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Goldman Warns Of "One Of The Largest VIX Dislocations On Record"

The VIX has increased on nine consecutive sessions, a new record; and the term structure of SPX implied volatility is now steeply inverted, pricing in a potential wide swing over election week. However, as Goldman Sachs notes, although the VIX is up, the market hasn’t actually been moving that much and that has led to one of the largest VIX dislocations on record. In fact, VIX has overshot its typical beta to the SPX by 5 vol points.

Unexpected Chart Of The Day: USA Default Risk Tumbles As Trump Gains

While every establishment politician and mainstream media pundit has proclaimed the end of the world as we know it if Donald Trump were to win next week, it appears - perhaps throwing off the narrative of exactly who is the "most dangerous" candidate - that the risk of the US Dollar has dropped along with Trump's resurgence...

VIX Hedges Building Fast After Scare-less October

Octobers are supposed to be the scary, and not only because of Halloween. Market observers like to point out how much more volatile October is relative to other months. Not so in 2016 as Goldman notes this was the 4th lowest average VIX since records began. However, the last few days have seen hedgers extremely active ahead of next week's election (despite one of the lowest levels of S&P 500 realized volatility recorded).

BOE's Carney May Announce Decision To Step Down This Week

According to several British newspaper, including The Times and Mail Online, Mark Carney’s "self-imposed deadline" for declaring whether he will stay in office beyond 2018 is fast approaching, and the central banker may decide to step down as soon as next week. The 51-year old Canadian may announce his decision "within days" at his next scheduled public appearance on Thursday.

Global Stocks, US Futures Modestly Higher As Debate Digested, Draghi Eyed

Global stocks were modestly higher, before the European Central Bank gives its policy update, while investors weigh mixed earnings results. Asian stocks rise, U.S. equity-index futures are little changed.  The euro touched its weakest level since July and stocks in the region fell after their first back-to-back gains in two weeks.

Deutsche Bank "Shocked" At "Disorderly, Dramatic" Pound Flash Crash

According to Deutsche Bank, the GBP move has been "shocking", and it will only get worse. The German bank's FX analyst George Saravelos writes in a note to clients that Deutsche Bank expects the pound to revisit lows seen during the Asia session and forecasts GBP/USD to trade at 1.15 by next year.

Citi Slams "Increasingly Bizarre" Presidential Race As Morgan Stanley Unveils Trump "Contingency Plans"

Citi said that its "base case is for a Clinton victory and mostly continuity in policies, which would leave U.S. and global growth expectations relatively unchanged,” while describing the U.S. contest as “increasingly bizarre.” Bizarre or not, earlier this morning Morgan Stanley, whose base case is still a Clinton victory has presented several "contingency planning" scenarios in case Trump does win.

"Eight Election Trades For November 8th"

On November 8th, the US Presidential election will take place. Below Bank of America lists eight trades, all specific to the election, some applicable to whoever wins, some dependent on the election result:

"The Only Asset That Matters Right Now" - Treasury Correlations Have Never Been Higher

As a result of an unprecedented scramble for duration over the past year courtesy of global NIRP, the sensitivity to bond yields is at its all time highs across all assets, which means whatever the 10Y does, everything else will do, especially as a result of the ongoing rout in risk-parity and systematic funds which create a positive selling (or buying) feedback loop.

"It Ain't Working" - Axel Merk Lashes Out At The Fed's Failed Inflationary Focus

It ain't working. Eight years after the outbreak of the financial crisis, central bank chiefs suggest they have saved the world, but have they? We argue central banks have become part of the problem, not the solution. At its core, their indoctrinated focus on inflation may well do more harm than good, with potentially perilous implications for investors.

Negative Rates & The War On Cash, Part 1: "There Is Nowhere To Go But Down"

As momentum builds in the developing deflationary spiral, we are seeing increasingly desperate measures to keep the global credit ponzi scheme from its inevitable conclusion. Credit bubbles are dynamic - they must grow continually or implode - hence they require ever more money to be lent into existence. As the peak of a credit bubble is reached, all these necessary factors first become problematic and then cease to be available at all. Past a certain point, there are hard limits to financial expansions, and the global economy is set to hit one imminently.

Q2 Earnings Review – Hockey Stick Hopes Remain

There is one commodity that Wall Street always has in abundance, “optimism.” When it comes to earnings expectations, estimates are always higher regardless of the trends of economic data. The problem is that the difference between expectations and reality have been quite dramatic.

Deutsche Bank Calculates How Much Of The S&P's Value Is Due To Central Banks

If the ERP is responsible for 92% of the S&P500 move since 2012, or just over 800 points, that would imply that central bank policies are directly responsible for approximately 40% of the "value" in the market; any moves to undo this support could result in a drop that leaves the S&P in the neighborhood of ~1,400.