Federal Reserve

5 Core Economic 'Facts'

Scores of economic figures go screaming across our screens every day, many of them contradicting yesterday’s figures, and perhaps half of them based upon lies. On top of that, we have dozens of economic theorists arguing back and forth. In the end, it’s all too muddled for most of us to make out. We each have our guesses, but none of them are terribly certain. So, this week we’d like to point out the central economic facts of the moment, five fundamental conditions that we should all be clear on...

US Futures, European Stocks Rebound, Bonds Fall Ahead Of US Data Deluge

The overnight session started with more weakness out of Asia, where chatter that the BOJ may end up doing nothing despite all the trial balloons (as we hinted yesterday), sent the USDJPY sliding, pushing the Nikkei lower, leading to a 7th consecutive decline in the Topix, the longest such stretch since 2014 even though the BOJ is now actively buying a record amount of ETFs. However, the modest dip in S&P futures and European stocks proved too much for BTFD algos, and risk promptly rebounded.

The World Is Turning Ugly As 2016 Winds Down

The negative reverberations in our current economic and political environment are becoming so strong that it is impossible for people to not feel at least some uneasiness in their gut. We imagine this is the same kind of sensation many felt from 1914 to 1918 during World War I and the terrible birth of communism, or perhaps in the early 1930s at the onset of the Great Depression and the rise of fascism. Some global changes are so disturbing that they send shockwaves through the collective unconscious before they ever hit the mainstream. People know that something is about to happen, even if they cannot yet clearly define it.

The Last Time This Happened, Stocks Crashed

Wondering why the stock and bond markets are tumbling simultaneously? Confused by the market's apparent inability to follow the mainstream media's narrative that higher rates are good for markets? Wonder no longer - the answer, as we have previously detailed - is the collapse in so-called "risk-parity" funds that force leveraged long positions in equity and bond markets to be unwound en masse.

Global Market Rout Abates As Bond Selloff Pauses, Oil Rebounds

After a sudden rout in financial markets that wiped $2 trillion in global market cap over the past week showed signs of easing, overnight stocks tried to stage another "BTFD-type" comeback with European stocks climbing for the first time in five days as oil and metals prices gained. S&P futures were modestly in green, although they faded earlier gains, on the back of a slide in the USDJPY which initially spiked to 103.31 only to fade back to the mid 102-range.

"You Will Be Poor"

How much of your wealth does the government want? How much do you have?

Paul Singer Warns It Is A "Very Dangerous Time" For Stocks, Prefers Gold

Having previously warned that "the ultimate breakdown from this environment is likely to be surprising, sudden, intense, and large," Elliott Management's Paul Singer slammed the "amazing arrogance" of policy-makers who have "created a tremendous increase in hidden risk, risk that investors don't exactly know." As CNBC notes, Singer issued cautionary words for the path ahead, "it's a very dangerous time in the global economy and global financial markets," adding that gold was "under-represented" in investors' portfolios.

Atlanta Fed President Lockhart Announces He Is Stepping Down

And so another Fed president has decided to call it a day, when moments ago, Dennis Lockhart, president of the Atlanta Fed, announced he would step down on February 28, 2017. We are confident the line of (soon to be former) Goldman employees submitting their resumes to fill his slot is already around the block.

Step Aside London Whale: Goldman Is Now Using Retail Deposits To Fund Investments

Goldman has been using the proceeds from the new deposits to directly fund speculative activity such as trading and investments, as well as more conventional activity such as creating looans. Goldman Sachs built up its consumer bank, led by 40-year-old Goldman partner and credit trading veteran Gerald Ouderkirk, whose job is to use consumer deposits and other types of funding for trades, investments and loans.

Goldman Slashes September Rate-Hike Odds As Hilsenrath Warns Of Divided Fed

Goldman Sachs' estimate of September rate-hike odds continue to collapse faster than Hillary Clinton as the absence of a clear signal from a series of speeches by Fed officials (concluding with Lael Brainard's headfake). Goldman have reduced their subjective odds for a hike next week to 25% from 40% previously (still above market expectations of 13%) but remains hopeful for December. However, as Fed-whisperer WSJ's Jon Hilsenrath warns, Yellen faces record levels of dissent as she "confronts a divided group of policy-makers."

5 Charts For Fully Invested Bears

“The funny thing is there is a disconnect between what investors are saying and what they are doing. No one thinks all the problems the global financial crisis revealed have been healed. But when you have an equity rally like you’ve seen for the past four or five years, then everybody has had to participate to some extent. What you’ve had are fully invested bears.”

Frontrunning: September 13

  • IEA Changes View on Oil Glut, Sees Surplus Enduring in 2017 (BBG)
  • Futures dip with oil as investors assess rate hike chances (Reuters)
  • Hilsenrath - Divided Federal Reserve Is Inclined to Stand Pat (WSJ)
  • 'I didn't think it was a big deal,' Clinton says of pneumonia bout (Reuters)
  • Clinton's Lead Narrows Among Independents, Voters Nationally (NBC)
  • Libor’s Reaching Point of Pain for Companies With Big Debt Loads (BBG)

Dow Futures Slide Over 100 Points Despite Fed's Dovish Relent; Oil Drops On IEA Pessimism

After yesterday's torrid rally, which sent stocks higher the most in 2 months on the back of Lael Brainard surprisingly dovish comments, we have seen an unexpected profit-taking session overnight in ES, with US equity futures down 0.6%, driven largely by a renewed drop in oil prices which slid after the IEA said a surplus in global markets will last longer than initially estimated, persisting well into 2017 as reported previously.