been absolutely zero coordination at the highest levels of authority and "responsibility", when the World Bank's current chief economist, Kaushik Basu warned that the Fed risks, and we quote, triggering “panic and turmoil” in emerging markets if it opts to raise rates at its September meeting and should hold fire until the global economy is on a surer footing, the World Bank’s chief economist has warned. And just in case casually tossing the words "panic in turmoil" was not enough, Basu decided to add a few more choice nouns, adding a rate hike "could yield a “shock” and a new crisis in emerging markets"

Well this might explain the weakness in BABA over the last couple of days as it appears 'news' of the IRS lack of decision on the tax-free-ness of YHOO's BABA spin-off leaked out. It is decidely unclear how the IRS's decision not to issue a ruling will impact the spin-off but for now YHOO shares have flash-crashed after hours and are now hovering 5-6% lower...

Presented with no comment...

The markets are clearly sending the same warning signals that they always have. It is only a question of whether we are willing to listen, or allow our "greed" to keep us at the casino table hoping for one more "hot hand." One thing is for certain, if the market does muster a rally strong enough in the week's ahead to retest the previous bullish trend moving average, it could very well be a "sucker's rally."

If the market is right, Goldman warns that current cross-asset-class volatility appears to be pricing in a lot of economic damage. As they note, VIX doesn’t just trade the economy; it also has a strong and often humbling element of risk sentiment baked in.

"You have a running gun battle here. There are a lot of cops involved and it takes place in several different locations. It’s not as if everything was stationary."

The good news: the collapse in global market cap since May of 2015 is not the worst ever.

The bad news: the $9 trillion drop in combined market cap between the MSCI All World index and Chinese stocks, is the second highest ever, surpassed only by the $13 plunge in global market capitalization in late 2008.

Forget nuclear facility sabotage; ignore stock market glitches; the world of cyber-threats just got serious. As The Telegraph reports, an Android app virus seduces users by promising porn but takes compromising photos of them to use as blackmail. The 'ransomware' demands a ransom of $500 (paid via PayPal) and warns "your device has been blocked for safety reasons listed below. All your files are encrypted. You are accused of viewing/storage and/or dissemination of banned pornography." Given the populist rhetoric among the presidential candidates (and urge for the younger demographic's vote), this would seem like a slam-dunk for any administration's cyber-crime unit.

according to the latest Gallup report on US consumer spending, in which a random sample of 15.724 adults were interviewed by phone, Americans' self-reported daily spending averaged just $89 in August, down not only from August in 2014 and 2013 but the fourth month in a row of year-over-year spending declines, as well as was also the lowest monthly spend since March of 2015. And this time there are no "scapegoats" to blame the spending slowdown on: the weather in August was uniformly gorgeous around the US.

One of the founder members of the so-called FANG stocks has now fallen 7 straight days and is resting Black Monday's flash-crash lows in today's session. With the media darling breaking back below its 100-day moving-average, technical pressure continues to weigh on the share price,. as it is almost down 30% from its record highs...