Risk Premium

US Futures Rebound Despite Global Stock Weakness As USDJPY Ramps HIgher

After breaking a multi-year stretch of 9 daily record highs in the Dow Jones, overnight global markets saw some early weakness with Asian stocks retreating after BOJ chief Kuroda dashed hopes for so-called helicopter money, triggering yen’s steepest rally in a month and pulling the Nikkei lower by 1.1%. This however did not last long, and around the European open the traditional ramp in the USDJPY helped European equities shrug off early downside, while US equity futures have already recovered half of yesterday's losses.

What Will It Take For Geopolitical Shocks To Worry Investors?

“...we are living in unprecedented times of geopolitical and social uncertainties. For investors, it is really hard to quantify those risks.. In this age of monetary policy uber alles, every setback somehow gets sold as a buying opportunity. There are no long-term ramifications ascribed to anything,” So what will it take for risk appetite to shift?

234 Billion-Dollar-Managing Fund Unclear Why Market Ignoring The Biggest Risk

"It's unclear why this hasn't been a significant driver of markets across the board... maybe we just haven't hit the threshold," exhorts $234 billion bond fund Invesco's Ray Yu. The head of the firm's macro research told Bloomberg that a general theme of political risks increasing or political risk premium has been prevailing for the last few years and we are now seeing tension between established political regimes and populist movements.

With The S&P 140 Points From Its 2018 Year End Target, Goldman Is Confused

Goldman found itself in the confusing position of being far more bearish than its clients, predicting that the S&P will rise less than 150 points over the next two and a half years and has to explain the reasons behind its bearishness, as well as the reason why it expects a sharp 5-10% drawdown in the S&P in the coming months.

Turkish Central Bank Pledges "Unlimited Liquidity" On Bank Run Fears: Wall Street's Take

On Friday, the Turkish Lira suffered its biggest daily drop in 8 years, and added to its woes after having lost more than 40% of its value since the end of 2012. So in an attempt to stabilize the financial system, earlier today, in a terse, 7-bullet statement, Turkey’s central bank vowed to provide "unlimited liquidity" to banks, while Deputy Prime Minister Simsek said nation’s macroeconomic foundations remain “solid.” Meanwhile, Wall Street's analysts chimed in on what they expect to happen in the coming days.

UBS' Trading Roadmap For The "Day After" Brexit

Moments ago we presented a contrarian thesis from Greg Peters of how markets would react to a Leave vote (and by impliocation, Remain). Next, we go back to a more conventional model of how assets would react, and present "a roadmap for the 'Day After'" from UBS, which seeks to answer the question "at what level would we buy or sell each key asset class in either a Remain or a Leave scenario?" It then show ranges of the potential near-term market reactions.

Short-Term VIX Premium Soars To Highest Since August Crash

Despite the exuberant rally in stocks following the dreadful murder of UK lawmaker Jo Cox last week, investors are anything but convinced that everything is awesome. As polls show the Brexit vote remains very evenly-matched, so traders have piled into short-term VIX protection (covering the next few days) spiking from 11 to 22 in the last week. This is the widest spread to 'normal' VIX since the August crash following China's turmoil-inducing currency devaluation.

"Reality Of The Virtual" - The Most Bizarre, Post-Modern Analysis Of The Fed Yet

"The problem is not only economic, but also linguistic. For years now, it can be argued, the Fed’s role has extended from inflation and growth to stability of the markets and shifted towards maintaining symbolic order. Since the moment when unwind of the stimulus became the main theme, Fed has been acting increasingly as a symbolic authority. This is the reality of the virtual -- the real effects produced by something which does not fully exist. In this way the Virtual acts as the stable focal point around which all elements circulate."

Sterling Volatility Explodes To Record High As Brexit Looms

With two polls being unleashed on the markets today indicating the largest lead for Brexit over Bremain yet with regard the UK referendum, it seems FX traders at least have begun to wake up to the short-term uncertainties a "leave" vote may entail. A short-term measure of expected price swings for the pound climbed for a third week as traders sought protection as two-week implied volatility, a period that covers the June 23 voting date, closed at its highest on record today.

Goldman Turns Downright Gloomy, Warns Market "Despair" Is Coming, Prepare For A Major Drawdown

As Goldman warns in a note overnight, "Large equity drawdowns often mark the end of an equity cycle and tend to coincide with a recession or financial market/geopolitical shock or a combination, which tend to result in a sharp equity correction driven by a decline in both earnings and valuations." As it turns out, Goldman thinks precisely such a "drawdown" is coming...

These Are The Two Most Important Questions Facing The Market

The two most important questions by far, those whose answer will determine not only the near term return of the S&P, but also global equity markets as well as that all-important commodity, oil, are the  following: Can the oil price hold up even as the dollar rises;  and, Can the CNY depreciate without hurting asset prices? Here is Deutsche Bank's attempt at an answer.