Capital Markets

The "Terrifying Prospect" Of A Triumph Of Politics Over Economics

All of life’s odds aren’t 3:2, but that’s how you’re supposed to bet, or so they say. They are not saying that so much anymore, or saying that history rhymes, or that nothing’s new under the sun. More and more 'they's seem to be figuring out that past economic and market experiences can’t be extrapolated forward - a terrifying prospect for the social and political order.

What Matters Most?

What 3 pieces of information would you need to confidently call the 2016 end-of-year level on the S&P 500?

The 'Market State' Prediction Went Terribly Wrong

"In retrospect the idea that an increasingly internationalized political elite would automatically remain faithful agents of their own populations should have rang alarm bells." Who are the internationalized political elite faithful too?

The Tragedy Of California's Public Pensions

“by [any] measure, California’s Big Three public pensions are dangerously underfunded, putting current and future taxpayers at risk.... those relying on public pensions for their retirement are not only going to be requesting funds that simply aren’t there, they are going to be requesting funds from pension systems who have yet to face the third recession in 15 years."

As A Frenzied Wall Street Buys Shale Equity Offering At A Record Pace, Exxon's CEO Has A Stark Warning

Investors have pumped a whopping $9.2 billion in new equity into energy companies year to date, the most since Bloomberg records began in 1999. The euphoria won't last, and the equity issuance window is already closing: confirmation of this comes from none other than Exxon CEO Rex Tillerson who moments ago said that the "wave of oil equity issuances is destroying value", adding that "global economic conditions are not inspiring", that "demand won't solve it quickly" and that "we're still oversupplying the market."

"The Liquidity Just Dries Up In A Stressed Market" - How HFT Killed FX Trading

Collin Crownover, head of currency management at State Street Global Advisors Inc., which oversees about $2.4 trillion,  who during a panel presentation said that "we are concerned. During volatile periods, market participants are backing away until conditions settle down, making it harder to complete large orders."“A lot of the electronification of the market, which by and large is a good thing, has led to kill switches on a lot of that algorithmic-provided liquidity,” Crownover said. “The liquidity just dries up in a stressed market.”

After €670 Billion In QE, European Inflation Plunges To -0.2%: Lowest In One Year

A little under one year after the ECB launched its own QE of €60 Billion/month in bond purchases in early March 2015, a process which has resulted in the ECB monetizing over €670 billion in European - mostly German - sovereign paper, moments ago Eurostat reported European February inflation (even though the month is not over yet), and it was a shock, with headline inflation tumbling form +0.3% Y/Y in January to a depressing -0.2% in February, the worst print since January 2015. It was expected to drop to "only" 0.0%.

The G-20 Meeting Was A Big Disappointment: What Happens Next

It is now all up to the ECB: "If they lowball or grudgingly meet expectations, we could face another December 4 move because market participants will see it as the equivalent of a ‘last ease in the cycle announcement’, basically ECB throwing in the towel. If they move aggressively they will catch market off guard and unwind the view that policymakers see themselves as powerless."

About That $1 Trillion In Distressed Credit: UBS Responds To Wall Street's Shock

UBS' recent bearish assessment of the junk bond space led to a firestorm of protests from Wall Street asset managers for whom just the selloff in itself had become a catalyst to buy. So, to clear up any confusion, here is Matthew Mish responding to the barrage of angry bulls why the $1 trillion in distressed credit - a third of the entire universe - is not just an energy story, and responding to the five most important and recurring questions

An Odd Correlation Between Market Crashes And "Socialism"

While we were looking at various other Google trends, we stumbled across the following chart, which may have profound implications for not only U.S. capital markets, and what the media does or does not follow, but ostensibly the outcome of the U.S. presidential election and the overall future of the U.S.