• Tim Knight from...
    09/29/2014 - 19:50
    Which brings us to Clinkle, which is a firm founded by a 22 year old with no business successes behind him (which at least Color.com's founder could claim, as he sold his firm to Apple for...

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"Major Risk Should The Market Drop": BofA On Fresh Record Low In NYSE Investor "Net Worth"

"Risk: NEW LOW for Net free credit at -$183b is major risk should the market drop: Net free credit is free credit balances in cash and margin accounts net of the debit balance in margin accounts. Net free credit dropped to -$183b and moved to a new low below the prior record of -$178b in February. This measure of cash to meet margin calls remains at an extreme low or negative reading below the February 2000 low of $-129b. The risk is if the market drops and triggers margin calls, investors do not have cash and would be forced to sell stocks or get cash from other sources to meet the margin calls. This would exacerbate an equity market sell-off." - BofA



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Frontrunning: September 26

  • Mystery Man Who Moves Japanese Markets Made More Than 1 Million Trades  (BBG)
  • Draghi’s Trillion-Euro Pump Finds Blockage in Spain: Euro Credit (BBG)
  • Apple plays defense on iPhone 6 bending, software concerns (Reuters)
  • U.S. to Shield Military From High-Interest Debt (WSJ)
  • U.S. Outgunned by Extremists on Social Media Battlefield (BBG)
  • Yen Weakens on Pension Fund Reform; Aussie Drops to 7-Month Low (BBG)
  • Secretive Russian oil giant has no fear of sanctions (Reuters)
  • Ride-Sharing Services Face Legal Threat From San Francisco, Los Angeles (WSJ)
  • Putin’s Sell-Treasuries-for-BRICS Bonds Plan Has Limits (BBG)


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Futures Rebound Following Yesterday's Rout

It was all up to the Japanese banana market to fix things overnight: after the biggest tumble in US equities in months, and Asian markets poised for their third consecutive weekly drop, the longest streak since February, Japan reported CPI numbers that despite still surging (for example, in August TV prices soared 9.5%, but "down" from 11.8% the month before), when "adjusting" for the effects of the April tax hike, missed across the board. As a result the USDJPY was at the lows and threatening to break the recent parabolic surge higher which has helped move global equities higher in the past few weeks when the usual spate of GPIF-related headlines, because apparently the fact that Japan will and already has begun sacrificing the retirement funds of its citizens just to keep Abe's deranged monetary dream alive for a few more months has not been fully priced in yet, sent the USDJPY soaring yet again.



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Australia Unleashes Draconian New Anti-Terror Law In Orwellian Orgy Of Baseless Fear-Mongering

Understanding how the power structure thinks, and how it intentionally manipulates the emotions of the masses, is key to overcoming and rolling back totalitarian ambitions. Indeed, to borrow a term from Glenn Greenwald, “fear-manufacturing” has been in overdrive across the Five Eyes nations over the past several weeks, but nowhere is fear being used in a more clownish and absurd manner to strip the local citizenry of its civil liberties than in Australia.



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Russia Asset Freeze Threat Sends European, US Stocks Reeling

Germany's DAX is tumbling this morning (and back in the red for 2014) as The Moscow Times reports Russian courts could get the green light to seize foreign assets on Russian territory under a draft law intended as a response to Western sanctions over the Ukraine crisis. Whether this is retaliation at Italian tax police seizing €30m in assets, including a luxury hotel in Rome and two villas in Sardinia, controlled by Arkady Rotenberg, is unclear, but the timing is highly coincidental and Rotenberg has been a longtime ally of Russian president Vladimir Putin.



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Traders: Millions By The Minute - Part 2

In the second (and final) part of BBC's 'Traders: Millions By The Minute' 2-part documentary (part 1 here) goes inside the competitive world of financial traders to meet the men and women who play the markets in London, New York, Chicago and Amsterdam.



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5 U.S. Banks Each Have More Than 40 Trillion Dollars In Exposure To Derivatives

When is the U.S. banking system going to crash? We can sum it up in three words. Watch the derivatives. It used to be only four, but now there are five "too big to fail" banks in the United States that each have more than 40 trillion dollars in exposure to derivatives.



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Why The Fed Doesn't Care About The Poorest Half Of Americans (In 1 Simple Chart)

Despite her platitudes to the unemployed (here) and the poor (here), it is clear Janet Yellen's Federal Reserve policies are aimed squarely at only one segment of the US population - the wealthy. The reason is simple... with an economy built on the back of conspicuous consumption, it's only the top quintiles of the population's income earners that spend-spend-spend to keep the dream alive. What's good for the 'wealthy' is good for America, right?



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What Wall Street Thinks About Today's Selloff

Aside from Russian threats, weaker-than-expected Durable Goods, and #Bendgate, here are nine other reasons for today's sell-off...



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Future Bull

“Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong.”



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Mapping The World's Muslims

With President Obama having bombed 7 mostly-Muslim nations in his reign as Nobel-Peace-Prize-Winner-in-Chief, we thought Pew Research's study on where the world's Muslims are would be useful context...



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Why Blackrock (And Every Other Bondholder) Is Freaking Out (In 1 Simple Chart)

Just last week, we explained why Blackrock - the largest asset manager in the world - is gravely concerned about the 'broken' corporate bond market. Simply put, thanks to The Fed's continued presence in the Treasury market has left the corporate bond market a liquidity-starved ticking time-bomb if faith in the stability of defaults ever falters (with firm balance sheets at record high leverage) and "selling" begins. As the following chart from Deutsche Bank highlights, the current level of liquid assets as a proportion of total HY assets is about as low as it has been tracking data back around 25 years. In other words, the massive (and likely levered) positions The Fed has forced the world to take on by its repression face a dramatic liquidity risk cost if they are ever to 'realize' any gains from the Fed's handouts (by actually selling). That's what every bond manager 'knows'...



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Fracked Up: Don't Believe In Miracles

There is no doubt that fracking stopped the long-term decline in U.S. oil output. Since the all-time low output in 2006, daily oil production has increased by 30%. Natural gas production has soared even higher, but seems to have leveled off. Ignoring the environmental impacts of fracking, just the economics alone show that shale oil and gas are not the miracle that will save us from the perils of peak cheap oil. Fracking extraction of oil is extremely expensive. If oil prices were to fall to $80 per barrel, there would be no profits for frackers. They would stop drilling wells. So don’t plan on ever paying less than $3 per gallon for gasoline ever again. Don’t believe in miracles.



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The Logistical Challenge Of Air Operations In Syria

The composition of the force carrying out airstrikes in Syria highlights the logistical complexity of this kind of operation. Most of the U.S. aircraft taking part in the operations over northern Iraq and Syria are based in and around the Persian Gulf, meaning they are operating far from their origins. Bahrain, Jordan, Saudi Arabia, the United Arab Emirates and Qatar reportedly participated in the initial operations in Syria, adding further complexity and coordination issues.



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"The Gig Is Up"

For investors, Fed stimulus has trumped all other factors.  It has lowered risk premia and inflated asset prices.  The gig is soon up, but investors have yet to adequately adjust. Unfortunately, they will attempt to do so with significantly compromised market liquidity.  The path to normalization is made even more challenging, because Japan and Europe are in recession, and China is slowing.



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