Flight to Safety

Global Stocks Drop; Futures Hints At Longest Losing Streak Since December 1980

With yesterday's, 8th consecutive decline for the S&P 500, the US equity market has now posted the longest losing streak since October 2008; and should we close payrolls Friday day with another negative print, it would be the longest negative streak since December 1980. Putting the recent slide in context, stocks are now down compared to a year ago, and are unchanged since December 2014.

Gundlach: "We Got The Bearish Signal; Stocks Are Going Down - You Can Feel It"

"We got the bearish signal," Gundlach said about the S&P 500 dropping below 2,130 on Monday. "It is more noteworthy and reinforces the bear signal that the market is down a lot today. The dam is breaking, you can feel it." Gundlach expected another 5-10% drop in the S&P 500, which closed at 2,111.72 on Tuesday.

Diversify At Your Own Risk

If one is to hedge with Treasury securities, they must also consider what happens if yields do not decline during a market correction. What if “safe-haven” securities traditionally used for hedging purposes were to lose 5% to 10% or even 20% or more?

Negative Rates & The War On Cash, Part 4: "Financial Totalitarianism"

Governments and central banks would very much like to frighten people away from cash, but that only underlines its value under the current circumstances. Cash is king in a deflation. The powers-that-be know that, and would like the available cash to end up concentrated in their own hands rather than spread out to act as seed capital for a bottom-up recovery. Holding on to cash under one’s own control is still going to be a very important option for maintaining freedom of action in an uncertain future.

Negative Interest Rates & The War On Cash, Part 3: "Beware The Promoters"

The main promoters of cash elimination in favour of electronic currency are Willem Buiter, Kenneth Rogoff, and Miles Kimball... in order to implement substantially negative interest rates..."If all central bank liabilities were electronic, paying a negative interest on reserves (basically charging a fee) would be trivial. But as long as central banks stand ready to convert electronic deposits to zero-interest paper currency in unlimited amounts, it suddenly becomes very hard to push interest rates below levels of, say, -0.25 to -0.50 percent, certainly not on a sustained basis. Hoarding cash may be inconvenient and risky, but if rates become too negative, it becomes worth it."

USDJPY Tumbles On Sankei Article BOJ Is Struggling To Reach Policy Consensus

After having dropped all day following the latest set of poor US data making a September rate hike virtually impossible, moments ago the USDJPY snapped lower by nearly 80 pips.  Among the reasons cited for the steep drop on trading desks, is that according to a Sankei article published just over an hour ago, BOJ board members are struggling to reach a consensus position on comprehensive policy review.

Negative Rates & The War On Cash, Part 1: "There Is Nowhere To Go But Down"

As momentum builds in the developing deflationary spiral, we are seeing increasingly desperate measures to keep the global credit ponzi scheme from its inevitable conclusion. Credit bubbles are dynamic - they must grow continually or implode - hence they require ever more money to be lent into existence. As the peak of a credit bubble is reached, all these necessary factors first become problematic and then cease to be available at all. Past a certain point, there are hard limits to financial expansions, and the global economy is set to hit one imminently.

Global Shares Slide As Japan Stimulus Disappoints, RBA Underwhelems, Italy Bank Fears Return

European stocks slid to a two-week low amid mixed earnings, as bank stocks extended yesterday’s decline as fears that Italy is not "fixed" have reemerged, not helped by an adverse market reaction to a disappointing Japanese fiscal stimulus announcement, while the AUD first dropped but then jumped after the RBA's priced in rate cut was announced, seen as underwhelming.

Goldman: The Last Two Times P/E Multiples Expanded This Much, The Result Was A Historic Crash

"The current P/E expansion cycle is now one of the largest in history. Since September 2011, S&P 500 forward P/E has grown by 75% (from 10x to 18x). This expansion has only been surpassed twice since 1976, when the multiple rose by 111% from 1984-1987 (ending with the 22% Black Monday collapse) and by 115% from 1994-1999 (ending with the Tech Bubble pop)." - Goldman Sachs