"Today is a historic day. It’s the changing of an era. We can live in an Argentina without poverty, where we can all aspire to have our own homes with running water and a sewage system."
"The question is whether this is going to be something like the rebirth of Argentina or another failed dream that people get excited about, but then they can’t overcome the challenges.”
There’s an old adage among veteran stock traders that goes something like his, “If I told you the news before it were made public – it’s still a 50/50 bet you would guess the market’s reaction correctly.” That was when the markets had some resemblance of normalcy. Today, normalcy has been replaced with sheer lunacy as to the speculation and interpretations for where these markets go from here.
As Puerto Rico stares down a $355 million bond payment due in less than two weeks, analysts warn that without federal intervention, the commonwealth could face growing social unrest and a prolonged depression.
"Can the government maintain this strategy of flooding the oil market? In our view, it is unlikely that Saudi leaders would want to exacerbate its ongoing reserve drain by pushing prices below $40/bbl. After all, pressure will quickly build on the riyal’s 30 year peg to the USD if Brent crude oil prices keep falling."
The Party Is Over: Goldman Sees "Limited Equity Upside" As "Bernanke Put" Is Replaced With "Yellen Call"Submitted by Tyler Durden on 11/20/2015 04:59 -0500
"We see a risk that the ‘Bernanke put’ will gradually be replaced by the ‘Yellen call’. The ‘Bernanke put’ captured the intuition that when the risks to growth, monetary policy reacts aggressively to bad news. Now that these risks have receded, we expect the Fed will shift to an easing bias, implying that monetary policy will likely begin to react more aggressively to good news... Rallies in risk sentiment may be met by less accommodative monetary policy – the ‘Yellen call’.
“Some Chinese firms have entered the Ponzi stage because return on investment has come down very fast. As a result, leverage will be rising and zombie companies increasing.”
"The equilibrium, for now, is QE infinity – but political risk could be the breaking point"...
"If You Get Enquiries Just Obfuscate And Stonewall" - How Barclays Rigged The FX Market For Seven YearsSubmitted by Tyler Durden on 11/18/2015 12:28 -0500
“Do not involve Sales in anyway [sic] whatsoever. In fact avoid mentioning the existence of the whole BATS Last Look functionality. If you get enquiries just obfuscate and stonewall.... for the future, sales absolutely 100% do not know about the existence of last look and it shouldn’t be a concern for them... IF any client does call up about a rejected trade . . . it is important that you state in any communication ‘THE TRADE WAS REJECTED BECAUSE OF LATENCY.’ . . . DO NOT talk about P&L on trades."
"Nothing Makes Sense Anymore" Traders Fear Debt Market Distortions Signal "Something Big Is Brewing"Submitted by Tyler Durden on 11/16/2015 19:00 -0500
In the last few months we have warned of the "perversions" in US money markets (here, here, and most recently here) adding that "to ignore them at your own peril." And now, as Bloomberg reports, it appears the mainstream is beginning to recognize that something very strange is going on in debt markets. Across developed markets, the conventional relationship between ('risk-free') government debt and other 'more risky' assets has been turned upside-down. "Everybody in the fixed-income market should care about this," warns a rates strategist and in fact, it’s hard to overstate how illogical it is when swap spreads are inverted, as JPM warns the moves in swap-spreads "should be viewed as symptomatic of deeper problems."
The institutional academic system is broken. We need less systemic, traditional education that only provides knowledge of low utility and more alternative education that provides the right high-utility knowledge to thrive during today's global currency wars.
While the world was following the tragic events unfolding on Friday night in France where hundreds of innocent civilians were killed or injured, an important economic development took place at the IMF, whose staff and head Christine Lagarde, officially greenlighted the acceptance of China's currency - the Renminbi, or Yuan - into the IMF's foreign exchange basket, also known as the Special Drawing Rights. Here are the initial early responses by various Wall Street analysts.
How much did the PBoC spend propping up China's stock market in Q3? By how much did they overpay? How likely are they to take an outsized loss? BofAML takes a look.
The world of Bubble Finance economies created by the Fed and other central banks is fundamentally different than that prevailing under the “Lite Touch” monetary policies which preceded the Greenspan era. The problem today is that the PhDs running the Fed have an economic model which is a relic of the Lite Touch era. It is not only utterly irrelevant in today’s casino driven system, but is actually tantamount to a blindfold. It causes them to look at a dashboard full of lagging indicators like jobs and GDP components, while ignoring the explosive leading indicators starring them in the face on CNBC. The clueless inhabitants of the Eccles Building do not recognize that they have created a world in which Wall Street supersedes main street.
Amid warnings from Daiwa Capital Markets that policy-makers "will sacrifice Yuan stability" in order to manage the deterioration in the economy (trade and industrial production data confirming the weakness), The PBOC weakened the Yuan fix for the 8th straight day. This is the longest streak of weakness since August 2008.
“Debt wasn’t a problem during the boom years because profits kept growing. But it’s not sustainable when the economy slows."