Market Conditions

Goldman Gives Draghi An Ultimatum, But The ECB May Be Finally Ready To Snap

"The ECB needs to surprise this week, not because of markets, but because – given the trend in core inflation – the existing policy mix is behind the curve."- Goldman FX strategist Robin Brooks

"There is a refugee crisis; what could the ECB do? There is climate change; oh, the ECB needs to do something. I have the hiccups; oh, the ECB should do something ... it's crazy. I find this completely ridiculous and irresponsible. But we got ourselves into this" - ECB source.

Futures Lower On Lack Of China Stimulus; Oil Squeeze Continues; Gold Spikes Ahead Of ECB

In the aftermath of last week's disappointing G-20 Shanghai summit, there was much riding on this weekend's start of the China's People's Congress, and specifically what if any stimulus announcement Beijing will make; sadly for stimulus addicts China mostly disappointed and after the unimaginative scope of growth proposals, it is hardly surprising that European stocks and US equity futures have taken a leg lower.

"We're In The Eye Of The Storm" Rothschild Fears "Daunting Litany" Of Problems Ahead

As central bank policy-makers' forecasts have become more pessimistic (i.e. more realistic), Lord Rothschild is unsurprised at the current malaise: "not surprisingly, market conditions have deteriorated further...So much so that the wind is certainly not behind us; indeed we may well be in the eye of a storm." On this basis, Rothschild highlights a "daunting litany of problems," warning those who are optimistically sanguine about the US economy that "2016 is likely to turn out to be more difficult than the second half of 2015."

Global Manufacturing Rolling Over: Over 70% Of Global PMIs Decline In February

28 regions have reported their global manufacturing PMI surveys so far. Seven saw improvements in their manufacturing sectors in February, twenty recorded a weakening, and India was unchanged. This means that over 70% of the world saw manufacturing sentiment deteriorate in February compared to January.

The Three Charts That No Small Cap Asset Manager Wants You To See

A funny thing happens to an index's valuation when you choose not to entirely ignore the companies that have negative earnings (i.e. losses). Ever wondered what the P/E ratio of the Russell 2000 was given that it is full of companies where the 'E' is negative? The answer is simple - and ugly - as The Wall Street Journal exposes, the aggregate P/E of the Russell 2000 is over 200x which perhaps explains the gaping chasm between bond and equity valuations for this highly credit-sensitive cohort.

NatGas Tumbles To 16-Year Lows

More "unequivocally good" news. On the heels of a smaller than expected drawdown in natural gas inventories (-117 vs -135bcf), Nattie futures have tumbled to their lowest intraday level since 1999...

"Where Are The Bubbles?" - UBS Shows Them All In One Chart

As has become increasingly obvious to many, unconventional central bank policies have resulted in an unprecedented level of crowding – a "herd mentality" to trade positioning on the basis of a similar theme – throughout global equity markets. UBS quant team guages the "barometric pressure of developing investment bubbles" across various factors and looks for the inflection points with the dollar, oil, and politics as the main catalysts.

The Mood In Silicon Valley Is Like The "Moment After The Titanic Hit An Iceberg"

A year ago, startups with nascent business models were scoring billion-dollar valuations as investors raced each other to write checks. Today, venture capital is drying up for less successful startups.  Rory O’Driscoll, a partner with venture firm Scale Venture Partners, likens the mood today to the moment after the Titanic hit an iceberg. “No one wanted to jump into the lifeboats right away.”

An Alarm Goes Off Threatening The "Strong U.S. Jobs" Myth: Withheld Income Taxes Are Stalling

Official Treasury tax-receipt data are at major odds with the much more upbeat numbers reported by the Labor Department. January’s year-over-year payroll increase of 2.665 million, or 1.9%, along with a 2.5% gain in average hourly earnings should yield something in the neighborhood of 4.5% year-over-year growth in tax withholdings — or more than double the actual growth rate in recent weeks. And yet over the past 10 full weeks, starting Dec. 7, tax withholdings have grown just 3.1% from a year ago.

Devon Energy Announces Sale Of $1 Billion In Stock, Dilutes Existing Shareholders By 13%

Devon Energy Corporation (DVN) ("Devon" or the "Company") announced today that it intends to commence a registered public offering of 55,000,000 shares of its common stock, subject to market conditions. The Company also expects to grant the underwriters an option to purchase up to 8,250,000 additional shares of stock at the underwriters’ election. Net proceeds from the offering are expected to be used for general corporate purposes, including bolstering the Company’s liquidity position, reducing indebtedness and funding the Company’s capital program.

FOMC Minutes Show Fed Fears Global Financial, Economic Risks, Tight Financial Conditions, China

Since the January FOMC statement, Janet has spoken twice and what seems like every Fed speaker has hit the headlines to explain their decisions (only to confuse the market more) leaving bonds and gold outperforming amid their clear confusion. The Minutes appear to confirm that confusion:

  • *FOMC MEMBERS AGREED DATA TOO UNCLEAR TO GAUGE RISKS TO OUTLOOK (confused)
  • *FED OFFICIALS CONTINUED TO EXPECT GRADUAL POLICY TIGHTENING (hawkish)
  • *MANY FED OFFICIALS AT JAN. FOMC SAW INCREASED DOWNSIDE RISKS (dovish)

So The Fed was unanimous in its decision to leave rates unchanged, downgraded the economic outlook, and was fearful of the global financial volatility - which in the last 3 days has all been solved.

Downturn Now Hitting The Refining Sector

China is hurting refiners and the global petroleum market in two ways then. First, the sudden shift in Chinese economic models has curtailed domestic oil demand, leading to falling oil prices and falling domestic demand for industrial oil derivatives. Second, to help Chinese refineries cope with the new harsh market conditions, China has started allowing many independent Chinese refineries to ship their output abroad.

Don't Confuse Genius With A Bull Market - 10 Steps To Redemption

Individuals are consistently promised that investing in the financial markets is the only way to financial success. After all, it’s so easy. Financial pundits across the country state the one simply buys a basket of mutual funds and they will make 8, 10 or 12% a year. Don’t confuse genius with a bull market. It’s not hard to make money in a roaring bull market. Keeping your gains when the bear comes prowling is the hard part.