Russell 2000

Frontrunning: November 22

  • Record highs for Wall Street quartet send other stocks higher (Reuters)
  • Oil prices rise to highest this month on hopes of OPEC deal (Reuters)
  • OPEC Likely to Reach Output Consensus, Delegate Says (WSJ)
  • Trump’s Targets in First 100 Days: Trade, Regulation, Corruption (BBG)
  • Trump Poised to Push Nafta Changes, Pressure Mexico on Trade (WSJ)

S&P Set To Open At All Time High, Boosted By Rising Crude On More "OPEC Deal Optimism"

European and Asian stocks rose after the early scare from the latest Fukushima quake dissipated, with the global risk on mood spurred by another jump in crude, which was up 1% in early trading, with the commodity complex now enjoying its biggest three-day rally since May, after Nigeria signaled optimism that OPEC will agree a supply-cut deal next week in Vienna. S&P futures are up 0.3%, with the cash index set to open at new record highs.

BOJ "Fires Warning At Bond Market" Sending Global Yields, Dollar Lower; All Eyes On Yellen

Global bond yields and the dollar both weakened after the Bank of Japan offered to buy an unlimited amount of debt at fixed yields, stabilizing the global bond rout, while investors awaited testimony from Fed Chair Janet Yellen that will help shape the outlook for interest rates ahead of a December rate hike that is now seen as near certain.

Global Bonds Plunge As "Trumpflation" Rally Returns, Dollar Jumps

After taking a one day breather, the "Trumpflation Rally" returned with a vengeance as global government bonds tumbled and the dollar rose on renewed speculation the economic outlook is strong enough to allow the Federal Reserve to hike in December (odds are now 94%). Asian shares rose, industrial metals and crude oil fell, European shares and US equity futures were pressured.

Risk Parity Funds Are Crashing But RBC Warns 'Spillover Event' Hasn't Happened Yet

It's ugly out there in Risk-Parity (RP) fund land as losses on bonds outweigh gains on stocks as correlations normalize (and volatility drops) echo the plunges experienced during 2013's Taper Tantrum. However, as RBC notes, adjustments to the leverage mechanism with RP strategies means, despite the carnage already, we may not have seen the cross-asset-class spillover yet.

For Deutsche Bank, This Is The "Brexit Panic" Signal In Today's Election

Deutsche Bank has advised its sales and trading team to immediately report to their trading desks should Trump wins Pennsylvania and Michigan. So if Trump be is reported to be leading and/or winning the two key battleground states at 8pm, expect all volatility hell to break loose.

US Economy Continues to Weaken As Warning Signs Flash Recession Ahead

The US economy continues to show weakening conditions as new warning signs are flashing recession ahead. This is despite the best efforts of the FED and the US Government to assure the public that there are plenty of measures in place to continue to stimulate the economy.