Bond

European Junk: "The Good-Looking Ones Are Always Bad News"

"I understand the attraction to shorting European junk. It’s easy to look dreamily at this chart and imagine spreads doubling to 5% without batting an eye... But there are a couple of problems with this trade..."

Frontrunning: August 16

  • White House braces for fallout from Trump remarks (Reuters)
  • Trump Drags GOP Onto Dangerous Ground, This Time Over Race (BBG)
  • Trump Gives White Supremacists an Unequivocal Boost (NYT)
  • Trump orders faster permitting on infrastructure projects (Reuters)
  • Trump’s U.S. Senate Pick Advances in Alabama Republican Race (BBG)

Global Stocks Rise Amid Unexpected ECB "Trial Balloon"; Dollar Flat Ahead Of Fed Minutes

European markets continued their risk-on trend in early trading, rising to the highest in over a week and rallying from the open led by mining stocks as industrial metals spike higher after zinc forwards hit highest level since 2007. The EUR sold off sharply, boosting local bond and risk prices after the previously discussed Reuters "trial balloon" report that Draghi's speech at Jackson Hole would not announce the start of the ECB's taper.

Euro Turmoils After ECB Walks Back Draghi Jackson Hole Appearance

The Euro whipsawed after Reuters "Trial ballooned" that contrary to a previous report by theWSJ, the ECB's Mario Draghi will not deliver a new policy message at the upcoming Jackson Hole conference, tempering expectations for the bank to start charting the course out of stimulus, and rallying European bonds as fears of an imminent taper have been pushed back once again.

The New American Dream: Rent Your Home From A Hedge Fund

"...there’s essentially an ‘arms race’ building among the world’s biggest funds to control the market, squeezing small, individual investors out of the 'buy-to-rent' housing market...the American Dream of owning your own home has been fading."

China's $9 Trillion Shadow Banking System Shrinks For The First Time In 9 Months

For the first time in 9 months China's $9 trillion Shadow Banking Industry - defined as the sum of Trust Loans, Entrusted Loans and Undiscounted Bank Loans - contracted, which begs the question: will the biggest deleveraging ever attempted in Chinese history be smooth and contained, or lead to another financial crisis?