Monetary Policy

"We May Be Very Close To The Turning Point": Selloff Blamed On This Note From JPM's Marko Kolanovic

"Growth in short volatility strategies in a self-fulfilling manner suppresses both implied and realized volatility. This in turn prompts other investors to increase leverage, and those that hedge with options lose out and eventually throw in the towel. The fact that we had many volatility cycles since 1983, and are now at all-time lows in volatility, indicates that we may be very close to the turning point."

The Fed Remains On Course... To Trouble

"If the Fed were to shed just 64 percent of its current bond holdings, the base money supply in the US banking system would be completely wiped out, making the banking sector effectively illiquid. In this process, US interbank interest rates would presumably spike, sending shock waves through the economic and financial system, not only in the US but worldwide."

Draghi Did Not Keep His Promise

"The threat to the euro is today greater than it was in 2012, and for that Draghi has completely failed. It comes not in Target II imbalances and Greek default penalties, but in political upheaval tied directly to what it is that Mario Draghi can’t seem to figure out. He can promise all he wants, but Europe’s fate will not be determined by his euro."

FOMC Preview: Just 2 Things To Watch For In Today's Fed Statement

With the market pricing in 0% chance of a July rate hike, and with no Yellen press conference to follow, there are just two things to watch for in today's FOMC statement: (1) any hints that Fed balance sheet reduction will be announced in September and (2) adjustments to the language discussing the recent disappointment in the rate of inflation (after 4 consecutive CPI misses).

Beware The Ides Of October...

"We are are waiting for Mr. October to step up and knock the risk markets for a loop, however, resulting in a nice fall correction (pun intended).  We believe many factors will be converging  by then, including..."

Five Years Ago Today...

“The ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”

Global Stocks Jump, Crude Booms As Yellen Looms

S&P futures were fractionally higher (+0.1% to 2,476) with all eyes on the Fed's rate decision as investors await another earnings deluge from companies including Facebook, Coca-Cola and Boeing. Asian and European shares were also higher, the Dollar rebound continued while oil rose above $48 as copper hit a two year high.

The Death Cross Of Central Bank Credibility

With no expectations of a rate-hike this week, and traders rapidly giving up on The Fed's dream of a steadily higher rate trajectory, a funny thing happened in the markets...

S&P Futures Bounce As VIX Hammered, Europe "Euphoric"

After sliding to 3 month lows on "car cartel" concerns yesterday, European stocks have rebounded after three days of declines, while oil extended gains after Saudi export cuts, with Brent rising above $49 and WTI just shy of $47. Asian stocks fell while S&P futures rose 0.2% to 2,473, helped by a tumbling VIX which was hammered early by 3% in early Tuesday trading, down to 9.17.

PIMCO Fears "The Coming Financial Volatility"

"...central bankers and bond investors have something in common: both worry that the current period of extremely low volatility is neither sustainable nor desirable...For investors today, the lesson is clear: reducing the scale of risk exposure is the right way forward."