New Normal

Will 2017 See Peak Fragility?

Markets remain more fragile than today’s volatility levels suggest according to BofAML's global equity derivatives group.

Visualizing The "Tectonic Shift" In The Markets' Narrative

"...we're at a phase in this UST / developed sovereign bond trade where previously acceptable conditioning (‘buy dips’; ‘get long-er duration because it just keeps working’; ‘never-ending bond inflows will always pause selloffs’ etc) are all being reset in real-time, and this behavioral shift is painful."

Trump, OPEC, & Game Theory

The role of the USA has changed sharply in terms of its likely behaviour under a Trump administration as it will no longer be a cooperative player, but a competitive one, where there are drastically different equilibrium conditions. When the dominant player changes its tack to claw back some the shared gains for itself, the game can rapidly change to a zero-sum or even negative-sum one.

One Hedge Fund's Warning: "What’s Good For The US In This Case, Is Not Good For Emerging Markets"

"To be bullish on emerging markets at this stage is to disregard the adverse dollar and interest rate environment, and build your investment thesis on the expectation that China will sustain the largest credit expansion in modern economic history." Most investors viscerally understand this, particularly within China, where capital outflows just hit new highs for the year - weakening the renminbi. "Historically, emerging markets have done well when global growth has been robust. But the world is changing."

"Markets Are Grasping At Trump's Answer To The New Normal"

"Monetary policy is no longer what’s driving these moves. Increasingly, central banks see themselves in a defensive role, reacting rather than dictating trends. The greenback’s rally is already forcing Asian and Latin American central banks to protect their currencies. More such moves may be in the offing if dollar gains continue....  But for now, after growing weary of monetary-led slow growth, markets are grasping at Trump’s answer to the New Normal."

FANG Stocks Lose Over $100 Billion In A Week

In the last week the so-called FANG stocks (FB, AMZN, NFLX, GOOGL) have stumbled. As earnings and outlooks disappointed, shareholders have awoken to the new normal low growth world and wiped over $100 bilion in market capitalization of the four horsemen of the Fed's wealth creation bubble.

Citi: "A Clinton Presidency Will Be Marked By Near-Continuous Investigations, Impeachment Risk"

"Mr Trump ‎may be heading for defeat but the prevalence of low trust, identity politics and demographic divides across the developed world suggests that he will not be the last non-mainstream candidate to come close to power.  Moreover, a Clinton presidency is highly likely to be marked by near-continuous investigations as well as the risk of impeachment." - Citi

The Story Of Durable Goods Is The Story Of The (Global) Economy

Here’s the part that economists, policymakers, and the media (all three largely indistinguishable from each other) miss – lack of true growth is contraction, and the worst kind because it isn’t recession contraction it is depression contraction. In the former, all is forgotten after a time; in the latter where even occasional positive numbers can be and often are highly deceptive, time is the biggest problem.

The Boredom Before The Storm

With all the surprising and/or disturbing things going on – Brexit, China’s soaring debt, US/Russia/China saber rattling, the, um, unique US presidential race, the cyber attack that shut down big parts of the US Internet – you’d think that an unsettled world would be reflected in skittish financial markets. Instead we’re getting the opposite...

Billionaire Clinton "Hillblazer" Pushes New Tax That Funnels Middle Class Money To Wall Street

Wall Street is maneuvering to propose and implement a new retirement tax on Americans under a Hillary Clinton Administration. Leading the charge is billionaire financial oligarch Tony James, who is COO of private equity giant Blackstone. Mr. James is a generous contributor to Hillary Clinton’s Presidential run, and is listed as a “Hillblazer” by her campaign for having raised at least $100,000 toward her candidacy.