Near-term dollar outlook, with some views on oil, Treasuries and S&P 500 thrown in for extra measure.
When things that are supposed to happen once every 3 billion years (statistically speaking) start happening once every three months, or every three weeks, then something is definitively broken.
One of the most disturbing and recurring themes highlighted on this site over the past year has been the ever greater disconnect between the worlds of equity and fixed income, whether in terms of implied volatility, or actual underlying risk. It turns out there is be an even more acute, and far more concering divergence, which was conveniently pointed out overnight by Bank of America and which suggests that a Bear Stearns type event may be just a few days ahead.
How did Tepper do in Q2? In a word: lousy. In another word: the man who recently was on CNBC pitching a 20x P/E multiple as the new normal, may have just called the market top.
There is an economic and financial trainwreck rumbling through the world economy. Namely, the Great China Ponzi. In all of economic history there has never been anything like it. It is only a matter of time before it ends in a spectacular collapse, leaving the global financial bubble of the last two decades in shambles. The resulting deflationary spiral will suck the global economy into its vortex. And Wall Street will go down for the count because this time the Fed will be utterly powerless to reverse the tide.
Despite the firm's rather checkered history when it comes to open source software, Goldman is reportedly set to make some of its technology available to clients. This new, enlightened stance comes six years after the bank accused a former employee of stealing code that, if it fell into the "wrong" hands, had the potential to "manipulate markets in unfair ways."
The week's weakness started with the surprise yuan devaluation, but the moves in everythingfrom crude oil to U.S. government debt signal that investors and traders are telling the Fed to hold off for now. Will U.S. policymakers listen? Make no mistake: the Fed marches to its own data-dependent drum. These indicators will only tell you if the central bank has the right tempo to support markets.
DUDLEY: HOPEFULLY IN NEAR FUTURE FED ABLE TO RAISE RATES
Recent price volatility in the media sector got us wondering: is “Cord cutting” the home cable box in favor of online entertainment really hitting critical mass?
During the most recent quarter debt issuance by US companies reached an all-time high, raising a question as to why companies still need to borrow so much after selling $7 trillion of U.S. debt securities since 2008. This weeks S&P Media index swoon leaves no doubt as to the answer. Companies have not been borrowing to grow; they have been borrowing in order to flush cash into the casino. Charles Ponzi once had a scheme that was not essentially different. Yes, and it worked until it didn’t.
"You wake up one morning and think 'I’m in prison.' And that’s when it hits you, and you suddenly realize that you are no longer in control of your life."
The #1 question we get after we review correlations every month is “Why are they so high relative to long term historical norms?” Our answer is that Federal Reserve policy has been an unusually important factor in asset prices since 2009. The unusually easy monetary policy since that time (and its planning, implementation, and effect on the economy) has been a powerful unifying story in capital markets. Now, as the Federal Reserve moves to return the economy to a more “Normal” policy stance, correlations should drop. That they have not yet moved convincingly lower is a sign that equity markets may want to see the Fed actually pull the trigger.
WTI Crude is back below $45 again this morning - pressing towards 2015 and cycle lows -after Goldman Sachs' Jeffrey Currie warns 'lower for longer' is here to stay, with price risk "substantially skewed to the downside." His reasoning are manifold, as detailed below, but overarching is oversupply (Saudi Arabia has a challenge in Asia as it battles to maintain mkt share, the Russians are coming, andother OPEC members want a bigger slice) and, even more crucially, storage is running out. As Currie concludes, this time it is different. Financial metrics for the oil industry are far worse.
Chinese Stocks Tumble Despite Margin Debt Rises As Virtu Is Unleashed To Provide "Liquidity" After Citadel BanSubmitted by Tyler Durden on 08/05/2015 20:18 -0500
No lesser liquidity-providing high-frequency-trading never-a-losing-trade shop than Virtu financial has been 'allowed' to trade Chinese capital markets. Coming just days after Citadel's ban, one can only assume that Chinese regulators made a deal with the devil CEO Doug Cifu to levitate markets at any and every cost in order to pick up pennies in front of de-leveraging, over-margined army of farmers and grandmas now seeking exits. Sure enough for the second day in a row margin debt is on the rise again. The retail-dominated Chinese stock market will be ripe picking for the HFTs, as long as not to many are allowed and a tail-chasing flash-crash ensues... but for now its appears yesterday afternoon's selling pressure continues with CSI-300 down almost 2% at the open.
In an irony of ironies, Saudi Arabia is set to take advantage of the very same forgiving capital markets that have served to keep its US competition in business as persistently low oil prices and two armed conflicts look set to strain the Kingdom's finances.