Reflexivity

The Moment The Fed Discovered Reflexivity

"Asset prices moved within a fairly narrow range for much of the intermeeting period, al­though volatility increased somewhat in the last few days of the period as market participants focused on central bank communications in the United States and abroad."

Fed Minutes Expose Hawkish Fed Fearful Of "Losing Credibility", No Hike Was "Close Call"

With three dissenters and no good reason (based on their own data) to stay on hold in September, The Fed chickened out, but jawboned the hawkish tilt afterwards. With Nov odds at 19% and Dec at 66%, the USD and Treasury yields were falling dovishly into the Minutes, this is what the Fed said “Several participants expressed concern that continuing to delay an increase in the target range implied a further divergence from policy benchmarks based on the committee’s past behavior or risked eroding its credibility” especially because recent data supported the committee’s outlook, the minutes stated.

How The "Perverse Economic Effects Created By ETFs" Are Setting Up The Next Crash

1. In a world of manic factor crowding via the exponential growth of cheap passive index and smart beta products, get ready for the class-action lawsuits in a future-state. And:
2. this is BEYOND GOLD as an example of “tail wagging dog” / “echo chamber” / “feedback loop amplification” from the market structure shift experienced within the industry over the past 10+ years.

Head Of "World's Most Bearish Hedge Fund" Explains Why The VIX Is Now Broken

"When nervous investors buy VIX ETFs they actually push down the VIX, and confident investors who are short VIX ETFs encourage it to spike. Given that VIX measures often are used to guide the risk that algorithms can take, this seems very contradictory to me. I would use extreme caution when using the VIX as part of any investment process."

Something Strange Emerges When Looking Behind The "Brexit" Bookie Odds

When one looks at the actual dynamics within the bookies, an odd divergence emerges: "Although Ladbrokes has received a higher volume of bets to leave the EU, those making a punt on remain were placing higher financially larger" - the average stake on a bet to remain was £450, compared to £75 on a bet to leave."

Brexit: All Eyes On European Banks

England’s upcoming vote on June 23rd may be the first of several votes that reveal the deep flaws embedded in the European Union. In particular, Europe’s undercapitalized and overleveraged banks are dangerously exposed to rising political unrest.

Restoration Hardware Stock Crashes After Company Slashes Guidance

The problem, just like last quarter, is that the dramatic drop in guidance has little to do with the company's (once again) sliding stock price, or any of the excuses listed above, and everything to do with the US consumer, who contrary to Wall Street expectations, simply refuses to come out of his shell and spend.

Why Stocks Keep Rising Despite Another Rate Hike On The Horizon: One Explanation

"It would seem to us that the equity outcome in the weighted average view is a lot less positive. There are few S&P 2500 optimists even at 2.5% growth but plenty of S&P 1600 or less pessimists on the negative scenario. Bottom line – one more and pretty much done is unlikely to be as risk positive as recent asset market prices action suggests."