Futures Resume Slide After Oil Tumbles Below $35, Natgas At 13 Year Low; EM, Junk Bond Turmoil AcceleratesSubmitted by Tyler Durden on 12/14/2015 06:51 -0500
With just 72 hours to go until Yellen decides to soak up to $800 billion in liquidity, suddenly we have China and the Emerging Market fracturing, commodities plunging, and junk bonds everywhere desperate to avoid being the next to liquidate.
Following Friday's further freefall in crude oil prices, The Middle East is opening down notably. Abu Dhabi, Saudi, and Kuwait are lower; Israel is weak and UAE and Qatar are tumbling, but Dubai is worst for now. Dubai is down for the 6th day in a row (dropping over 3% - the most in a month) extending the opening losses to 2-year lows. The 11% drop in the last 6 days is the largest since the post-China-devaluation global stock collapse. Leading the losses are financial and property firms.
The writing has been on the wall for a few days/weeks, but it appears a combination of global FX and equity turmoil and domestic corporate debt market collapse is finally starting to roil US equity markets. The Dow is down over 600 points in the last week or so, bond yields are collapsing, the USDollar is tumbling, crude is crashing, and junk bonds are in free-fall.
It was a relatively calm overnight session in which European stocks wobbled modestly, Japan was up, China was down following its weakest fixing since 2011 as the PBOC continues to aggressively devalue since the SDR inclusion (stoking concerns capital outflows are once again surging), EM stocks stocks were weak and the dollar was unchanged ahead of today's retail sales data and next week's Fed meeting, and then suddenly everything snapped.
After Vicious Rollercoaster Session, Global Stocks Flat, US Futures Stage Tepid Rebound In Illiquid ChaosSubmitted by Tyler Durden on 12/10/2015 06:53 -0500
After yesterday's rollercoaster session in both the S&P and in oil, where initially stocks soared alongside oil, only to promptly tumble as stops were taken out and as the refiners' inventory strategy was exposed after the DOE's latest weekly numbers were released, it has been a quieter session so far, though maybe not for China where stocks jumped at the open only to fizzle and close at the lows in what appears to be ever less intervention by the market manipulating "National Team."
Overnight market action has largely been a continuation of Tuesday's key themes with European stocks falling as a selloff in mining companies extended to a 7th day, even as metals prices rose and crude oil rallied modestly from a six-year low after yesterday's API crude inventory draw. U.S. equity futures have rebounded from modest declines, as emerging-market shares extended their losing streak to a 6th day while Asian stocks dropped to 2 month lows.
Man Group, which runs $76.8 billion in assets, said on its website that its $4.4 billion AHL Diversified fund lost 5.1% on Thursday. Among other funds to have been running bets, to a greater or lesser extent, against the euro were Brevan Howard Asset Management, which oversees about $25 billion in assets; Tudor Investment Corp.; Moore Capital Management; and Caxton Associates, said investors. "Pretty much everyone was short the euro. The view was very clear for everyone."
Over the weekend, in its latest quarterly presentation, the Bank of International Settlements made what may have been a very premature assessment that China is now contained. Judging by events in the past 24 hours, the reality is anything but.
With just nine days until The Fed - which has prepared the world, apparently - will raise rates for the first time in years (and potentialy suck up to $800 billion of liquidity from the global collateral chains of shadow stability), it appears China is doing its best to start some destabilizing efforts (which worked last time). None of this is helped by the collapse in China trade (with imports down YoY for a record 13th month, and exports falling for 5 straight months).
Less than two weeks after Guotai chief Yim Fung went "missing" amid Beijing's reinvigorated crackdown on market "manipulators," Citic Securities - China's largest broker - says it cannot find two of its most prominent investment bankers. Considering recent events, you don't have to be a detective to make an educated guess as to what might have happened to Jianlin Yan and Jun Chen.
Beware The "Massive Stop Loss" - JPM's Head Quant Warns This Unexpected Downside Catalyst Looms Next WeekSubmitted by Tyler Durden on 12/07/2015 18:39 -0500
"There are $1.1 trillion of S&P 500 options expiring on Friday morning. $670Bn of these are puts, of which $215Bn are struck relatively close below the market level, between 1900 and 2050. At the time of the Fed announcement, these put options will essentially look like a massive stop loss order under the market. This important event falls at a peculiar time—less than 48 hours before the largest option expiry in many years. "
Global equity markets, as measured by the MSCI Developed World index, are above the lows hit in early October but remain on a downtrend that began after markets peaked at the end of May this year. As SocGen's Andrew Lapthorne notes, the current level is now only just above where the index stood at the beginning of 2013 and less than 1% above the 2007 peak. In other words, as he warns, "the equity market has run out of momentum," and the 'bill' for the debt overhang is coming due.
RANsquawk Week Ahead Video - Central Banks remain in focus with several rate decisions on the slate this week alongside US data ahead of next weeks FOMC meetingSubmitted by RANSquawk Video on 12/07/2015 12:46 -0500
US equity markets opened and stunned onlookers by not going instantly vertical on a morning bid-fest. Instead, everything is falling. The Dow is back in the red for 2015 but it is Small Caps that are worst hit as they give up all of Friday's God- Draghi-given gains...