- China’s Stocks Sink Most Since 2009 as Turnover Jumps to Record (BBG)
- Greek Stocks, Bonds Tumble (WSJ)
- China tightens LGFV funding screws (BBG)
- Crude Rebounds From Five-Year Low Amid Shale-Oil Spending Curbs (BBG)
- Sexual threats, other CIA methods detailed in Senate report (Reuters)
- U.S. Takes Security Precautions Overseas Ahead of CIA Report (WSJ)
- Light-Speed Treasury Trading Governed by Rules Dating to 1998 (BBG)
- Delhi to ban all internet taxi firms after Uber rape claim (Reuters)
- Supreme Group Fined $389 Million for Overcharging Pentagon (WSJ)
It wasn't just China's long overdue crash last night. In addition to the Shanghai Composite suffering its biggest plunge since August 2009, there has been a sharp slide in the USDJPY which has broken its uptrend to +∞ (and hyperinflation), and around the time Chinese gamblers were panicking, the FX pair tumbled under 120, although since then the 120 tractor beam has been activated. Elsewhere, the Athens stock exchange is also crashing by over 10% this morning on the heels of news that the Greek government has accelerated the process to elect the next president and possibly, a rerun of the drama from the summer of 2012 when the Eurozone was hanging by a thread when Tsipras almost won the presidential vote and killed the world's most artificial and insolvent monetary union. And finally, the crude plunge appears to have finally caught up with ground zero, with ADX General Index in Abu Dhabi plunging 3.5%, also poised for the biggest drop since 2009. In fact the only thing that isn't crashing (at least not this moment), is Brent, which did drop to new 5 year lows earlier under $66, but has since staged a feeble rebound.
"The highly abnormal is becoming uncomfortably normal... There is something vaguely troubling when the unthinkable becomes routine."
Investors have been lulled into a state of complacency due to a seemingly "unstoppable" rise in the financial markets. Bad news remains good news, and even small drawdowns are quickly reversed sending stocks surging higher. Eventually, the paradox of what happens when a seemingly unstoppable force collides with an immovable will be answered. Historically, such realizations have not been kind to investors. This weekend's reading list takes a look at the reasons why stocks could rise higher, and the potential they won't. The question to be answered is "What will you do when the immovable object is met."
High-yield credit markets saw spreads widen 12bps on the week and high-yield bond prices fell notably as energy stocks faded after Monday's exuberant dead-cat-bounce. Trannies tumbled today off early exuberance gains, ending the week the biggest loser despite lower oil prices. Today's jobs data sparked initial "good news is bad news" weakness, was ramped to Europe's close then faded with Nasdaq and S&P red post-Payrolls. Treasury yields rose on the day (and week) with dramatic flattening as 2Y-7Y maturities up 17-20bps on the week and 30Y only 7bps higher. 2Y yields exploded 17bps for the worst week since Feb 2011 to Apr 2011 highs. The USDollar closed higher today (up 1.25% on the week) led by dramatic JPY weakness (and EUR fading). Despite USD strength, gold gained 2% on the week and silver +5.4% (best week in 6mo) even as oil lost 0.75% for its lowest close since July 2009. VIX tested down to an 11 handle but closed peeking back into a 12 handle, lower on the week. For the 3rd day of the last 4, internals created a Hindenburg Omen cluster.
- JP Morgan 200K
- Goldman Sachs 220K
- Citigroup 225K
- HSBC 230K
- UBS 230K
- Credit Suisse 235K
- Morgan Stanley 235K
- Deutsche Bank 250K
Because nothing says rational equity markets like a 16-year-old penny-stock-day-trader who turned $10,000 into $300,000 this year... Meet Connor Bruggermann - the new normal 'investor'
Today we'll learn more about whether Mr Draghi becomes Super Mario in the near future as the widely anticipated ECB meeting is now only a few hours away. We will do another summary preview of market expectations shortly, but in a nutshell, nobody really expects Draghi to announce anything today although the jawboning is expected to reach unseen levels. The reason is that Germany is still staunchly against outright public QE, and Draghi probably wants to avoid and outright legal confrontation. As DB notes, assuming no new policy moves, the success of today's meeting will probably depend on the degree to which Draghi indicates the need for more action soon and the degree to which that feeling is unanimous within the council. Over the past weekend Weidmann's comment about falling oil prices representing a form of stimulus highlights that this consensus is still proving difficult to build. It might need a couple more months of low growth and inflation, revised staff forecasts and a stubbornly slow balance sheet accumulation to cement action.
"The stock market just keeps zooming up. A low equity allocation must be hurting you now... For all purposes, this is a hideously expensive market. I don’t care if it’s a bubble or not. It’s too expensive, and I don’t need to own it. That is the problem. This is the first central bank sponsored near-bubble. There is just nowhere to hide... but... to think that central banks will always be there to bail out equity investors is incredibly dangerous."
Presented with nothing but admiration for the arrogance of manipulators...
Dudley’s overall message is that the US economy is doing great, but it’s not actually doing great, and therefore a rate hike would be too early. Or something. "The sharp drop in oil prices will help boost consumer spending?" We don’t understand that: Dudley is talking about money that would otherwise also have been spent, only on gas. There is no additional money, so where’s the boost? This is just complete and bizarre nonsense. And that comes from someone with a very high post in the American financial world. At least a bit scary.
Goldman Sachs' 2015 global equity views and themes note is out and its title "The Long Grind Higher Continues" says it all... it's muppet slaughtering time...
While we have focused on the decoupling between US equity markets and their high-yield credit and US Treasury yield peers, today is perhaps most notably for the widening seen in investment-grade credit markets - the most in 2 months - as oil-complex concerns squeeze liquidity across all credits.
Using A Bitcoin Wallet To Take Inexpensive Positions On Goldman Sachs 2015 Recommended Global Macro TradesSubmitted by Reggie Middleton on 11/29/2014 09:11 -0500
First we discuss whether Goldman Is Giving Real Advice or Muppet Fodder, then we learn how to monetize our position on said Fodder... eh... Advice using just a bitcoin wallet and not Goldman itself.