recovery

Frontrunning: October 16

  • Dallas County May Declare State of Disaster From Ebola Virus (BBG)
  • Markets on edge after worst turmoil in four years (Reuters)
  • Central bankers may have no quick fix as markets swoon, economy weakens (Reuters)
  • Risk of Deflation Feeds Global Fears  (Hilsenrath)
  • U.S. health official allowed new Ebola patient on plane with slight fever (Reuters)
  • Texas Hospital Fights Allegations About Ebola Protocols (BBG)
  • Treasuries Gain as Oil Drops Below $80 While Stocks Slide (BBG)
  • Greek Bonds Slump on Bailout Concern as Spain Misses Sale Target (BBG)
  • White House shifts into crisis mode on Ebola response (Reuters)
  • Obama Confronts Slippery Slope as Islamic State Advances (BBG)

Everything Breaks Again: Futures Tumble; Peripheral Yields Soar, Greek Bonds Crater

Yesterday afternoon's "recovery" has come and gone, because just like that, in a matter of minutes, stuff just broke once again courtsy of a USDJPY which has been a one way liquidation street since hitting 106.30 just before Europe open to 105.6 as of this writing: U.S. 10-YEAR TREASURY YIELD DROPS 15 BASIS POINTS TO 1.99%; S&P FUTURES PLUNGE 23PTS, OR 1.2%, AS EU STOCKS DROP 2.54%.

Only this time Europe is once again broken with periphery yields exploding, after Spain earlier failed to sell the maximum target of €3.5 billion in bonds, instead unloading only €3.2 billion, and leading to this: PORTUGAL 10-YR BONDS EXTEND DROP; YIELD CLIMBS 30 BPS TO 3.58%; IRISH 10-YEAR BONDS EXTEND DECLINE; YIELD RISES 20 BPS TO 1.90%; SPANISH 10-YEAR BONDS EXTEND DROP; YIELD JUMPS 29 BPS TO 2.40%.

And the punchline, as usual, is Greece, whose 10 Year is now wider by over 1% on the session(!), to just about 9%.

As US Politicians Consider Travel Bans, Istanbul Quarantines Hospital Of Suspected Ebola Patient

Istanbul's Marmar University Training and Research Hospital is not accepting new patients after, as Daily Sabah reports, a person suspected of being infected with Ebola has been quarantined. The patient, who arrived by plane from Ivory Coast, is suffering high fever and nausea. While Lagos, Nigeria was CDC Director Frieden's worst nightmare with regard Ebola contagion, we suspect Istanbul is a close second with over 14 million people living there. This news comes as US politicians begin to call for visa restrictions and travel bans from infected nations.

Fed Hits Rumor Panic Button: "Sources" Confirm Yellen's Confidence In US Recovery

It would appear The Fed is in panic mode. According to two "people familiar with her comments" - who asked not to be named because the meeting was private last weekend:

  • *YELLEN SAID TO VOICE CONFIDENCE IN EXPANSION AMID FOREIGN RISKS

Of course, this is now the last thing that markets want to hear since it means she is less likely to unleash QE4.

And The GDP Downgrades Begin: Goldman Slashes Q3/Q4 GDP

BOTTOM LINE: Business inventories rose less than expected in August. In light of the disappointing September retail sales report and slower-than-expected inventory growth in August, we reduced our Q3 GDP tracking estimate by three-tenths to +3.2%. We also moved our Q4 GDP forecast down a quarter point to +3.0%.

Retail Sales Bloodbath: Control Group Has First Decline Since "Polar Vortex"

It may come as a shocker to some, but hopefully not to anyone here, that September retail sales were arguably the worst of the year excluding the "abortion" that was the Polar Vortex. The simple reason: after the US consumer loaded up on debt in the spring and the summer, the payback hangover has finally hit with the payment due in the mail resulting in a collapse in revolving credit as reported previously, and as the September retail sales just confirmed.

Bank Of America Posts Q3 Loss, Slammed By Yet Another "One-Time, Non-Recurring" Legal Charge

Remember when banks said to ignore "one-time, non-recurring" legal fees because they are going away? Well, JPM yesterday showed they aren't. But it was Bank of America today which was slammed with the latest whopping $5.3 billion pretax litigation charge, which pushed its EPS once again into the red. But wait, there's great news: the loss of $0.01 is really a $0.42 non-GAAP adjusted profit if one "adds back" the $0.43 in litigation charges.

12 Charts That Show The Permanent Damage That Has Been Done To The US Economy

Most people that discuss the "economic collapse" focus on what is coming in the future.  And without a doubt, we are on the verge of some incredibly hard times.  But what often gets neglected is the immense permanent damage that has been done to the U.S. economy by the long-term economic collapse that we are already experiencing.  But because unprecedented levels of government debt and reckless money printing by the Federal Reserve have bought us a very short window of relative stability, most Americans don't seem too concerned about our long-term problems.  They seem to have faith that our "leaders" will be able to find a way to muddle through whatever challenges are ahead.  Hopefully the following 12 charts will be a wake up call.

Bob Janjuah Targets S&P 1770, Says "Markets Are Now Collectively Reconsidering Reality"

The fact that the US economy is nowhere near strong enough to offset the deflation it would import and is already importing through USD strength vs EUR and JPY in particular, has now become a key market theme. Crucially, markets are now collectively having to consider what Bob Janjuah thinks is the reality – that annual trend global growth is converging down at around 2.5%, well short of the pre-crisis levels of over 4%. Janjuah believes "we will see UST 10yr yields closer to 1.5% before they get anywhere near 3.5%, with 10yr Bund yields at 50bp; and a weekly close on the S&P 500 below 1905 was and remains his key pivot point - targeting 1770 as the next stop."