Volatility

What Happens When The Fed Hikes During An Earnings Recession

The right question to ask is not what happens to stocks when the Fed starts hiking rates, but what happens to stocks when the Fed is hiking rates during an earnings recession. And, as BofA claculated recently, "Hiking during a profits recession usually hasn’t ended well." The details: "The Fed has only embarked on a tightening cycle during a profits recession three other times, which typically spelled downside for the S&P 500."

Your Last Minute Payrolls Preview: What Wall Street Expects

Today's NFP report will be under intense scrutiny as it is the final jobs report before the June rate decision by the FOMC. The market has increased the probability of a hike at the June meeting significantly in recent weeks and a strong labour market will be critical to allow the Fed to proceed with a June or July "normalization."

Futures Flat Ahead Of Strike-Impacted Jobs Report; Commodities Approach Bull Market

After yesterday's two key events, the ECB and OPEC meetings, ended up being major duds, the market is looking at the week's final and perhaps most important event of the week: the May payrolls report to generate some upward volatility and help stocks finally break out of the range they have been caught in for over a year.

Oil Jumps After DOE Reports Bigger Than Expected Inventory Draws, 19th Weekly Production Cut

Following last night's surprise build of 2.35mm barrels reported by API (against expectations of a 2.5mm draw), DOE reported inventory draws across the board. While the headline crude draw of 1.36mm barrels was below expectations of -2.5mm, it was considerably lower than API. Cushing saw a bigger than expected draw of 704k and both gasoline and distillates draws were bigger than expected. This is the seventh week in a row of Distillate draws. Crude production fell for the 19th week in a row to its lowest since Sept 2014.

Bill Gross Explains Why He Is Now Shorting Credit

"For over 40 years, asset returns and alpha generation from penthouse investment managers have been materially aided by declines in interest rates, trade globalization, and an enormous expansion of credit – that is debt. Those trends are coming to an end.... A repeat performance is not only unlikely, it  is impossible unless you are a friend of Elon Musk and you’ve got the gumption to blast off  for Mars. Planet Earth does not offer such opportunities."

Liquidity Panic? A $90 Million Sell Order Crashed China's Futures Market

Seemingly missed by the mainstream media on Monday, Chinese equity futures crashed over 12.5% - the biggest drop since 1995 - only to soar back to unchanged within seconds. This was not a 'fat-finger' trade, and as one trader noted, "liquidity in the market is really thin right now," which is borne out by the evidence. Thanks to government rules disabling "hedging" accounts from holding more than 10 contracts a day, volume (and liquidity) has become practically non-existent since September and so the 12.5% flash crash was driven by just 3 trades totalling just 646 contracts which means a mere $92 million sell order collapsed Chinese equity markets by the most on record.

Moments After Market Close, UAE Oil Minister Kills Hope Of OPEC Production Freeze

Earlier today, when Reuters quoted "sources" that OPEC may consider a new oil output ceiling, a recurring headline meant simply to spark algo-driven buying (which it did), we said that the "most likely next step: a denial from other "sources." That is precisely what happened moments ago when with hours until the OPEC meeting in Vienna, the UAE oil minister said there will be no oil freeze.

World's Largest Asset Manager Downgrades Global Equities To Neutral

With one after another bank issuing downgrade reports on global stocks, including such stalwarts as JPM and, most recently, Goldman, overnight a far more important market entity - the world's largest asset manager - joined the club when BlackRock downgraded U.S. and European stocks to neutral, citing elevated U.S. valuations and the higher probability of a midyear interest-rate increase by the Federal Reserve. 

Goldman Fires Dozens Of Investment Bankers

Following an abysmal quarter for investment banks around the globe, which saw salary cuts across the board as a result of sliding revenues in virtually all product areas, we forecast that the next logical step will be ongoing major layoffs of some of the world's highest paid employees. This morning none other than the most insulated from global financial troubles bank confirmed just this when Bloomberg reported that Goldman had quietly cut investment banking jobs in the last few weeks, joining securities firms that are adjusting to a slowdown in deal activity.

Global Stocks, US Futures Slide On Mediocre Manufacturing Data, Yen Surge

Following the latest set of global economic news, most notably a mediocre set of Chinese Official and Caixin PMIs, coupled with a mix of lackluster European manufacturing reports and an abysmal Japanese PMI, European, Asian stocks and U.S. stock index futures have continued yesterday's losses. Oil slips for 4th day, heading for the longest run of declines since April, as OPEC ministers gather in Vienna ahead of a meeting on Thursday to discuss production policy. The biggest winner was the Yen, rising 1%, with the USDJPY tumbling overnight and pushing both the Nikkei 1.6% lower and weighing on US futures.

As Short Interest Soars To Record Highs, Chinese Stock Futures Flash-Crash 12.5%

Shortly after 1042am local, Chinese stock futures (CSI-300) flash-crashed over 12.5% on extreme heavy volume (while the cash CSI-300 remained unch). This move erased 3 months of gains but within 1 minute was back in the green with stocks up over 2.5%. The shocking collapse, exaggerated by a major lack of liquidity, was made more surprising by the fact that the last week has seen a record short position in the major Chinese stock ETF. Simply put, the heavy hand of market-central-planning has erased any and all depth in futures markets and positioning has become so tilted that price vacuums are likely to continue to occur.