Bond

Frontrunning: May 9

  • Yates warned Trump over Flynn blackmail fears (Reuters)
  • Former Trump security aide was Russia blackmail risk: ex-U.S. official (Reuters)
  • Visiting the White House Can Boost Your Stock Price. So Who’s Visiting Trump? (BBG)
  • Investors Lighten Up on U.S. Stocks, Betting on Europe (WSJ)
  • Oil steadies but rattled by concern about OPEC's clout (Reuters)

SocGen: Beware The Ghost Of 1993

"The comparison with 1993 is worthwhile too - it ended badly for asset markets, after all. Whether the Fed should worry about over-frequent excursions to the zero lower bound, or focus on financial sector stability, the risk is plain – super-easy monetary policy is creating artificially low volatility and driving money into trades and investments that are mispriced as a result."

Crushed Vol Boosts Dollar, Commodities; Futures Flat

Asian stocks declined, while European stocks rose to the highest since 2015, led by a rebound in commodities and basic resource stocks. U.S. stock-index futures were little changed at 2,395 - just shy of all time highs - as investors focused on corporate earnings after the French election, while the VIX hovered near its lowest level since 1993.

Bill Blain: "What's Going On In Equity Markets Should Serve As Something Of A Warning"

Most of the recent gains have been concentrated in a very small number of the mega-cap tech stocks – Apple, Google, Facebook and Amazon. Despite the absence of any real selling pressure (yet!), the rest of stocks are struggling to keep up the momentum. A handful of mega-cap stocks are masking underlying weakness. Near 1/3 of the rest of the SPX are in bear phase.

How Uber Hurts Hertz

While Hertz gets keelhauled when it loses a few hundred millions dollars, Uber is considered a hero when it loses billions of dollars. It’s easy to plow down competition when burning unlimited amounts of investor cash is part of the business model. This allows Uber to undercut any kind of competition.

Citi Warns Of Volatility Surge As Its Macro Risk Index Crashes Near Record Lows

A sixth consecutive monthly decline in risk aversion has taken our Macro Risk Index to extreme lows. Readings below last Friday’s 4.1% have only been observed on 31 days since 1997. Citi notes that comparable low levels of risk aversion have historically been followed by higher volatility, stronger USD, higher bond prices and weak performance of global equities.

Macron Victory Leads To "Risk Macr-Off" In Europe, Poor China Trade Data Doesn't Help

It was supposed to be Risk Macr-ON after Emmanuel Macron's avalanche victory in Sunday's French presidential elections; instead as some banks cautioned and as we showed early in the overnight session, the market reaction has been the opposite with the victory fully priced in and especially in the European currencies and stocks, as well as S&P futures, we have seen a modest episode of Risk Macr-Off.

Equity Outflows Surge As Stocks Limp To Record High

After the quietest 8 days in S&P history since 1964, the broad market index managed to limp quietly to a new record close on Friday after a very mixed payrolls print. However, despite the volumeless spike to record highs, it appears the week's dismal data and disappointing earnings left investors unimpressed as S&P ETF outflows surged to their biggest since January 2016.

A Problem Emerges: Central Banks Injected A Record $1 Trillion In 2017... It's Not Enough

Having accelerated for four straight quarters from 2015q4 to a local peak of +5.0 percent in 20167q4, q1 saw the first slowing in global liquidity to a year over year growth rate of just 2.23 percent. In absolute terms it was $29.5 trillion, almost unchanged from 2016q3. This means that even a record $1 trillion in central bank liquidity is no longer enough.