Blockchain-based Derivative Contracts Allows Leveraged Forex Trading Where Brokers Fear to Tread Due To GrexitSubmitted by Reggie Middleton on 06/28/2015 10:18 -0400
A Grexit debacle easily highlights the advantages of trading throgh blockchain technology. Long story short - no FTDs, counterparty or default risk when trading forex pairs!
Upcoming risk - Instruments moving to 'Close Only' mode
Due to the uncertainty surrounding the ongoing Greek debt negotiations, and ahead of a potential announcement over the weekend that could lead to high volatility on the market, please be informed that we have decided to decrease your risks by temporarily moving all Instruments to 'Close Only' mode, from 22:30 GMT+3 on Friday the 26th of June 2015, until 00:30 GMT+3 on Monday the 29th of June 2015, trading terminal time.
People are already freaking out that Greece is just days away from defaulting on a $1.72 billion loan payment. Just wait till the margin call on the $370 billion margin debt in China's stock markets.
Today will almost certainly be the busiest trading day of the year, as the Russell indexes go through their annual rebalancing/reconstitution. But, as ConvergEx's Nick Colas notes, Friday’s close will be the end of a trade that began almost 2 months ago, as traders began handicapping which equities would be included for the first time or swapped between various Russell indices. Since the beginning of May, for example, the stocks that will be added to the Russell 2000 are up 11%, and those being deleted from the same index are down 2% over the same time period. In short, for one day – and this is the day - every U.S. equity market participant, no matter what their investment mandate, needs to think like a trader. Throw in a little Greek drama going into the weekend, and it could be quite a day...
Following yesterday's furious market drop in Chinese stocks, just before the overnight open, Morgan Stanley came out with a much distributed report urging investors "Not to buy this dip", and so they didn't. As a result, the Shanghai Composite imploded, at one point trading down 8% while the Chinext and Shenzhen markets crashed even more. This was the single biggest Shanghai Composite one-day drop since 2007, and with a close at 4192.87 the SHCOMP is now on the verge of a bear market, down 19% from its June 12 highs. China's second largest market, Shenzhen, is now officially in a bear market.
"Blood On The Streets": Chinese 'Nasdaq' Crashes Most On Record, Morgan Stanley Warns "Don't Buy This Dip"Submitted by Tyler Durden on 06/25/2015 23:45 -0400
Is it time to step in and buy the dip in Chinese mainland shares after last week’s harrowing 13% decline on the SHCOMP? Absolutely not, Morgan Stanley says.
*CHINEXT PLUNGES 8.3%, BIGGEST ONE-DAY LOSS EVER (down over 27% from highs)
Trillions upon trillions in “stimulus” and the FOMC is left, pathetically, fighting for the distinction of “it’s not as bad as it looks.” That would seem to make this the most costly economic age ever conceived, with global implications that are just now starting to be felt as whatever faith was leftover from 2008, wrong or right, wears off all over the world. That is a highly combustible deficiency, since the longer the global economy remains disorientated the more likely it is to experience not just recession but, since this is all still so leveraged (even more poorly this time), something potentially worse.
With levels of investors complacency at extremely high levels, it is a currently "fact" that little can go wrong. There is no recession in sight; the earnings decline was all primarily related to energy companies and most importantly, global Central Banks are continuing to support the financial markets. Of course, maybe it is the last point that should be questioned. If the economy is doing so well, then why are Central Banks still needing to intervene to support the growth? This is equivalent of saying the "the patient is cured, as long as we don't take him off of life support."
Capital should always be allocated to the “marginal cost of capital”. The stock market in its most simple form is really an input–output black box: In goes the “cost of capital” – out comes “profit”. No one can disagree that, over the long- and medium-term, it’s the profit which both explains and drives stocks best. The most profitable companies get the best stock returns... which brings us to the “dilemma” of today’s market: The marginal cost of capital is significantly higher.
“Any of these events would likely trigger asset price volatility [and] attempts by institutional investors to redeem illiquid corporate bonds in crisis circumstances would amplify volatility.”
Chaos reigns, with contradictory headlines pushing and pulling futures in any one direction, only for the next headline to undo the previous one. And only headline scanning frontrunning algos have any chance of trading any of this...
With a DoJ probe having predictably gone nowhere, a group of pensioners and retirement funds are suing Wall Street and Markit for colluding to monopolize the CDS market. Amusingly, Citadel has been subpoenaed to discuss how it was shut out of creating a CDS trading platform by the "oligopolistic" activities of TBTF banks, even as the firm looks set to dominate the market for IR swaps.
With the US equity market jerking around on every headline (having jumped on DOE inventories?!), reports from MNI that the FOMC majority is not prepared to wait indefinitely for market participants to be fully on board, appear to have taken the shine off the exuberance. It seems yesterday's warning from Jerome Powell that there will be 2 rate hikes this year did not stall the stock bubble enough and so more "officials" leaked more information today.
FOMC Voting member Jerome Powell has spooked markets this morning (though a glance at stocks impotence would not tell you that) with his comments that a "September rate hike is now 50-50," and that "The Fed would like to test a rate rise as soon as September." FX markets are turmoiling with the USD surging and bond markets are seeing Bunds/TSYs sold aggressively. Stocks shrugged in their "huh?" way initially but tumbled as Powell confirms 'mechanical'-sounding 1% rise per year in rates if the economy continues to grow as expected.