"We begin by admitting that we were uncommonly, inordinately, improperly bearish, believing that the weakness that had developed since last Friday’s collapse had merely been consolidated… We were wrong."
"The above raises an issue for non-government borrowers of US dollars such as Japanese mega banks. For example GREED & fear heard this week in Tokyo that one major Japanese bank is borrowing US$60bn from money market funds."
While there has been a plethora of calls by "invested" pundits and analysts, urging clients to stay invested or, even better, BTFD, following the Friday selloff and the Monday rebound, we have also seen some more cautious recommendations, such as this one by FBN's JC O'hara, warning clients "Buy the ‘Dead Cat’ Bounce at Your Own Risk."
The outlook for the US economy is deteriorating, yet the Fed is trying to raise overnight rates to keep unseen inflation from rising. Success in its strategy could force consumption lower, unemployment higher, and exacerbate real output contraction. The market, however, should not underestimate the Fed’s power based on its apparent incompetence.
The physical holdings of Chinese gold ETFs have surged five-fold from 7 tonnes at the end of January, to 35 tonnes at end of August. The Huaán Yifu Gold ETF, which was holding 23 tonnes in August, entered the global top 15 list.
"Why beat your head against the wall trying to make sense of some stretched argument about how the Russian ruble will fare against the South African rand when simply buying gold has been the alternative? The former has multiple, opaque and rapidly changing parts galore. The latter only requires evaluating if the world will stay as messed up as it’s become."
Following last week's 2nd build in a row (and 5th of last 6), API reports crude inventories collapse over 12 million barrels - the most since Jan 1999 (against expectations of a 905k barrel build). Crude had rallied on the day early hovering aroung $45.50 for a few hours before the data hit, but spiked above$46 after the print.
Today was another historic day in the monetary twilight zone that is Europe, when two large European, non-financial companies were the first in history to be paid by investors to borrow, courtesy of the ECB's corporate debt monetization program, which has unleashed an unprecedented scramble for frontrunning the central bank's purchases of corporate debt and a historic collapse in bond spreads.
"I don’t see a reason [for the ECB not to buy stocks]" said Joseph Gagnon, senior fellow at the Peterson Institute for International Economics. "It isn’t obvious to me why a central bank wouldn’t always want a diversified portfolio, including equities."