Archive - Oct 16, 2015 - Story

When @Steven_Ballmer tweeted last night about acquiring a 4% stake in TWTR, many thought he was either hacked or the account was bogus. It appears, given Bloomberg headlines that this has been confirmed. A 4% stake makes him a bigger holder than Jack Dorsey who owns 3.2%.

Bottom line: despite being two months backward looking, today's JOLTS report provide the latest batch of weak news coming from the US labor market, which likely explains the ongoing levitation in stocks which have officially given up on the "rate hike is good for stocks" narrative, and fallen back to what has worked for the past 7 years, namely terrible economic news being great news for risk assets.

"He told me, 'Your worst enemy has achieved this right to enrich. It's a right to enrich now that your friends are going to want, too, and we won't be the only country,'"...

It's Option Expiration.. and that can mean only one thing - ridiculous and disjoined entirely illiquid jerky moves in equity markets (and their respective derivatives)...

Credit Suisse has released a reported titled "Client perspectives: lost and bearish" in which it lists the 12 bricks of the global wall of worry and adds that "this is the first time that we have come across so many people who say they are completely 'lost' in the current environment." So, to help out those who just have to be in this market yet share the same total confusion, here is BofA listing what the two key trading camps in the market: "the consensus" and "the contrarians" are doing.

"The market does not appear to be discounting negative knock-on effects. The outcome for recall costs and fines is unclear and largely depends on the engine performance post repair," said a Credit Suisse analyst in its report on the scandal. Estimates from Credit Suisse peg the costs of Dieselgate at a worst-case scenarios of $87 billion. This would make the VW scandal could be even bigger than Enron Scandal and BP Deepwater Scandal combined.

Thanks, we presume, to a resurgent stock market (because almost every macro and micro fundamental data item has been a disaster), UMich Consumer Sentiment rose from 89.0 to 92.1, bouncing after 3 straight months lower. Both current situation and futures expectations rose (the former to near cycle highs). Good news right? Be careful what you wish for however, as The Fed's Bill Dudley previously noted this consumer confidence data is a must-watch for The Fed in its rate-hike decision-making.

Since we first exposed (and explained) the Black-sh Swan-link nature of the options market's Skew Index, the mainstream media has lept to various conclusions (from ignore it, like everything else, to 'wow'). However, what is crucial to comprehend is that the soaring Skew is occurring at the same time as a collapsing VIX. However, what we have seen over the last two days is somewhat unprecedented - VIX has continued to collapse into option expiration (and we know the pattern that occurs after opex) as SKEW has soared to new all-time record highs.

Industrial Production growth in The US has now slwoed for 10 straight months, rising just 0.4% YoY in September - the weakest growth since Dec 2009 - signaling the path to recession is clear. Manufacturing production YoY slowed to just 1.4% - the slowest since Feb 2014. For the 8th month of the last 9 IP fell MoM with a 0.2% drop in September as a modest revsion higher in autos was offset by a plunge in Oil and Gas Drilling to the lowest this century (down 4% after rising 1.7% last month).

The European Commission will release €2 billion to Greece in the coming days to help the country manage the current migration crisis, a top Commission source told MNI Friday, but as German daily Wirtschaftswoche reports, the German Government is considering 'helping' Greece more financially – but only if Athens is more involved in the refugee crisis.

The cross asset whiplash events, coming at a furious pace unseen since 2009, continue, and while the late September surge driven by a historic short squeeze served to massively boost equities, other risk assets were also impacted. Case in point: junk bonds, which after becoming one of the most unloved asset classes in 2015 due to their exposure to energy assets, took advantage of the latest vicious squeeze in crude, and notched their biggest inflow in 8 months, even as gold just saw its biggest "QE-on" buying in the past 7 weeks.

The ability of the Nasdaq 100 to overcome nearby resistance would be one of the first price-based signs that the current stock rally may be more than just a mean-reversion bounce.

• McDonald’s Close to Deciding Whether to Change Structure of U.S. Real Estate (WSJ)
• Stocks Rise as Stimulus Bets Spur $4.1 Trillion Gain; Oil Climbs (BBG)
• Wall Street bonuses likely to plunge as trading revenue drops (Reuters)
• Syrian army launches Aleppo offensive with Iranian support (Reuters)
• Malaysia’s Najib Razak Played Key Role at Troubled 1MDB Investment Fund (WSJ)
• VW Loses Market Share in Europe as Diesel-Motor Recalls Loom (BBG)

In the absence of any key economic developments in the Asian trading session, Asian stocks traded mostly under the influence of the late, pre-opex US ramp momentum courtesy of another day of ugly economic data in the US (bad econ news is good news for liquidity addicts), closing solidly in the green across the board, led by China (+1.6%) and Japan (+1.1%) thanks in no small part to the latest tumble in the Yen carry trade, which mirrored a bout of USD overnight weakness. And since a major part of the risk on move yesterday was due to Ewald Nowotny's comments welcoming more QE, news from Eurostat that Eurozone CPI in September dropped -0.1% confirming Europe's deflation continues, should only be greeted with even more buying as it suggests further easing by the ECB is inevitable.