Reflexivity

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Earnings "Beats" & The Warning In Today's GDP Data





"The riskiest things are now stocks and other investments perceived to be safe. One of the most popular categories in US investing are low volatility stock funds. But there is no such thing! If you think that a stock like Johnson & Johnson can’t go down, you’re wrong.. If you are waiting for the confirmation of a recession before taking actions to protect your investment portfolio, it will likely be far too late.”

 
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Hilsenrath's Take: March Rate Hike In Limbo, But "Fed Was Expecting A Slowdown"





Just days after Fed whisperer Goldman Sachs made its first (of many) revisions to its Fed rate hike schedule, and no longer expects a March rate hike (if still somehow seeing 3 rate hikes in 2016), moments ago Fed mouthpiece Jon Hilsenrath reiterated the Fed's latest favorite catchphrase - that would be "watchfully waiting" for those who haven't paid attention - , and said that today's jobs report leave the Fed in limbo when it comes to the March rate hike decision. More importantly perhaps he adds that "Fed officials were expecting a slowdown." However, when one adds the 105,000 in prior month revisions, was is this big?

 
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The Chinese Economy Is Sinking, Not Transitioning





China’s stock market is a small, relative matter; the more troubling imbalances lie and remain elsewhere. This change in production profitability is concerning on three fronts: China’s industry persists at only getting worse even though it has already reverted to a state not seen in a decade or more; consumer appearances may seem generally optimistic despite all that but only because industrial activity has yet to fully make adjustments through resources and labor; and financial trends are likely already at the stage of self-reinforcement within and without.

 
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The Real Enemy Of Investors





The real enemy of investors is not these fairly routine 10 or 20% downturns. The real enemy is the bear market that is associated with a recession or crisis, the one that knocks your equity block down by 40 or 50%. And actually it isn’t even the depth that is the real enemy. For most investors the enemy is time.

 
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Why Are There No Stock Buyers? Goldman Has Five Answers





1. who is brave enough to catch a proverbial falling knife?
2. US industrial activity is contracting and the consumer will soon follow
3. the plunge in crude will lead to further cuts in capex and a profit downturn across many industries
4. China’s economy is slowing and the RMB will soon be devalued
5. share prices need to fall further to offer an attractive risk-adjusted return given heightened economic and market risks

 
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Exclusive: Dallas Fed Quietly Suspends Energy Mark-To-Market On Default Contagion Fears





The Dallas Fed met with the banks a week ago and effectively suspended mark-to-market on energy debts and as a result no impairments are being written down. Furthermore, as we reported earlier this week when first nothing the rumor, the Fed indicated "under the table" that banks were to work with the energy companies on delivering without a markdown on worry that a backstop, or bail-in, was needed after reviewing loan losses would exceed the current tier 1 capital tranches.

 
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The Real Reason Behind The Santa Rally





Over the past 20 years, there's been an 87% correlation between S&P performance in 4Q and Holiday Sales. As of right now, the S&P in Dec is now on track to be up - a few days ago it wasn't. Furthermore, the S&P is now up +5.5% above its Sep average. If it holds there, the 20-year regression line below suggests that Holiday Sales will be up +5.4%.

 
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Step Aside Gold: There Is Something Else The Hedge Fund Community Hates Even More





While the fear and loathing of gold by the "smart money" and central banks has been extensively documented in recent years, another asset class is emerging as the "most hated" within the speculator community: treasurys, or rather, duration.

 
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"Outing" The Over-Confidence Of Our Central Bank Overlords





Confidence in central bankers is now hanging by a thread. Mario Draghi (and his fellow Goldman Sachs alum Mark Carney at the Bank of England, for that matter) might want to adopt a little humility before that thread snaps completely. It is always tragic when we filthy peasants stop banging rocks together momentarily to listen to the awe-inspiring intellects at the central banks, only to misunderstand them. Perhaps the real problem is one of overconfidence. Not our overconfidence. Theirs.

 
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Fed Mouthpiece "Explains" Janet Yellen's "Less Dovish" Hold





"Fed officials suggested they had become less concerned in recent weeks about turbulent financial markets and uncertain economic developments overseas ... open[ing] the door more explicitly than they have before to raising rates at a final 2015 meeting in December."

 
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The Three Things Goldman's Clients Were Most Worried About This Week





"Three topics dominated our client discussions this week: (1) Hedge fund performance in the wake of the collapse in Valeant Pharmaceuticals (VRX) during the past five days; (2) cash return to shareholders, especially buyback activity; and (3) 3Q results."

 
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Futures Continue Surge On Global Draghi Euphoria, Tech Earnings





Yesterday morning, when previewing the day's tumultuous events, we said that "Futures Are Firm On Hope Draghi Will Give Green Light To BTFD." And boy did Draghi give a green light, that and then some, when his press conference unleashed one of the biggest one-day US equity rallies in 2015. This morning it has been more of the same, with global market momentum on the heels of Draghi's confirmation that Europe's economy is again backsliding (it's a good thing, if only for stocks), leading to momentum for US equity futures, which together with soaring tech/cloud, earnings if no other, are on their way to take out recent all time highs.

 

 
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3 Things: Worse, Worst, Or Worst-er





"The basic assertion is the following: the U.S. economy is not showing signs of entering into recession, thus stocks are not at risk of falling into a sustained bear market. Unfortunately, this conclusion is not necessarily true. For history has shown on numerous occasions that you do not need to have an economic recession looming on the horizon to see U.S. stocks fall into a bear market."

 
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