After Bridgewater, and Goldman Sachs, today it is SocGen's turn, which overnight advised clients that with "US set to unwind QE", now is the time to "increase cash" and "reduce risk." This is how SocGen advises its clients to be positioned ahead of the end of QE...
After a quiet Asian session, where not even the latest Chinese CPI miss was enough to push the SHCOMP to new multi-year highs, all eyes were on Europe where a few hours ago the European Commission announced it had received not one but two new proposals from Greece with the Greek government adding that it considers proposals submitted last week as remain basis for political negotiations. However, barely had Europe received the Greek addenda when it nein'ed all over them, with BBG citing an international official directly involved in talks saying that the "Greek government's revised proposal to unlock bailout funds is vague rehash of earlier plans, not considered credible."
Why has the dollar jumped in recent weeks? Global conspriacy and lies? Are thousands of investors and participants being deluded?
After yesterday's unprecedented volatility fireworks across all markets and continents, today so far has been a modest disappointment, with no crashes and subsequent surges in China, where the Politburo's only achievement was keeping the bubble dream alive by pushing the Shanghai Composite over 5,000 for the first time since January 2008, closing the index 1.5% higher on the day - a very modest gain by China's recent blow-off top standards. Europe, too, has been relatively tame with the 10 Year Bund starting off on the wrong foot, the yield rising back above 0.91% before once again dipping to the upper 0.8% range, tracking the move in the EURUSD tick for tick, which also is a tractor beam for the US 10 Year. On the equity, front, things are just as muted, with futures at the Low of Day as of this moment, despite yesterday's last minute manic buying spree, the S&P set to open below 2100 as a result.
FTW (For Those Who Say I Just Don't Get It... Get This!) There seems a shift showing itself in dramatic fashion unseen since the 2008 financial meltdown. Not only are some key players, or institutions beginning to notice some troubling signs; but rather; those very signs that everyone was told 'won’t or shouldn’t happen', not only are, they’re starting to rear their ugly heads in much greater frequency.
U.S. companies announced $141 billion of new stock buyback programs last month and $243 billion of new M&A deals. Both figures are all-time records, and according to bubblevision are further evidence that CEOs are bullish on their companies and the economic outlook. You might say that. Then, again, it might put you in mind of swarming moths heading for a light bulb. The baleful truth is this. In its arrogant and misbegotten seizure of all financial power, the nation’s central bank has turned the C-suite of corporate America into a destructive agent of bubble finance. That’s ‘dumb money’ with a vengeance.
For once Mario Draghi was right. A day after the European central bank head warned of a spike in volatility, volatility did just that, with markets everywhere from China to Europe seeing volatility explode.
Although a slew of ‘experts’ say the darndest things (e.g.Bloomberg ‘Intelligence’s Carl Riccadonna: “You had equity markets benefit from QE, but eventually QE also jump-started the broader recovery.. Ultimately everyone’s benefiting.”), we can’t get rid of this one other nagging question: who needs an expert to tell them that today’s markets are riddled with bubbles, given that they are the size of obese gigantosauruses about to pump out quadruplets?
In a sign of the times, ICAP, which handles nearly two-thirds of Treasury trading activity between HFTs and banks, is considering the implementation of circuit breakers in the Treasury market to halt trading in the event of an ‘accident.’
With the Greek IMF payment just 48 hours away, and Europe having submitted its best and final offer to Greece in a battle of "deal proposals", today Greek PM Tsipras will meet with European Commission President Juncker to discuss the recently submitted reform proposals by the Greek premier. However, a Greek government spokesman says that Greek PM Tsipras will not meet Eurogroup's Dijsselbloem despite several reports suggesting that they would do so later today. Last night it was reported that the EU, ECB, IMF agreed on terms for a cash-for-reform plan to be presented to Greece. However, a senior EU official has said that they are concerned that the stringent measures of the proposal could be met with rejection by Greece.
If U.S. equities feel brittle, they should. Yes, central bank liquidity from Japan and Europe may well push global equity markets higher. But what we really need is a pullback – that classic 10% correction that flushes out weak hands, reestablishes the discipline of “Risk” in the “Risk-Return” equation, and shows capital markets how to do more than just follow central bank liquidity. So watch June’s price action in U.S. stocks very carefully, because this process needs to start now. The bull market that began in March 2009 is now an ancient bovine indeed. After all, better 10% now than 20% or more later in the year. The first is inconvenient. The second is unwelcomed.
Who could have seen this coming? Just 24 hours after the NSA goes "dark" from "securing" the nation against terrorist threat (by recording and storing all domestic phone calls) we get this:
BOMB THREATS PHONED INTO AIRPORTS, CNBC SAYS
According to NBC, these threats are against planes already in the sky.
Once again it's all about Greece, with the latest iteration of a "Greek deal is imminent" rumor making the rounds and, just like yesterday, sending futures in the green, just a little over an hour after the increasingly more illiquid E-mini future has slid 0.7%. The EUR, where the bulk of Virtu headline kneejerk reacting algos are to be found, has surged over 100 pips overnight on more hope and optimism.