Capital Markets

Nigeria Says "Don't Panic, Banks Are Fine" Amid Currency Collapse, Inflation Spike Concerns

A month ago we warned of the looming hyperinflation coming to Nigeria (as well as much of Africa). It appears, following the central banks' rate hike to a record 14% (reach for yield anyone) in an attempt to stall the ongoing currency collapse, that Emefiele is worried, warning of "concern over headline inflation spike." Perhaps most worrying though, amid the chaos, Emefiele advised depositors in banks "to go about your business," adding that there was "no need to panic or worry." Hhhmm..

USDJPY Plunges On Japan Stimulus Concerns; US Futures Flat With As Fed Begins Meeting

In a turbulent session for FX, the Yen soared as much as 1.4%, the most in three weeks, after Finance Minister Aso says the government will "leave actual policy measures to BOJ", sending the Nikkei lower by 1.4%. European stocks and U.S. equity index futures are little changed despite the slide in the key carry pair as the Fed starts its two day meeting.

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.

What The "Gambler's Fallacy" Tells Us About Where The Market Will Go next

The Dow has closed at a record high for nine days in a row, so it (and U.S. equities generally) MUST be ready for a pullback, right?  Not so fast.  Thinking that reversion to the mean happens swiftly and reliably is something called “The Gambler’s Fallacy”.  To borrow from an old capital markets aphorism, things can stay weird longer than you can stay solvent betting against them.

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."

Who Really Won The Oil Price War?

It is probably a tie... Although the Saudis caused damage to U.S. shale, they also hit the global oil industry hard; and while they managed to preserve their market share, they paid a heavy price in terms of oil revenues.

Erdogan Goes Too Far, Market Warns As Lira, Turkish ETF Suddenly Tumble

While so far the Western diplomatic response to Erdogan's unprecedented putsch has been mostly stunned silence (with just the U.N. human rights chief expressing alarm about the mass suspension or removals of judges so far), the market is starting to get concerned, and moments ago the Turkish Lira suddenly tumbled, sliding below Friday's closing level, while at the same time the MSCI Turkish ETF plunged as well.

With "Stock Valuations At Extremes" Goldman's Clients Are Asking Just One Question

This week the S&P 500 surged to a new record high of 2164 this week while the 10-year US Treasury yield touched an all-time low of 1.37%. As a result Goldman, and especially its clients, are stumped. As chief equity strategist David Kostin admits, they have one burning question. As Kostin puts it, they "are struggling to reconcile how extreme valuations of both assets can co-exist."

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.

"The Resentment Will Explode" - In Dramatic Twist, McKinsey Slams Globalization

In a stunning study released today, one which refutes all its prior conclusions on the matter, McKinsey slams the establishment's status quo thinking and admits that the economic gains of changes in the global economy have not been widely shared lately, especially in the developed world. It finds that between 2005 and 2014, real incomes in the world's most advanced economies were flat or fell for 65 to 70% of households, or more than 540 million people.

Germany Sells First Ever Negative-Yielding 10Y Treasury, Corporate Bonds

Just hours prior to Germany selling its first ever negative-yield 10Y bund, German railway operator Deutsche Bahn became the first non-financial company to sell a corporate bond with a negative yield in euros on Tuesday. . Joint leads BayernLB and Raiffeisen Bank set the final spread at plus 15bp as orders reached 840m. The deal priced with a negative 0.006% yield and a 0% coupon.

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.

Chasing Fools Gold (aka Central Banker Alchemy)

Remember the story of “The Philosopher’s stone?” In a nut shell it was an alchemical substance capable of turning worthless metals into gold. Today, much like those of yore, central bankers across the globe are engaging in that never-ending quest for the ability to turn the worthless – into the precious. And to the ill-informed it seems they have indeed achieved it. That is, as long as you wrap it in the same cloth as found in “The Emperor’s New Clothes.” For if not – the naked truth becomes appalling clear. And it ain’t pretty.