"It has been a year since the last 10% US equity market drawdown. We forecast S&P 500 will peak in 1Q at 2400 and end the year at 2300. Given extremely low volatility, investors should replace long equity positions with calls or sell unlikely upside to fund protection."
Bitcoin is a primary means of capital flight out of China. How long will that last? Here’s one key thought on bitcoin from the article: “OKCoin is among cryptocurrency exchanges that has recently taken steps to halt bitcoin withdrawals amid efforts to clamp down on capital outflows.” When China launches its own cryptocurrency, will it ban Bitcoin transactions? If so, what happens to the price of Bitcoin?
It is ironic that when the bubble pops, given all the Central Bank infused liquidity to create this bubble paradigm, that all liquidity dries up, and all the sudden there is no real liquidity at all in the system when everyone direly needs it!
Germany's central bank reported its smallest profit in more than a decade in 2016 after setting aside a record amount of provisions against future losses on the bonds it is buying as part of the ECB's stimulus programme, its annual report showed on Thursday. "It is fair to ask ... when we can take our foot off the monetary policy pedal," Bundesbank President Jens Weidmann said.
Despite desperate attempts to jawbone March rate-hike-odds higher, because as Master said last night "we don't want to surprise the markets", Fed Funds Futures imply just a 36% chance (down from a week ago). That suggests, if The Fed is serious about March, that today's minutes must be spun towards that narrative. Here are the five key areas to watch for...
The “Greater Fool Theory” surmises there is always a “greater fool” than you in the market to sell to. For Wall Street, that greater fool is you. Haven’t you ever wondered why Wall Street never tells you to “sell and raise some cash?”
The Federal Reserve has pursued the unprecedented monetary policy of lowering rates to zero and increasing their portfolio from 500 billion to over 4 trillion. But as the Fed reminds us, there is a cost.
"When I was Chair of the Federal Reserve I used to testify before US Congressman Ron Paul... we had some interesting discussions... We would never have reached this position of extreme indebtedness were we on the gold standard, because the gold standard is a way of ensuring that fiscal policy never gets out of line."
While Trump seemingly remains the only topic worthy of discussion blanketing the airwaves, as the following chart from Goldman demonstrates, it has been China where policy uncertainty has stealthily exploded in the past three months.
In this holiday-shortened week, attention will be on the US FOMC minutes, housing data and consumer confidence. There will be GDP, PMI and inflation releases across the Euro Area as well as the latest Greek Eurogroup meeting. Look for GDP and public finances data in the UK.