Bank of England

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.

Frontrunning: July 13

  • Brexit, what Brexit? Shares near 2016 highs (Reuters), Global Stocks Inch Higher (WSJ), Stocks Climb With Copper as Brexit-Induced Volatility Subsides (BBG)
  • Yen under pressure as global stock markets rally (Reuters)
  • Spanish Banks Surge as Fears Subside Over EU Mortgage Ruling (BBG)
  • Pimco Loads Up on Treasuries as Gundlach to Gross Voice Caution (BBG)
  • U.S. Presses China to Be Responsible Power After Sea Ruling (BBG)

Global Stocks, Futures Rise On Disappointing Chinese Trade Data, Hopes For More Central Bank Intervention

In an otherwise quiet overnight session, which among other things saw Germany sell 10Y Bunds with a zero coupon and a negative yield (-0.05%) for the first time ever (despite being uncovered with just €4.038BN sold below the €5.00BN target) anyone hoping for a confirmation that China will be able to prop up the world economy once more, was left disappointed when earlier this morning China reported June exports and imports that once again dropped substantially in dollar terms as soft demand at home and abroad continued to weigh on the world’s largest trading nation.

UK Fund Managers Start Dumping Properties, Admit "Real Estate Needed Re-Pricing"

The uncomfortable moment of truth has arrived for property funds in the UK (and their investors). Following the initial tumble of the post-Brexit dominoes - eight major funds so far either gating redemptions or forcing massive haircuts on to investors who want out - contagion concerns even woke up Britain's regulators (and central bank) as fears of Bear-Stearns-esque forced liquidations spread; and now, as The FT reports, that is what has just started.

Global Stocks Surge On Rising Hopes Of Japan "Helicopter Money"

A quick headline search for the phrases "Japan stimulus" and "helicopter money" is all one needs to understand the very familiar reason for today latest overnight global stock rally, which has sent the USDJPY surging some more, in the process pushing the Nikkei higher by 2.5%, China up over 1% (with the help of some late FX intervention by the PBOC), European stocks up 1%, US equity futures up 0.5%, and so on, in what is a global wave of green on the back of the helicopter money which after Bernanke's visit to Japan, market participants are now convinced is just a matter of time.

Frontrunning: July 11

  • Global stocks rise as markets anticipate stimulus (Reuters)
  • Global Stocks Buoyed by Rally in Japan (WSJ)
  • Andrea Leadsom Pulls Out of Conservative Party Leadership Race (WSJ)
  • More protesters arrested, police say Dallas sniper plotted bigger assault (Reuters)
  • Voters Add to Election Turmoil by Threatening to Jump Party Lines (WSJ)

The Prospects For Money

"In my view, this new bout of turmoil in financial markets is the prelude to the final demise of government currency..."