Market Conditions

FX Week Ahead: Highlights Include FOMC, BOC And OPEC

Politics dominate yet again, as focus on Comey testimony set to determine Trump and USD fate.  Fed minutes and OPEC meeting on the same day with the BoC thrown in!  EUR on the front foot and leading the pack as growth and inflation stats heighten tapering expectations, greenback flagging.

George Orwell's Monetary Policy

"Tightening is easing..." Monetary policy is a black box and former Fed chair, Alan Greenspan, acknowledged this more than 20 years ago...

Morgan Stanley: "Book Your Summer Holidays, But Put These Trades On First"

"Have you booked your summer holidays yet? If not, you probably should... Record-low readings of the VIX suggest that investors have little to worry about at the moment. In our view, the current low level of volatility seems unsustainable though, but the exact timing of a volatility rebound remains uncertain. Hence, it might make sense to put on trades that hedge against unexpected market moves over the summer."

Ray Dalio Goes Dr. Doom: "When The Next Downturn Comes, It’s Going To Be Bad"

"we fear that whatever the magnitude of the downturn that eventually comes, whenever it eventually comes, it will likely produce much greater social and political conflict than currently exists.  The idea of conflicts getting even worse in a downturn is scary.  When the next downturn comes, it’s probably going to be bad."

Moodys Slashes Ratings On 6 Canadian Banks, Fears Asset-Quality Deterioration, Soaring Household Debt

Amid Poloz-described "unsustainable prices" in various cities, and just days after the collapse of Canadian mortgage lender Home Capital Group and our discussion of the dire state of Canadian savers (and their record household debt), Moodys has cut the rating son six of Canada's largest banks because of "ongoing concerns that expanding levels of private-sector debt could weaken asset quality in the future."

Crushed Vol Boosts Dollar, Commodities; Futures Flat

Asian stocks declined, while European stocks rose to the highest since 2015, led by a rebound in commodities and basic resource stocks. U.S. stock-index futures were little changed at 2,395 - just shy of all time highs - as investors focused on corporate earnings after the French election, while the VIX hovered near its lowest level since 1993.

Macron Victory Leads To "Risk Macr-Off" In Europe, Poor China Trade Data Doesn't Help

It was supposed to be Risk Macr-ON after Emmanuel Macron's avalanche victory in Sunday's French presidential elections; instead as some banks cautioned and as we showed early in the overnight session, the market reaction has been the opposite with the victory fully priced in and especially in the European currencies and stocks, as well as S&P futures, we have seen a modest episode of Risk Macr-Off.

The Triumph Of Hope Over Experience

All is probably not well. That may not become obvious just yet in the very near term, but if the trends depicted below continue, various bubble activities will get into severe trouble as the year progresses. It may finally be time to batten down the hatches.

April Payrolls Preview: "It Better Be Good"

After the abysmal March labor report, all we - and the Fed - can say is that April better be good, or else Yellen's claim of "transitory weakness" will simply be the latest nail in the coffin of Fed credibility. Here is the consensus for the key numbers the BLS will report at 8:30am ET on Friday morning.

Futures Rise On Government Funding Deal; Most Global Markets Closed For Holiday

With much of Europe and Asia, including the U.K., France, Germany and China markets closed for Labor Day, Asian stocks and the dollar rose buoyed by news that Congress had reached a deal to keep the US government funded through the end of September. S&P futures are up 4 points or 0.2%. Oil declined as rigs targeting crude in the U.S. rose for a fifteenth week and output from Libya rebounded.

Frontrunning: April 27

  • Israel strikes Iran-supplied arms depot near Damascus airport (reuters)
  • ECB Keeps Policy Settings Unchanged Awaiting Political Clarity (BBG)
  • Lawmakers push one-week stopgap funding bill (The Hill)
  • Key Moments From Trump’s First 100 Days (WSJ)
  • Trump Makes Huge U-Turn on Pulling Out of Nafta (BBG)

Top 5 Risks To Oil Prices

There are a series of gigantic question marks out there – a handful of countries could upend the theory that the oil market is on a smooth trajectory towards balance...