Sovereigns

This Is What JPM Meant When It Said The "Market Is Trapped"

As the dollar weakens, it supports the most beaten down, energy, sector (which has now undergoing a record short squeeze), but it ultimately will pressure the broader market lower through Tech and Momo. As Kolanovic called it: "a market trapped by the USD."

European Sovereign Risk Soars As Bank Contagion Spreads

The ECB's "whatever it takes" ponzi strategy of keeping the dream alive in Europe's financial system has finally been caught as rapid collapse in the banking system is contagiously spreading to peripheral sovereigns once again. Portugal risk spreads are up 120bps in the last 3 weeks and Spain and Italy are soaring over 35 and 50bps respectively as the almost self-dealing nature of banks buying "risk-free" EU bonds and repoing for cash via The ECB comes home to roost...

Paying A Corporation To "Buy" Its Debt? It's Coming Soon, Jim Reid Warns

As a result of the rush to global NIRP, which now sees central banks and their sovereigns accounting for over 25% of global GDP, amounting to around $6 trillion in government bonds, trading with negative yields, a question has emerged: when will corporate bonds follow this govvie juggernaut and how soon until investors pay not government but companies to borrow? That is the focal piece in today's note by our favorite DB credit strategist Jim Reid who muses as follows.

F(r)actions Of Gold

If the eurodollar and wholesale banking system had been sliced to such a thin margin again by 2011 so as to so heavily depend on the modern duality of gold, it not only would not survive it literally could not survive. The paper dilution we see now may just be that judgement finally seeking open admission.

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Gold Bullion’s 2016 Upleg

Gold is poised to rebound dramatically this year, mean reverting out of its recent deep secular lows. The drivers of gold’s weakness have soared to such extremes that they have to reverse hard. The resulting heavy buying from dominant groups of traders will fuel gold’s 2016 upleg.

What Does The Future Hold For Negative Rates In Europe? Goldman Answers

While the market might have been disappointed by the ECB’s “underdelivery in December, it came as a relief for the Riksbank, the SNB, the Norges Bank, and the Nationalbank who are effectively forced to cut each time the ECB eases or risk seeing upward pressure on their respective currencies. That dynamic has led to a veritable race to the Keynesian bottom with Norway as the last man standing in terms of conducting monetary policy with rates above zero. As we enter the new year, a number of questions remain regarding Europe's headlong plunge into NIRP-dom.

2015 Year In Review: "Terminal Phase" Excess & Peak Cognitive Dissonance

Important pillars of the bull case evaporated throughout 2015. Global price pressures weakened, the global Credit backdrop deteriorated and the global economy decelerated. The huge bets on central bank policies left markets at high risk for abrupt reversals and trade unwinds – 2015 The Year of the Erratic Crowded Trade. Indeed, a global bear market commenced yet most remain bullish. Serious and objective analysts would view this ominously.

Amid FX Reserve Liquidation, These Are The Countries JP Morgan Says Are Most Vulnerable

While EM sovereigns as a group may be in better shape now in terms of “original sin” (i.e borrowing heavily in foreign currencies) than they were during say, the Asian Currency Crisis, the confluence of factors outlined above means no one is truly “safe” in the current environment as moving from liquidation back to accumulation will entail a sharp reversal in commodity prices and a pickup in the pace of global growth and trade.