Bank of England

EURUSD Plunges To Post-Brexit Lows

Following disappoingly un-dovish commentary from Bank of England and ECB, it appears a dearth of monetary exuberance (over and above the current insanity) is prompting capital flight from Europe. EURUSD tumbled to a 1.09 handle this morning, near post-Brexit lows...

Pound Plummets On Renewed Recession Fears As PMI Shows Fastest Contraction Since 2009

Sterling plummeted nearly 200 pips this morning, after rising in early trade to just shy of 1.33, when the latest July Markit flash PMI surveys suggested the UK is heading for a quick recession in the form of a 0.4% GDP contraction in the third quarter. As Markit reported, "July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early-2009."

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.

Frontrunning: July 19

  • Turkey's Erdogan recounts night of coup, mulls death penalty (AP)
  • Dissidents Silenced, GOP Convention Turns Attacks on Clinton (WSJ)
  • U.S. police deaths build momentum for law to treat attacks as hate crimes (Reuters)
  • Police across US patrolling in pairs after ambush attacks (AP)
  • UK will not invoke EU Article 50 this year, government lawyer says (Reuters)

Frontrunning: July 18

  • Global stocks rise on SoftBank bid for ARM, dollar up vs yen after Turkey crushes coup (Reuters)
  • U.S. backs justice for coup plotters but urges Turkey to keep rule of law (Reuters)
  • Law and Order Will Be a Big Republican Convention Them (WSJ)
  • SoftBank to buy UK chip designer ARM in $32 billion cash deal (Reuters)
  • Rate-starved U.S. banks happily gobble mortgage business (Reuters)

Global Stock Rally Halted In Aftermath Of Latest French Terror Attack

The tremendous rally of the past 4 days that has sent global stocks soaring in recent days has finally been capped and European shares, S&P futures are all modestly lower following a deadly terror attack in Nice, France. Meanwhile Asian stocks rose as Chinese economic data beat estimates, with Q2 GDP rising by 0.1% more than the estimated 6.6% on the back of stronger housing data.

BOE "Disappointment" Leads To VIX Flash Crash

It appears the machines were not expecting Mark Carney to disappoint this morning. When the Bank of England decision hit at 7amET, US equities instantly tumbled but VIX flash-crashed to almost an 11 handle, before reversing almost instantly back above 13. Having run all the stops lower, it appears the machines have run out of VIX stomping ammo as stocks roll over at the open...

Frontrunning: July 14

  • BoE surprises markets by keeping rates on hold, signals August move (Reuters)
  • Bank of England Signals August Stimulus as Rate Kept at 0.5% (BBG)
  • JPMorgan results boost futures, but BoE move trims gains (Reuters)
  • Bernanke Floated Japan Perpetual Debt Idea to Abe Aide Honda (BBG)
  • Oil bounces after big losses but glut persists (Reuters)

US Futures, Global Markets Storm Higher As More Details Emerge About Japan's "Helicopter Money"

The global meltup continues with the S&P set to open at new all time highs, some 20 points higher from yesterday's close, however the driver for the latest rally is not so much the imminent BOE announcement which is expected to cut rates by 25 bps from 0.50%, but a dramatic surge in the USDJPY just after 1am Eastern when Bloomberg revealed more details about Ben Bernanke's masterplan for Japan's helicopter money.

"Soon" And "Really, Really Crazy": Starting Up The Helicopters

The idea (now being pushed by a surprising number of people who ought to know better) that governments should take advantage of historically low interest rates to “invest” with borrowed money has an obvious fatal flaw. That is, accumulating even more negative or zero-rate debt will make it functionally impossible to raise rates to “normal” levels, which is to say levels where markets can once again function as mechanisms for moving savings into productive investments. It’s not a stretch to call this the end of capitalism and the beginning of a new Dark Age.