Bond

Where The Money Is Going: Record Inflows Into Emerging Markets, Longest Ever Outflows From Europe

One week ago we showed a stunning chart showing the panic among the investing public to allocate funds to emerging markets. There has been no change this week, with investors plowing money into emerging market equity funds at a staggering rate, hitting a 58-week high as "financial repression" and record low interest rates push the search for yield to truly unprecedented levels.

Frontrunning: August 19

  • European shares, oil ease as markets return to Fed-watching (Reuters)
  • Brent crude slides, but on track for third week of gains (Reuters)
  • Rio 2016: Lochte’s Teammates, USOC Join With Police in Discrediting Robbery Story (WSJ)
  • OPEC Freeze Wouldn’t Be So Potent as Gulf Rivals Pump More (BBG)
  • Hackers targeted Trump campaign, Republican Party groups (Reuters)

Bill Gross Warns "Central Bankers Are Destroying The Engine Of The Real Economy"

In the US the year-on-year trend for productivity has turned negative . Most central bankers dismiss this fact as a short-term aberration. But the Japanese economy provides an example of what interest rates at or near zero can do to a large, developed economy. The answer is not much: not much real growth; not much inflation - and, together, not enough nominal GDP growth to repay historic debt should yields on sovereign debt ever return to normal.

S&P Futures Unchanged As Europe Rises; Dollar Slide Sends Oil Above $47

In the latest quiet trading session, European shares rose while Asian stocks fell and S&P futures were little changed. Minutes of the Fed’s last meeting damped prospects for a U.S. interest-rate hike, sending the Bloomberg Dollar Spot Index doen 0.3%, approaching a three-month low. Dollar weakness continues to buoy commodities, with the Bloomberg Commodity Index set for the most enduring rally in more than two months, as WTI flirted with $47

And The Market Breaks...

Bond yields are plunging, the USD is tumbling, and precious metals are surging after the unquestionably hawkish fed minutes... and so, how do you stop the market melting down? Break The Market...

FOMC Minutes Show Fed Members Split Over July Rate-Hike, Fear Financial Risks From Low Rates

With Fed speakers attempting to jawbone the current narrative back from the uber-dovish record-high-creating Fed statement, all eyes today were glued on how hawkish the statement would be with regard 2016 hikes - few, some, or many? Since The Fed statement, GDP expectations have crashed to cycle lows but that has not seemed to stop The Fed:

  • *FED OFFICIALS SPLIT IN JULY ON WHETHER RATE HIKE NEEDED SOON
  • *A COUPLE FED OFFICIALS BACKED JULY RATE HIKE
  • *FOMC VOTERS AGREED TO WAIT FOR MORE DATA TO GAUGE ECONOMY

But perhaps most notably, several Fed officials are concerned of financial risks from too low rates.

Gold Is At Extreme Correlations Against Stocks, Bonds, & Oil

Gold has been exhibiting some extreme correlations over the past three months. And by extreme, we mean the most negatively correlated it has been to stocks, bonds and oil prices in decades (or ever in some cases)...the only other times this happened was when the US was in the middle of a recession (1991, 2001, 2008).