Archive - Sep 2015

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...

The internals of the auction were solid if not groundbreaking: the Bid to Cover was 3.233, fractionally below the TTM average of 3.286, the Dealer take down of 41% was the highest since February, while Indirects ended up withe 51% of the takedown, above the 45.7% TTM average. Finally, Directs were awarded just 8.0% of the auction matching the lowest since February. In short: a perfectly average auction, one which did not attract particular attention for any one reason. Which is why, tomorrow's 10Y auction will be far more closely watched.

Last week, amid China's sweeping crackdown on "subversive", "malicious" sellers, Chinese authorities took Li Yifei, chairwoman of Man Group Plc’s China unit, into custody. Or maybe they didn't. After resurfacing, the hedge fund manager now claims that reports of her arrest were untrue and that she was merely on vacation - "meditating." 

BABA Shares stalled once again in their efforts to break back above the IPO price of $68. Following a Citi tech conference which reportedly saw Alibaba investor relations talking down their numbers, BABA has plunged over 6%

Thanks to the new normal world of extremely loose monetary policy and extraordinary accumulations of financial assets by Central Banks, Deutsche Bank finds that we live in a period not of selectively expensive global asset prices, but of record "expensiveness" across developed market bonds, stocks, and real estate.

For the fifth time in two decades, Turkish soldiers have launched a ground incursion into Iraq in pursuit of PKK "terrorists" who have orchestrated a series of deadly attacks on security personnel over the past several days. Of course Turkish soldiers aren't the only ones fighting Kurds in Iraq. So is ISIS. And that means that just like in Syria, Turkey (with Washington's implicit blessing) is at best distracting from and at worst impeding the battle against Islamic State, the same Islamic State which is being used by Ankara as a cover for the PKK crackdown.  

Today, in the first official criminal action following the Litvak bust from 2013, the SEC confirmed that our assessment was indeed spot on after the regulator announced fraud charges against three traders "accused of repeatedly lying to customers relying on them for honest and accurate pricing information about residential mortgage-backed securities (RMBS)." In the complaint, the SEC alleges that traders  misrepresented the bids and offers being provided to Nomura for RMBS as well as the prices at which Nomura bought and sold RMBS and the spreads the firm earned intermediating RMBS trades.  They also trained, coached, and directed junior traders at the firm to engage in the same misconduct.

In our day-to-day world, old lessons regarding markets are easily forgotten. Nowhere is this observation more true than in the stock market where people expect stocks to always rise.

The chart below warrants the question: if an even modest slowdown in Europe's pace of credit creation resulted in unprecedented economic and social upheavals for the "southern" part of the continent, what happens when deleveraging finally hits one of the other places around the globe, be it the BRICs in particular, the EMs in general, or - heaven forbid - the US itself.

"We shouldn't pass on the bill for the tasks that are facing us now to future generations. Being in favour of more debt and a further flooding of the markets with central bank money is neither original nor serious."

The Fed likes to act as though it’s concerned about stocks… but the real story is in bonds. Indeed, when you look at the Fed’s actions from the perspective of the bond market, everything suddenly becomes clear.

Rig productivity and drilling efficiency are red herrings. Although the barrels produced per rig is increasing, the barrels per average producing well is decreasing.