The Dangerous Illusion That Risk Can Be Offloaded Onto Others

Central bank intervention/financial repression provides the illusion thay systemic risk has been disappeared, and this pushes all asset classes into correlation. The idea that some assets will escape the implosion is also illusory; what appeared uncorrelated can suddenly correlate overnight, destroying the entire fantasy that risk can be offloaded onto others.

Participation Rate Crashes To October 1977 Level: Americans Not In The Labor Force Soar By 579,000 To Record 94.6 Million

While the September jobs number was an absolute disaster, here is the real punchline: in September, the people not in the labor force soared by a whopping 579,000 to a record 94.6 million, up from the previous record 94.0, even as number of people employed - according to the household survey used to calculate the "5.1%" unemployment rate - tumbled by 236,000 to 148.8 million. 62.6% to 62.4%, it was the lowest since October 1977.

Payrolls Reaction: Hope Dashed As Stocks Dump, Gold Jumps, & Bond Yields Break Critical Support

"Inconceivable." With the total destruction of the "faith" in The Fed's pr0mised "recovery," stocks and bond yields are collapsing. A glance at the crash in fed reigional surveys should have given the market a hint (and credit did) but US equity markets are in free-fall and gold and silver are surging. Treasuries rallied hard on the bursting of the faith bubble with 10Y yields plunged back under 2.00% and 30Y yields broke below the 200-day moving average.

What's The Worst That Could Happen?

The 30 stocks of the Dow Jones Industrial Average currently trade for an average of 14.8x next year’s consensus earnings.  But... Everyone knows Wall Street analysts are always too optimistic, so what if we just look at the lowest estimate for each company? The driver of market pessimism sits at the top of the income statement – the Street’s worst case revenue estimates call for a decline of 1.7% in 2016.  Now, Q3 earnings season is unlikely to provide much comfort here; why should corporate managements go out on a guidance limb when their stocks are down on the year?  All this points to further volatility in October, and with a bias to the downside.

Frontrunning: October 2

  • U.S., Allies Demand Russia Stop Attacks on Syria Opposition (BBG)
  • Russian Airstrikes Defend Strategic Assad Regime Stronghold on Syria’s Coast (WSJ)
  • Emerging Stocks Head for Weekly Advance Before U.S. Jobs Data (BBG)
  • Wage Strife Clouds Car-Sales Boom (WSJ)
  • Oregon town reels from classroom carnage (Reuters)
  • Oregon shooter came from California, described as shy and skittish (Reuters)

U.S. Stocks Face Their Biggest Test In 8 Years

We don’t label many spots on U.S. equity charts as “make or break” for the broad market. However, the mid-430?s area on the Value Line Geometric Composite is as critical a level as we can give you in any index or security.

Payrolls Preview: Goldman Says 'Beat', Fed Regional Surveys Signal 'Huge Miss'

Goldman forecasts nonfarm payroll growth of 215k in September, above consensus expectations of 200k by about 0.3 standard deviations of a typical surprise. Noting that August payrolls were likely distorted downward by seasonal bias last month and may be revised up, Goldman expects the unemployment rate to remain flat at 5.1% (and earnings growth to slow). Howver, judging by the collapse in September's regional Fed surveys, today's "most important" payrolls data ever could be a massive miss.

Calm Before The Payrolls Storm

With China markets closed for holiday until the middle of next week, and little in terms of global macro data overnight (the only notable central banker comment overnight came from Mario Draghi who confidently proclaimed that "economic growth is returning" which on its own is bad for risk assets), it was all about the USDJPY which has seen the usual no-volume levitation overnight, dragging both the Nikkei higher with it, and US equity futures, which as of this moment were at session highs, up 7 points. The calm may be broken, though, as soon as two hours from now when the September "most important ever until the next" payrolls report is released.

If You Work Here, Quit Before You Are Fired: The 20 Largest US Layoff Announcements Of 2015

For those eager to push aside the endless government propaganda and concerned about the rapidly deteriorating economy, here is a list of the Top 20 biggest private-sector job cut announcements of 2015. Our advice: for anyone who is still employed at any of the following corporations, if you can find a job elsewhere (because the "recovery" and all), do it before you too become a seasonally-adjusted pink-slip.

Russia Is Destabilizing Syria… According To The People Currently Destabilizing Syria

Critics concerned by what Russia is accused of doing — destabilizing Syria and prolonging the conflict— should be equally opposed to U.S. intervention in that country. U.S. intervention in Syria, much like U.S. intervention elsewhere, has culminated in unprecedented destabilization and blowback. However, most people — as George Orwell understood — have a lopsided view of history, as they ignore and almost refuse to come to terms with the atrocities their own state commits, and by that logic, ignore the detrimental role the United States has played in Syria.

Humans Are No Longer The Apex Predator In Capital Markets (But We Act As If We Are)

How many of us are bored to tears with the Fed’s Hamlet act on raising rates, and yet have been staring at this debate for so long that we have convinced ourselves that we have a meaningful view on what will transpire, even though it’s a decision where we have zero investing edge and unknowable risk/reward odds. The hardest thing in the world for talented people is to avoid turning a low edge and odds opportunity into an unreasonably high conviction bet simply because we want it so badly and have analyzed the situation so smartly. In both poker and investing, we brutally overestimate the edge and odds associated with merely ordinary opportunities once we’ve been forced by circumstances to sit on our hands for a while. Investment discipline suffers under the weight of dullness and low conviction in at least four distinct ways here in the Golden Age of the Central Banker...

Drug Shortages, Price Gouging, And Our Broken Health Care System

In a certain sense, then, the character assassination directed at the price gouger is akin to shooting the messenger pointing to the brokenness of our healthcare system. Perhaps it is to that system that the shaming should be directed. And we may wish to do that fast.

US Mint Sees Record Silver Sales In Q3 As Physical Demand "Is Absolutely Through The Roof"

Having recently pointed out the surging premiums for physical gold and silver relative to the 'paper' prices spewed forth by the mainstream media, it will likely come as no surprise that, as Reuters reports, "silver [coin] demand is absolutely through the roof," according to the Perth Mint. Confirming the demand side is the U.S. Mint sold 14.26 million ounces of American Eagle silver coins in the third quarter, the highest on records going back to 1986. Dealers and mints trace the supply squeeze to a burst of buying by mom-and-pop investors in the United States, who scrambled to scoop up coins they considered to be at bargain levels after spot silver prices in early July sank to six-year lows.

Wall Street Banks Admit They Rigged CDS Prices Too

As Bloomberg reports, "JPMorgan Chase & Co. is set to pay almost a third of a $1.86 billion settlement to resolve accusations that a dozen big banks conspired to limit competition in the credit-default swaps market, according to people briefed on terms of the deal."

HFTs Have Devolved To Two-Bit Criminals Straight Out Of "Office Space"

A quick summary of the latest HFT market-rigging scam: mysteriously, and "erroneously", a change in Latour Trading's code was made, which the firm lacked "direct and exclusive control" over, and which was non-compliant with Reg NMS requirements, yet which mysteriously ended up generating "gross trading profits and rebates by stock exchanges" amounting to $2.8 million. Where have we seen this? Oh yes...