Market Conditions

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The Buyback Of Things: IBM To Repurchase Another $5 Billion In Stock In Next Two Quarters





When all else fails, and there is no growth, what you gonna call? Buybackbusters!

 
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The Market's Unsustainable Bounce: Fast, Furious, & Prone-To-Failure





Keep in mind that even terribly hostile market environments do not resolve into uninterrupted declines. Even the 1929 and 1987 crashes began with initial losses of 10-12% that were then punctuated by hard advances that recovered about half of those losses before failing again... The 2007 top began with a plunge as market internals deteriorated materially, increasing day-to-day volatility, and a tendency for large moves to occur in sequence." Investors should interpret recent market strength in its full context: we’ve observed a fast, furious advance to clear an oversold “air-pocket” decline.

 
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Someone Didn't Do The Math On The ECB's Corporate Bond Purchasing "Trial Balloon"





Because after doing the math, we find that the biggest stock market surge in 2014 was over what boils down to be a central bank injection of... $5 billion per month?

 
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Frontrunning: October 20





  • Stick to tapering and rates pledge, says Boston Fed chief (FT)
  • Turkey to let Iraqi Kurds reinforce Kobani as U.S. drops arms to defenders (Reuters)
  • Obama makes rare campaign trail appearance, some leave early (Reuters)
  • Japan GPIF to Boost Share Allocation to About 25%, Nikkei Says (BBG)... or three months of POMO
  • Japan Stocks Surge on Report GPIF to Boost Local Shares (BBG)
  • China Growth Seen Slowing Sharply Over Decade (WSJ)
  • Russia, Ukraine Edge Closer to Natural-Gas Deal (WSJ)
  • Leveraged Money Spurs Selloff as Record Treasuries Trade (BBG)
  • After clashes, Hong Kong students, government stand their ground before talks (Reuters)
 
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What Americans Are Thinking (And Asking) About The Fed





When will the Fed... Raise rates? Stop buying bonds? End quantitative easing? Common questions, those, from Wall Street to Main Street. And – apparently – the online world as well, because they also reflect (literally) what Google autofills when individuals pose inquiries about future monetary policy action in the famously simple Google search box.

 
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Hussman Warns Beware ZIRP "Hot Potatoes": Examine All Risk Exposures





"Present conditions create an urgency to examine all risk exposures. Once overvalued, overbought, overbullish extremes are joined by deterioration in market internals and trend-uniformity, one finds a narrow set comprising less than 5% of history that contains little but abrupt air-pockets, free-falls, and crashes."

 
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The Ides Of October





The central bankers have truly been the markets best friends and Draghi and Kuroda-san have been taking over where Ms Yellen has all but left off, but even they can do little in the face of protest and dissent by various members of the global populace and the continuing stupidity and arrogance of our “democratically” elected representatives.

 
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Dancing Without A Floor - "Sooner Or Later A Crash Is Coming... And It May Be Terrific"





There’s really no point in trying to convert anyone to our viewpoint. Somebody will have to hold stocks over the completion of the present cycle, and encouraging one investor to reduce risk simply means that someone else will have to bear it instead... In any event, be careful in believing that a market advance “proves” concerns about valuations wrong. What further advances actually do is simply extend the scope of the potential losses that are likely to follow.  That lesson has been repeated across history.

 
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Congress Considers Federal Assistance For Laid-Off Coal Miners





A major coal mining company has announced another round of layoffs as declining demand for coal continues to depress the industry. The closures will put 261 people out of work. The news has a familiar refrain; more than 20,000 coal miners have lost their jobs since 2011. Compare that to the solar industry, which employs around 143,000 people, according the Solar Energy Industries Association. The fortunes of the two energy industries will only diverge further in coming years. Sadly, many political leaders in coal producing states have not planned for a future without coal. Rep. David McKinley (R-WV) and Rep. Peter Welch (D-VT) have introduced a bill in Congress to help out-of-work coal miners providing a year’s worth of benefits, including training and support for relocation.

 
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"The Ingredients Of A Market Crash": John Hussman Explains "Why Take The Concerns Of A Permabear Seriously"





"I should be clear that market peaks often go through several months of top formation, so the near-term remains uncertain. Still, it has become urgent for investors to carefully examine all risk exposures. When extreme valuations on historically reliable measures, lopsided bullishness, and compressed risk premiums are joined by deteriorating market internals, widening credit spreads, and a breakdown in trend uniformity, it’s advisable to make certain that the long position you have is the long position you want over the remainder of the market cycle. As conditions stand, we currently observe the ingredients of a market crash." - John Hussman

 
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What Happens When A Money Printer Finally Crashes





This is just too delightfully ironic to pass by.

In a world in which nobody has any faith in the capital markets because over $10 trillion in central bank liquidity has been injected to prop out a fragile house of risk asset cards the one place one should have faith (because let's face it: monetarism is the only religion that matters in today's world) is that money will be printed for the foreseeable future, certainly metaphorically and also quite literally. Alas, things did not quite work out that way for the company which, well, prints money (but sadly is not a central bank) when earlier this morning the shares of De La Rue, the company responsible for printing Bank of England banknotes, plunged a record 30% after it issued a profit warning.

 
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Ho-Ho-Holding Mexican Bimbo Can't Get Paid





Sad but true. Current owner of the Twinkies and Ho-Ho brands, Mexico's Grupo Bimbo, had planned to take advantage of an exuberant public stock market by bringing a secondary stock offering to reduce its leverage. Everything was good-to-go on Friday, but with the market now down a stunning 1.5% from pre-BABA IPO levels, they have pulled the offering:

*MEXICO’S BIMBO SAID TO POSTPONE FOLLOW-ON SHARE OFFER: REUTERS

No comment as yet on the reason, though we assume "market conditions" will be cited as the fickleness of capital markets' animal spirits is once again exposed for all to see. Perhaps Grupo Bimbo should rename themselves Grupo Bimbaba?

 
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Key Events In The Coming Week





With the snoozer of an FOMC meeting in the rearview mirror, as well as Scotland's predetermined independence referndum, last week's key events: the BABA IPO and the iPhone 6 release, are now history, which means the near-term catalysts are gone and the coming week will be far more relaxed, if hardly boring. Here is what to expect.

 
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