Monetary Policy

When Narratives Go Bad

There’s a … tiredness … to the status quo Narratives, a Marie Antoinette-ish world weariness that sighs and pouts about those darn peasants all the way to the guillotine.

Weekend Reading: Central Banks Save The World

For now, Central Banks have seemingly accomplished the rescue of the entire global financial system by one again lofting asset prices higher. The problem, however, remains the underlying fundamental issues of weak earnings, slowing economic growth and a collapsing Chinese economy. There is a point, unknown to anyone currently, where the failure of monetary policy will occur.

Trader Asks: "Remember The All Time Highs After Bear's Subprime Funds Blew Up?"

One of the most enduring legacies of the financial crisis is the death of the credible notion that traders flock in and out of "safe havens." As Bloomberg's Richard Breslow notes, investors don't particularly care to seek safety. Why waste the effort when the central banks will be buying the dip if you don't.

S&P Back To All Time Highs After 17 Consecutive Weeks Of Mutual Fund Outflows

The biggest fund flow surprise was in the space of equity funds. According to Lipper stock funds - including both mutual and ETF funds - posted yet another week of outflows totaling $1.4 billion. The optimism of exchange-traded fund investors that the Brexit vote might not derail stocks was nonetheless overwhelmed by a long-running trend of withdrawals from stock mutual funds. And while stock ETFs took in $4.6 billion in the latest week ended Wednesday, U.S.-based stock funds posted $6.1 billion in outflows in the latest week, their 17th week of cash withdrawals, according to Lipper data.

US Futures Rebound After Volatile Session, All Eyes On June Payrolls

In a session where bleary-eyed traders followed the all-night tragic developments out of Dallas and initially sold off risk assets, it is good to see that some normalcy prevailed with the traditional post Europe-open futures ramp, which was further assisted by the successful resolution of the Dallas standoff, which has pushed futures modestly higher ahead of today's main event for markets, the June payrolls report due in under two hours.

The Reason For The Relentless Scramble For US Corporate Debt In One Chart

While the $5.9tr US IG corporate bond market represents only 12% of that global market, it is now responsible for 33.0% of its total (effective) yield payment. In other words, nearly one in three (global) dollars paid out in the global IG broad market is paid to investors in the US IG corporate bond market.

Gartman: "You'd Have To Hold A Gun To My Head To Be A Buyer"

"I find it very difficult to be anything other than modestly bearish. I trade only from my own account and I am modestly short of equities generally and I think that's the proper place to be. It's a little scary to be bullish at these prices when it's the Fed and monetary authorities who are sponsoring share prices (going) higher – it can't last for very long. If you have to buy, the only place to be a buyer is the U.S. but you'd have to hold a gun to my head to be an aggressive buyer. I'm quietly, modestly net short and I feel reasonably comfortable being that way."

European Stocks Storm Higher As Bank Fears Subside; US Futures Flat

After yesterday's afternoon surge in US stocks, facilitated by the "uncertain" Fed's FOMC Minutes, today the rest of global market are playing catch up with European stocks rebounding from one week lows, snapping the longest losing streak in three weeks, as well as Asia where most stock markets climbed, led by gains among energy producers as crude prices advanced, while a stronger yen weighed on Japanese shares.

Just One Word Describes This Fed

A simple word count of the Fed's minutes reveals that the prevailng mood at the Federal Reserve right now can be described with just one word.

FOMC Minutes Reveal Fed Wanted More Info Before Hiking

Since June's FOMC statement, bonds and bullion have been well bid with stocks unchanged as rate-hike hopes collapsed. For those looking to glean insight from a confused Fed's minutes today, we wish them luck. As WSJ notes, the minutes can prove to be dated and that will be especially so given that Brexit occurred just days after, so the best we could hope for from today's minutes was "what-ifs."

  • *ALMOST ALL FED OFFICIALS SAW MAY PAYROLLS RAISING UNCERTAINTY
  • *SOME OFFICIALS SAID LOWER PAYROLLS MAY SIGNAL BROADER SLOWDOWN
  • *FOMC: PRUDENT TO WAIT FOR CONSEQUENCES OF U.K. VOTE

So nothing new whatsoever but definitely a Fed that is increasingly facing the realization that normalization is over as we draw readers' attention to the fact that the wordcount for 'uncertain' soared to 38.

World's Biggest Asset Manager Downgrades European Banks To Sell, Expects Global Slowdown

"We have trimmed our global growth expectations, and now expect a modest slowdown over the next 12 months. We see risk of a UK recession and European slowdown, as Brexit uncertainties weigh on sentiment. Our new BlackRock Macro GPS “nowcasting” indicator suggests Brexit-related uncertainty has already started to negatively impact UK and global economic growth. We have downgraded European stocks to underweight, with a negative view of the eurozone banking sector."