Monetary Policy

Qatar Crashes In Escalating Gulf Crisis; Oil Fails To Rebound As Global Stocks Dip

S&P futures point to a slightly lower open ahead of today's US non-mfg ISM and Service PMI data. European shares fall, while Asian shares are little changed. Several European countries are closed for Whit Monday leading to subdued trading. Following the latest unexpected Gulf Crisis overnight, in which Gulf nations cut all diplomatic relations with Qatar amid stunning allegations of funding terrorism, oil spiked but has since pared almost all gains.

"The Western Status Quo Political System Is Collapsing Into 'Something Else'"

"...as the Western status quo political system collapses into Something Else, how is it possible that our capital markets are not similarly gripped by volatility and stress? What is responsible for breaking the transmission mechanism from political risk to market risk? I’ve got a macro answer and I’ve got a micro answer..."

Here Are The Seven "Black Swans" SocGen Believes Could Shock Global Markets

"policy is the main potential source of both upside and downside risk, be it with respect to fiscal expansion, trade policies, wage outcomes, euro area reform or monetary policy. As China tightens policy, what happens next in the US has become critical, we look for modest US tax cuts but believe that, Trumpflation insufficient to offset fading Xiflation." - SocGen

RBC: "The Entire World Is Long Tech, Short Energy, And Now It Gets Interesting"

"Everybody in the equities-universe it seems is aware of this dynamic, and fundamental folks are increasingly nervous about the potential for a reversal in mega ‘pain trade’ style—because it seems the entire world is ‘LONG TECH AGAINST SHORT ENERGY’…people are ready to pounce on this trade."

"If You Blinked, You Missed The Euro Correction"

"The euro zone has survived the worst that could be thrown at it and the narrative of the currency union breaking up is stale. Euro implied volatility has slumped as a result – it’s now perceived to be the third-most stable G10 currency, after CAD and CHF, versus the dollar based on such metrics. The euro can be a haven currency again."

Quiet Month End Markets Hide "Below The Surface" Fireworks

It has been another quiet session for global equity markets, with S&P futures flat, as are European and Asian stocks, which is perhaps odd, as there was quite a bit of newsflow and, in the case of China, outright fireworks.

Paul Singer Warns "All Hell Will Break Loose"

"Given groupthink and the determination of policy makers to do ‘whatever it takes’ to prevent the next market ‘crash,’ we think that the low-volatility levitation magic act of stocks and bonds will exist until the disenchanting moment when it does not. And then all hell will break loose." - Paul Singer

Fitch Warns Biggest Threats To The Dollar's Global Supremacy Are At Home

Two pieces of legislation currently working their way through Congress are the Federal Reserve Transparency Act (FRTA) and the Financial Choice Act (FCA). Fitch warns that these transparency-seeking bills, if implemented, would diminish the appeal of the dollar as a reserve currency over time.

The Internet Helped Kill Inflation In America, Says Credit Suisse

"...what’s really killed inflation clearly isn’t the Fed’s monetary policy but the Internet – it’s the sharing economy, the network economy it’s the uber-deflationary companies like Uber, Amazon, Airbnb and the like who have transformed most companies and most sectors into price takers rather than price makers."

Greek, Italian Risks Weigh On European, Global Markets; Oil, Gold Slide

Tuesday's session started off on the back foot, with the Euro first sliding on Draghi's dovish comments before Europarliament on Monday coupled with a Bild report late on Monday according to which Greece was prepared to forego its next debt payment if not relief is offered by creditors, pushing European stocks lower as much as -0.6%. However the initial weakness reversed after Greece denied the Bild report. S&P futures are fractionally lower

Watch Live: Draghi Speaks At Euro Parliament, Makes Case For More Easing

In today's only major risk event, at 3pm CET (9am ET) Mario Draghi will hold his quarterly hearing before the European Parliament, and his final scheduled appearance before next week’s monetary-policy decision, in which the ECB president will be pressed about his plans for stimulus withdrawal.