• Pivotfarm
    08/01/2014 - 12:04
    As the slide starts and the stock markets open in the red on the 1st August , it’s now time to take into consideration what it is that will save you on the floor from losing the house, the wife and...

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The Fed Is Not Your Friend

During the last 64 months “buying the dips” has been a fabulously successful proposition. So yesterday’s 2% dip will undoubtedly be construed as still another buying opportunity by the well-trained seals and computerized algos which populate the Wall Street casino. But that could be a fatal mistake for one overpowering reason: The radical monetary policy experiment behind this parabolic graph is in the final stages of its appointed path toward self-destruction.

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A funny thing happened since The US unleashed Russian-economy-crushing sanctions... the "costs" appear to have weighed down US and European stocks as Russian stocks gained?

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August 1914: When Global Stock Markets Closed

Although the NYSE was closed between July 30 and December 12 of 1914, stocks were quoted by brokers and traded off the exchange.  Global Financial Data has gone back and collected stock prices during the closure of the NYSE to recreate the Dow Jones Industrial Average while the NYSE was closed.  We collected the data for the 20 stocks in the new DJIA 20 Industrials and calculated the average of the bid and ask prices from August 24, 1914 to December 12, 1914.  This enabled us to discover that the 1914 bottom for stocks actually occurred on November 2, 1914 when the DJIA hit 49.07, over a month before the NYSE reopened.  Few people realize that stocks in the US had already bottomed out and were heading into a new bull market when the NYSE reopened on December 12, 1914. The DJIA did not revisit this level until the Great Depression in 1932. 

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And Now Facebook Is Down

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High-Yield Credit Crashes To 6-Month Lows As Outflows Continue

We have been warning for a while that not only is the high-yield credit market sending a warning but that it is critical for equity investors to comprehend why this is such bad news. This week has seen exuberant equity markets start to catch down to high-yield's warning but today's surge in HY credit spreads to six month wides is a rude awakening. Between outflows, a huge wall of maturities (and no Fed liquidity), and corporate leverage, the reach-for-yield just became an up-in-quality scramble. HY spreads are over 70bps wider than cycle tights implying the S&P 500 should be around 1775. When the easy-money-funded buyback party ends, will you still be dancing?

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CDS Triggered: ISDA Confirms Argentina Credit Event Took Place

Moments ago ISDA, which yesterday was queried whether a CDS-triggering credit event had taken place in Argentina, made a ruling. Here it is:

  • The Americas [Determinations Commitee] met on August 1, 2014 and resolved that a Failure to Pay Credit Event in relation to the Argentine Republic occurred on July 30, 2014.

And now, we find out who is the biggest seller of the CDS. Up next: the CDS auction.

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European Stocks Plunge Into Red For 2014, Portugal Down 10% This Week

But but but... the crisis is over and Europe is recovering? European stocks dropped 3.2% in the last 2 days - the most in 7 months - taking the broad index into the red for 2014. Portugal (remember how BES was contained) collapsed 10.3% this week (down 26% from its highs in April) to one-year lows. Europe's VIX spiked over 20 today - its highest in over 4 months.

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Judge Griesa Slams Argentina's "Misleading Statements"

Having been abused by almost every member of Argentina's political body, Judge Griesa (presiding over the holdouts vs Argentina case) has come out swinging this morning. "What occurred this week did not extinguish or reuce the obligations of Argentina," he began, exclaiming that "public statements [from Argentina] have been highly misleading - and has to be stopped."

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Stocks Tumble To Lows As Post-Payrolls Exuberance Fades, 10Y Yield At 2.50%

For all the glad-handers who said "the market seems to like it" - how do you like it now? The kneejerk jump in stocks to green on the day after payrolls (miss), spending (meet), PMI (miss), UMich confidence (down), ISM (beat), and construction spending (big miss) noise sparked algos momentum is fading fast... Treasury yields are plunging (10Y < 2.5%) along with the USD Index - giving up the entire Fed move. Gold and Silver have jumped around 1%, oil is lower.

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Espirito Santo Stock Suspended After 40% Crash, "Pending Information"

Looks like it will be a busty weekend for European leaders calling the crisis over. Knife-catching 'value' investors have been torn asunder as Banco Espirito Santo's stock crashed another 40% today to 12c and has now been suspended by Portugal's securities regualtor.


With Goldman bailing and the sovereign suggesting it is not willing to bailout, it appears - based on Sub debt's collapse - that a bail-in burden-sharing solution is coming. When will Bill Miller scoop it up?

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RANsquawk - Weekly Wrap 1st August 2014

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How The Worst New Orders Number In 6 Months Became The Highest Of 2014

To show what is really happening with New manufacturing Orders in the US here is a chart of New Orders actual and adjusted. One is the lowest print since January. The other is the highest of 2014. Which one do you believe?

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American Ebola Patients On Way To Atlanta Hospital, Customs On Heightened Alert For "Ill" Passengers

Two American healthcare workers, described as in 'grave condition and worsening' are being infected by the Ebola virus are on their way to Atlanta's Emory University Hospital for treatment. As WSBTV reports, the hospital has a separate isolation unit set up in partnership with the CDC to treat serious infectious diseases. CDC officials have called this "the biggest and most complex Ebola outbreak in history." Sentiment across social media appears rather biased towards the negative on bringing the patients back. As we warned last night, there are significant implications should Ebola come to America.

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ISM Manufacturing Surges To 3 Year Highs, Construction Spending Plunges Most Since Jan 2011

The numbers have been 'adjusted' and all is well in the world. Never mind Chicago PMI, or US PMI, the ISM Manufacturing index for July printed 57.1 - the highest since April 2011 - well above expectations and last month's 55.3. Employment rose notably (the opposite of US PMI) and inventories contracted. That's the great news. Then there's the meh news - consumer confidence slipped lower in July. Then there's the horrible news - construction spending collapsed at 1.8% MoM - its biggest drop since Jan 2011. Take your pick which will define your bias.

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US Manufacturing PMI Misses By Most In 11 Months, Employment Plunges, Blames Russia & Gaza

US Manufacturing PMI in July dropped to 3-month lows at 55.8, missing expectations by the most since Augiust 2013 as employment growth moderated to its slowest in 13 months. The 'excuse' this time - Russia and Gaza.

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