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End Of An Era: The Rise And Fall Of The Petrodollar System

"The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or euros. The sooner the better."

Investors Plow Record Cash Into Emerging Markets, As Europe Suffers Record Outflows

Whether it is due to the recent speculation that Japan may usher in helicopter money, or ongoing concerns about what Brexit may do to the future of European asset returns, there has been a dramatic shift in fund allocation and as Bank of America reports, investors are rushing to vote with their wallets. They have done so in the latest week by continuing to plow money into EM stocks, allocating a record amount of cash to Emerging Markets, while yanking a similarly record amount of cash from Europe.

Frontrunning: July 22

  • Global stocks fall, UK PMIs flash Brexit recession warning (Reuters)
  • Trump's greatest hits, all in one speech (Reuters)
  • Donald Trump Accepts GOP Nomination, Promises to Fix America (WSJ)
  • Trump's America Grows More Ominous Over 13-Month Run (BBG)
  • Hillary Clinton: unwitting star of the Republican convention (FT)
  • Clinton faces pressure to pick VP who is tough on trade, Wall Street (Reuters)

US Futures Rebound Despite Global Stock Weakness As USDJPY Ramps HIgher

After breaking a multi-year stretch of 9 daily record highs in the Dow Jones, overnight global markets saw some early weakness with Asian stocks retreating after BOJ chief Kuroda dashed hopes for so-called helicopter money, triggering yen’s steepest rally in a month and pulling the Nikkei lower by 1.1%. This however did not last long, and around the European open the traditional ramp in the USDJPY helped European equities shrug off early downside, while US equity futures have already recovered half of yesterday's losses.

What Will It Take For Geopolitical Shocks To Worry Investors?

“...we are living in unprecedented times of geopolitical and social uncertainties. For investors, it is really hard to quantify those risks.. In this age of monetary policy uber alles, every setback somehow gets sold as a buying opportunity. There are no long-term ramifications ascribed to anything,” So what will it take for risk appetite to shift?

Energy Giant Schlumberger Fires Another 8,000 As "Market Conditions Worsened" In Q2

"As a result of the weakness in activity that will persist through 2016 as expected, we have made another significant adjustment to our cost and resource base, including the release of more than 16,000 employees during the first half of 2016 and a further streamlining of our overhead, infrastructure, and asset base."

Wall Street Is Confused By Elon Musk's Master Plan - "Credibility Is Challenged... How Do They Fund It?"

As we said last night when reviewing Elon Musk's "Master Plan", Part Deux, "it's one of those thing you read twice, three times, and then look at those around you to see if you somehow missed the deep message." Judging by the litany of responses by the sell-side this morning, we weren't the only ones confused. As the following reactions from Wall Street analysts, the confusion was far-ranging.

Elon Musk Reveals His "Master Plan", Part Deux

Create stunning solar roofs with seamlessly integrated battery storage
Expand the electric vehicle product line to address all major segments
Develop a self-driving capability that is 10X safer than manual via massive fleet learning
Enable your car to make money for you when you aren't using it

S&P Downgrades Turkey To BB, Outlook Negative; Lira Tumbles To New All Time Low

"Following the attempted coup on July 15, Turkey's political landscape has fragmented further. We believe this will undermine Turkey's investment environment, growth, and capital inflows into its externally leveraged economy. In the aftermath of the failed coup, we believe that the risks to Turkey's ability to roll over its external debt have increased."

US Futures Rise To Session Highs, Set For Another Record Open; Global Stocks Jump

After yesterday's positive close in the Dow Jones, which hasn't had a losing day since July 7 and which took the series of consecutive green closes to 8 in a row - the longest stretch since 2013 - the index will look to lock in its 9th green day in a row with futures currently trading well in the green. It's not just the US - equities edged higher in Asia and Europe as positive earnings results from some of the world’s biggest companies countered concern the global economy is losing steam. The dollar strengthened while gold retreated.

S&P Cuts Deutsche Bank Outlook To Negative On "Challenging Operating Conditions"

It has been a while since investors focused their attention on the world's "most systematically risky" bank, Deutsche Bank. Moments ago, S&P made sure to remind us that nothing is fixed, when it released a report saying that "Operating Conditions May Challenge Strategy Execution" but keeping the bank at a BBB+ rating.

America Has Become A "Parasitocracy"

Everyone wants to get something for nothing. Everyone wants to be a rentier. And every society has them. But a rentier is a parasite. And the more of them you have, the weaker the economy becomes – until it eventually succumbs to revolution, depression, war, or hyperinflation.

US Futures Dip, European Stocks Slide After EU Court Slams Italian Bank Bailout Plans

After a head-scratching S&P500 rally - which not even Goldman has been able to justify - pushed stocks to new all time highs with seemingly daily record highs regardless of fundamentals or geopolitical troubles, overnight US equity futures dipped modestly, tracking weak European stocks as demand for safe haven assets including U.S. Treasuries and gold rises. Asian stocks outside Japan fall. Crude oil trades near $45 a barrel. 

Largest US Pension Fund Suffers Worst Annual Return Since Financial Crisis Due To Heavy Stock Losses

While we have often documented the dramatic underperformance by the hedge fund industry over the past decade, today we learn that "vanilla" asset managers were also hurt over the past year in which the S&P went nowhere. Case in point: Calpers, the largest U.S. public pension fund which as the WSJ reports posted its lowest annual gain since the last financial crisis due to heavy losses in stocks.