• Tim Knight from...
    02/06/2016 - 00:25
    What we must remember is this: we are in a bear market, and the risk of a countertrend rally is present, but confined. The opportunity on the downside movement dwarfs the risk of a push higher, as...
  • Phoenix Capital...
    02/06/2016 - 10:15
    2008 was caused by derivatives based on consumer-focused assets (houses). The next crisis will be driven by derivatives on government-focused assets (bonds).

Stress Test

Tyler Durden's picture

Is This How The Smart Money Is Betting On A Market Crash?





Instead of allocating capital to expensive tail risk bets on direct asset class collapse (in equities, credit, and commodities), it appears, just as we detailed previously, the 'smartest money in the room' is "betting" indirectly on a stock market crash through eurodollar options.

 
Tyler Durden's picture

Weekend Reading: The Awakening





"More monetary stimulus, wherever it is in the world, isn’t the answer for a global economy still trying to find a new growth path. Pay attention to bonds and ignore the sirens of the stock market."

 
Tyler Durden's picture

Negative Interest Rates Already In Fed’s Official Scenario





"The severely adverse scenario is characterized by a severe global recession, accompanied by a period of heightened corporate financial stress and negative yields for short-term U.S. Treasury securities.... As a result of the severe decline in real activity and subdued inflation, short-term Treasury rates fall to negative ½ percent by mid-2016 and remain at that level through the end of the scenario."

 
Tyler Durden's picture

"If You're Not Confused, You Don't Understand Things Very Well"





If you believe the global economy is doing great and stocks are cheap, stop reading now; this post is not for you. We promise to write one for you at some point when stocks are cheap and the global economy is breathing well on its own - we just don’t know when that will be. But if you believe that stocks are expensive - even after the recent sell-off - and that a global economic time bomb is ticking because of unprecedented intervention by governments and central banks, then keep reading.

 
Secular Investor's picture

Banco De Portugal Indicates The ECB Stress Test Was A Complete 'Sham'





The Central Bank of Portugal conveniently released their results between Christmas and New Year, when the trading desks in Europe are virtually empty...

 
Tyler Durden's picture

The Bail-Ins Are Back! Portugal Slaps Senior Bank Bondholders With €2 Billion Loss





If you are an institutional investor and you bought Novo Banco bonds, you just had a bad morning...

 
Tyler Durden's picture

In Lehman Rerun, Banks Are Buying Protection Against Their Own Systemic Demise Again





At the peak of the craziness of the last cycle, banks took to protecting themselves by buying (credit) protection on other banks as a 'hedge' for systemic risk (which instead exacerbated contagion concerns and was never going to payoff anyway given the systemic - counterparty - collapse required to trigger it). Fast forward 8 years and it appears once again, as Bloomberg reports, that banks are buying (equity) protection in order to hedge the stress-test downside scenarios enforced by The Fed.

 
Tyler Durden's picture

"Buy The Dips! What Could Possibly Go Wrong?" Axel Merk Warns "A Hell Of A Lot"





The lack of fear in risky assets is another way of saying that risk premia have been low, or as we also like to put it, that complacency has been high. Not fully appreciative of this inherent risk, it seems many investors have refrained from rebalancing their portfolios, and bought the dips instead. We believe the Fed’s efforts to engineer an exit from its ultra-low monetary policy should get risk premia to rise once again, that if fear should come back to the market, volatility should rise, creating headwinds to ‘risky’ assets, including equities. That said, this isn’t an overnight process, as the ‘buy the dip’ mentality has taken years to be established. Conversely, it may take months, if not years, for investors to shift focus to capital preservation, i.e. to sell into rallies instead.

 
Tyler Durden's picture

Global Stocks Start Off December With A Bang, US Equity Futures Rebound; Yuan Drops





There was something for everyone in last night's much anticipated Chinese PMI data, with the official number sliding to the lowest in over 3 years, suggesting the PBOC will need to do more stimulus and is thus bullish, while the unoffocial Caixin print rising to the highest since June, suggesting whatever the PBOC is doing is working, and is also bullish. Not unexpectedly, global stocks decided to take the bullish way out, and have risen across the globe led by Asia, where stocks rose as much as 1.8%, Europe also green and US equity futures up 10 points as of this writing.

 
Tyler Durden's picture

Greek Bad Debt Rises Above 50% For The First Time, ECB Admits





Today we got yet another tortured admission of just how ugly Greek balance sheets are, the ECB has admitted what we knew months ago, namely that more than  half of all Greek loans are now nonperforming, and that as much as 57% of the loans made by Piraeus Bank the bank which fared worst, are at risk with the other Greek banks not much better off.

 
Tyler Durden's picture

It's Back To The Future As Stocks, Futures Jump On The Latest Abysmal Economic News; China Tremors Return





26 years ago, today was envisioned as day when cars flew, holographic movies were box office hits, hoverboards roamed, and people were fired by fax. None of the happened. Instead the only "back to the future" moment this morning is a deja vu one we have seen every day for the past 7 years: bad economic news leading to surging stocks.

 
Tyler Durden's picture

As A Shocking $100 Billion In Glencore Debt Emerges, The Next Lehman Has Arrived





And now the real shocker: there is over US$100bn in gross financial exposure to Glencore. From BofA: "We estimate the financial system's exposure to Glencore at over US$100bn, and believe a significant majority is unsecured. The group's strong reputation meant that the buildup of these exposures went largely without comment. However, the recent widening in GLEN debt spreads indicates the exposure is now coming into investor focus."

 
Tyler Durden's picture

Forget The Greek Crisis, Immigration Will Divide Europe Against Itself





Europe has complex immigration rules. But, as the recent influx of refugees and economic migrants has shown, the EU government is able to flex its muscle in an ad hoc fashion in the service of compelling member states to accept the migrants and refugees. Ultimately, however, the imposed "solutions" to the migrant and refugee crisis may be a signal to many members that the EU isn't quite what they thought it was.

 
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