June is off with a bang, and a very busy week in the macro economic calendar, both globally and in the US, which culminates with the latest "most important ever" payrolls report, one which will surely be closely watched by a Fed which may hike as soon as a few weeks from now (but probably won't).
Here are Deutsche Bank's 10 themes and "summer issues" to keep an eye on as we leave May behind and enter June...
"The oil rebound has run out of gas and now you are seeing nervous investors with itchy trigger fingers bailing out of USO," notes Bloomberg, as the biggest US ETF that tracks oil is heading for the largest two-month outflow in six years, raising concern that crude’s 30% rally may stall. As BNP points out, "we do not think that the bulls have enough supporting fundamental factors to make a case for a higher oil price," and judging by the mass exodus from USO, as Bloomberg concludes, knife-catching 'investors' "don’t want to get burned by another drop in oil."
The Russell 3000 — to which more than $5 trillion in assets were benchmarked as of 2013 — will be reconstituted next month based on market capitalizations calculated at the end of trading today. Here's what you need to know...
For those who still cling on to margin debt as indicative of anything, the latest NYSE report should provide some comfort: finally the long-awaited breakout in participation has arrived, and after stagnating for over a year, investors - mostly retail - are once again scrambling to buy stocks on margin, i.e., using debt, and as of April 30, the amount of margin debt just hit a new all time high of $507 billion, $30 billion more than the month before, and nearly 50% higher than the last bubble peak reached in October 2007.
We did not actually need confirmation that global trade is slowing to a crawl (and has in fact reversed): after all, we have been showing just that for the past year, most recently earlier this week but it is important to note that in today's negative GDP print, it was net trade (exports less imports) that subtracted -1.9% from the final GDP print, driven by a -1.03% annualized drop in exports. This was the biggest hit to US trade since thegreat financial crisis.
The most prominent market event overnight was once again the action in China's penny-index, which after tumbling at the open and briefly entering a 10% correction from the highs hit just two days ago, promptly saw the BTFDers rush in, whether retail, institutional or central bankers, and after rebounding strongly from the -3% lows, the SHCOMP closed practically unchanged following a 2% jump to complete yet another 5% intraday swing on absolutely no news, but merely concerns what the PBOC is doing with liquidity, reverse repos, margin debt, etc. Needless to say, this is one of the world's largest stock markets, not the Pink Sheets.
When we first brought the world's attention to the 330ET daily ramp in US equity markets, we were shrugged off as conspiracy wonks once again, but 2 years later - as trading activity has become increasingly focused in smaller and smaller windows during the trading day, so the mainstream media has finally been forced to admit that the US equity market has become nothing but Ebay - where everyone waits til the last second.
Amid accelerating deposit outflows and an hourly flow of conflicting headlines, Deutsche Bank is out with a fresh take on the Greek endgame including an analysis of both the political wrangling that would need to take place in order for parliamentary approval of concessions to creditors and the mechanics of a default to the IMF.
Another round of the Crisis is coming and the Powers That Be know it. This is why they’re preparing by buying up Gold bullion.
On Tuesday, Deutsche Bank agreed to a $55 million SEC settlement tied to allegations it hid billions in losses by mismarking its crisis-era derivatives book. The bank has always contended its valuation methodologies were sound. Here is the real story...
- FIFA Raided by Swiss Authorities in 2018, 2022 World Cup Probe (BBG)
- Companies Send More Cash Back to Shareholders (WSJ)
- Time Warner Cable Deal Stirs Debt Concerns (WSJ)
- Qatar $200 Billion World Cup Under More Scrutiny Amid FIFA Probe (BBG)
- Philippine, Vietnamese troops play soccer and sing on disputed island (Reuters)
- The G-7's Problem: Can the World Deal With a Greek Default? (BBG)
- SocGen Deal for Bache Illustrates Commodity-Trading Woe (WSJ)
- China’s Naval Abilities Test Asia’s Insecurities (WSJ)
"...it is imperative that the data does turnaround during 2015h2 for the recent rise in yields to be sustained. It is quite surprising to us that there is so much focus on US employment data and Fed Funds normalization to the exclusion of global trade data or US demand let alone productivity. A case perhaps of the lunatics trying to run the asylum."
"It is troubling enough to consistently grant waivers for criminal misconduct. It is an order of magnitude more troubling to refuse to enforce our own explicit requirements for such waivers. This type of recidivism and repeated criminal misconduct should lead to revocations of prior waivers, not the granting of a whole new set of waivers. We have the tools, and with the tools the responsibility, to empower those at the top of these institutions to create meaningful cultural shifts, yet we refuse to use them. I am concerned that the latest series of actions has effectively rendered criminal convictions of financial institutions largely symbolic."