With last night's latest Japanese flash crash firmly forgotten until the next time the trapdoor trade springs open and swallows a whole lot of momentum chasing Virtu vacuum tubes, it is time to look from east to west, Frankfurt to be precise, where in 45 minutes the ECB may or may not say something of importance. As Deutsche Bank comments, "Today is the most important day since.... well the last important day as the ECB hosts its widely anticipated monthly meeting." Whilst not many expect concrete action, the success will be judged on how much Draghi hints at much more future action whilst actually probably doing nothing.
"The US Mint has just announced that they are temporarily sold out of American Eagle Silver Bullion Coins. They are in the process of producing more and will advise when additional inventory is available." To paraphrase: the US mint just sold out of all silver American Eagle silver bullion coins, following "tremendous" demand in the past several weeks, according to Reuters reports.
We applaud PIMCO's attempt to stem the bleeding, however by publicly confronting such a critical, for any asset manager, topic as fund outflows and even providing a handy daily chart of outflows, we fear it will only push the situation from bad to worse, as increasingly more investors ask themselves: "what are we missing." Especially since the appropriate chart to focus on is not the one showing the outflows from the TRF since September, but the one below, showing the epic devastation that the flagship fund, the Total Return Fund, of the world's largest bond manager, has suffered since April 2013, when its AUM peaked at just inder $300 billion, and fast foward to October 2014, when it is now a whopping 42% lower and declining fast.
- From Yes We Can to Probably Not (BBG)
- How Mitch McConnell did it (Politico)
- Tough road ahead for Obama after Republicans seize Senate (Reuters)
- Election 2014: Who were the big winners and losers? (USA Today)
- GOP Senate Takeover Puts Fed on Hot Seat (WSJ), and other fables
- GOP Won by Recruiting the Right Candidates (WSJ)
- McCain could shake up U.S. defense in powerful new Senate role (Reuters)
- Investors Pulled Record Amount From Pimco’s Flagship Fund in October (WSJ)
- Taliban group threatens to attack India following border blast (Reuters)
- Oil Import Decline to U.S. Revealed by Louisiana as Truth (BBG)
While hardly a surprise, the spin for the latest round of overnight BOJ USDJPY-buying exuberance, which sent the pair higher by another 100 pips to a fresh 7 year high of 114.500 and just over 500 pips from the Albert Edwards "line in the sand" 120 and pushed US equity futures higher with it, has been the Republican sweep in the midterm elections which not only solidified GOP control of the House but also gave Republicans outright control of the Senate.
Here is why interest rates will be perpetually low for the rest of our lives, why the inflation calculation has been changed to a dynamic formula (meaning they now change the inputs each quarter) and why those of us yet to retire are screwed.
- Republicans expect gains, but many races close on election day (Reuters)
- Ahead of tough election, White House blames dismay with Washington (Reuters)
- On Election Day, a Tale of the Young and the Old (WSJ)
- Because the recovery: Sprint to Cut 2,000 Jobs as Mobile Customers Keep Leaving (BBG)
- Ukraine's rebel leader is sworn in, crisis deepens (Reuters)
- Brilliant: Burkina Faso Army Promises Religious Leaders It Will Step Down (BBG)
- More Unknowns Leave Central Banks Facing Greater Internal Strife (BBG)
- Scapegoat found: IBM to Change Leadership at Global Services Unit (WSJ)
- Explains why Europe just slashed its GDP forecast: Don’t Be Fooled by Warm Spell as Cold Air About to Return (BBG)
what is strange is that while traditionally such a major downward growth revision would have been sufficient to send futures soaring - why: because in a world where only central banks are left, it means more central bank global bailouts of course - this time the adverse update actually had the impact of sending futures to their lows of the session, granted just a few tiny points since the market is clearly disconnected with even the most pro forma, non-GAAP version of reality, but the reaction direction was clearly unexpected. Perhaps this is explained by the ongoing devastation in both WTI and Brent, which were trading at $76.70 and $82.50 at last check, both down almost 3% as the plan to use Saudi Arabia to crush Russia has instead backfired and the Saudi princes are now openly looking at destroying the US shale infrastructure, as we forecast in the worst, for Obama, scenario.
Strong tailwind for Southeast Asia that the West is ignorant about
The trend is your friend... until it becomes a Venezuelan hyperinflation melt-up...
Lack Of Daily Central Bank Intervention Fails To Push Futures Solidly Higher, Yen Implosion ContinuesSubmitted by Tyler Durden on 11/03/2014 06:47 -0500
While it is unclear whether it is due to the rare event that no central bank stepped in overnight with a massive liquidity injection or because the USDJPY tracking algo hasn't been activated (moments ago Abe's deathwish for the Japanese economy made some more progress with the USDJPY hitting new mult-year highs just shy of 113.6, on its way to 120 and a completely devastated Japanese economy), but European equities have traded in the red from the get-go, with investor sentiment cautious as a result of a disappointing the Chinese manufacturing report. More specifically, Chinese Manufacturing PMI printed a 5-month low (50.8 vs. Exp. 51.2 (Prev. 51.1)), with new orders down to 51.6 from 52.2, new export orders at 49.9 from 50.2 in September. Furthermore, this morning’s batch of Eurozone PMIs have failed to impress with both the Eurozone and German readings falling short of expectations (51.4 vs Exp. 51.8, Last 51.8), with France still residing in contractionary territory (48.5, vs Exp and Last 47.3).
The global economy is like a jetliner that needs all of its engines operational to take off and steer clear of clouds and storms. Unfortunately, as Nouriel Roubini tells The Guardian, only one of its four engines is functioning properly: the Anglosphere (the United States and its close cousin, the United Kingdom). As Roubini continues, the question is whether and for how long the global economy can remain aloft on a single engine. Weakness in the rest of the world implies a stronger dollar, which will invariably weaken US growth. The deeper the slowdown in other countries and the higher the dollar rises, the less the US will be able to decouple from the funk everywhere else, even if domestic demand seems robust. But it's not just the rest of the world that is decoupling from US growth... as the following uncomfortable chart shows, so is a crucial pillar of monetary policy transmission, consumer wealth perception, and economic stability - the US housing market itself.
When Calpers buys an international asset for its investors, is it intervening in the forex market on behalf of the US?
Prepare to once again hear the word "decoupling" a whole lot more.