New Normal

Global Stocks Slide, Futures Tumble On Confusion Unleashed By "Uber-Dovish" Fed

What was one "one and done", just became "none and done" as the Fed will no longer hike in 2015 and will certainly think twice before hiking ahead of the presidential election in 2016. By then the inventory liquidation-driven recession will be upon the US and the Fed will be looking at either NIRP or QE4. Worse, the Fed just admitted it is as, if not more concerned, with the market than with the economy. Worst, suddenly the market no longer wants a... dovish Fed?

The Real Reasons Why The Fed Will Hike Interest Rates

With a complex and disaster-prone system of interdependence causing social strife and chaos, why not just simplify everything with a global currency and perhaps even global governance? The elites will squeeze the collapse for all it’s worth if they can, and a Fed rate hike may be exactly what they need to begin the final descent.

Traders Fear Second China State Entity Default As Aussie Leading Index Plunges, PBOC Devalues Yuan

Chinese equity markets are holding modest 'bounce' gains after two days of carnage. After 3 days of stronger fixes PBOC devalued the Yuan but the Ministry of Finance made it clear that "devaluation is not aimed at boosting exports," which makes us wonder, is it aimed at selling Treasuries? No additional direct liquidity injections but anxiety grows as China National Erzhong Group Co. may miss an interest payment later this month after one of its creditors filed a restructuring request, putting it at risk of becoming the second state-owned company to default in the nation’s onshore bond market.

USDJPY, Nikkei 225 Tumbles After Disappointing "No Change" From Bank Of Japan

We noted earlier the premature exuberation in USDJPY and Nikkei 225 - despite most of the sell-side not expecting anything from The BoJ - and it appears the banks were right and the FOMO traders wrong. The Bank of Japan made no change to its monetary policy (no increased buying, no shift in ETF allocations, and no NIRP for now). BoJ members spewed forth their usual mix of "everything is awesome" and "any quarter now" for the recovery but the market wasn't buying it. That leaves only one thing left to cling to for a "we must buy" crowd - no change today 'guarantees' moar QQE in October.

Goldman Warns: VIX Is Not Going Back To Low-Teens, No Matter What Fed Does

While equities do tend to be lower one-, two-, and three-months after a Fed rate hike, S&P 500 realized volatility and VIX levels have been fairly well contained. However, Goldman Sachs warns not to expect VIX to calm down and settle back into the low teens like it was from 2013 to mid-August 2015. New normal trend VIX levels should now be 4-5 points higher than the average level of 14 experienced in 2013-2014 given the current state of the economy.

EM FX Bloodbath Continues As Lira Slides To New Low, Tenge Plunges

The EM FX carnage continues unabated heading into the FOMC as the Kazakh tenge plunges for a seventh consecutive day and the beleaguered Turkish lira slides to a new low as an obstinate central bank and an extraordinarily unstable political situation conspire to undermine confidence ahead of elections scheduled for November 1.

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The Decline Of Oil: Head-Fake Or New Normal?

Once welfare spending and subsidies of Elites collapses, the social and political stability of oil exporters becomes extremely fragile. The leadership of oil exporters without a stash of USD to tide them over as oil prices crash would be wise to start building their bug-out island fortresses.

Developed Market Stocks & Bonds Have Never (Ever) Been This Expensive

Thanks to the new normal world of extremely loose monetary policy and extraordinary accumulations of financial assets by Central Banks, Deutsche Bank finds that we live in a period not of selectively expensive global asset prices, but of record "expensiveness" across developed market bonds, stocks, and real estate.

Futures Soar After Dramatic Chinese Last Hour Intervention Scrambles To Mask Latest Terrible Trade Data

The last time we looked at Chinese stocks, just a few hours ago, they were on pace to close back under 3000, following the latest collapse in trade, where in August exports dropped 5.5% (last -8.3%) while imports tumbled -13.8% in dollar terms (worse than the -8.1% prior). As the Reuters chart below shows, this was the 10th month in a row of declines and the worst stretch since the 2008 crisis, confirming China will need far more currency devaluation to stabilize the trade pain. And then Chinese authorities intervened with gusto, waiting until the start of the afternoon session, at which point a massive buying orgy ensued, and pushed the SHCOMP from down more than 2% to close at the day highs, up some 2.9%!

Japan's Nikkei Flash-Smashes 400 Points Higher In Milliseconds After Abenomics Gets Three-Year Extension

Whether it is due to thin holiday liquidity, due to the BOJ intervening just ahead of its usual time, because Japan's "legendary" Twitter trader "CIS" just went bullish (again), because prime minister Abe just learned he would be reinstalled as head of his ruling LDP party because no challenger had emerged unleashing three more years of unchallenged Abenomics, because Japan's Q2 GDP was just revised modestly higher (to a less negative number) or just because this is how the New Normal rolls, moments ago the Nikkei flash smashed higher some 400 points higher, in a well-choreographed algorithmic frenzy, to take out Friday's high stops.