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Grexit Anxiety Sparks Bond Bid As Stocks Skid To Worst Streak Since Jan
Summing up the week (in Washington and NYC)...
A hope-strewn squeeze at the open was dominated by the Grexit contagion spreading across the pond..
On the week. the S&P just managed a gain with the Nasdaq on a 3-week losing streak - its worst since January...
But Futures show the real volatile swings in the markets this week...
On the week, Energy stocks were the biggest losers (despite Crude's gains) and Homebuilder led (WTF!?)
Bonds & Stocks decoupled...
And SMART money flow is notably divergent...
And then there's TWTR...
And Axon - the biggest Pharma fraud IPO ever...
Treaury yields ended the week lower... after all that hand-wringing about bonds collapse
The dollar ended lower for the 2nd week in a row...NOTICE THE PATTERN?
Gold and Crude made gains on the week as Copper and Silver slipped...
Crude ended higher but gavce back all its post inventory draw gains as Saudi threats and record production did not help...
Charts: Bloomberg
Bonus Chart: Credit Suisse warns that this level of extreme non-volatility (the smallest range on record) implies investors are like a deer in headlights - stuck in place and too overwhelmed to act.
Bonus Bonus Chart: The S&P 500 is 2% off all-time record highs and investors' Fear is getting extreme...
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Liquidity was better vs earlier in week. but the bond market is increasingly thin as yeilds move 5-10 basis points in hours.. not days or weeks.. Blackstone..
Steve Schwarzman: over-regulation could lead to a liquidity freeze & another financial crisis
Greece is new Cyprus. Remember ruble in pocket is not equal ruble in hand of banskster.
To quote Albert Santayana, "To repeat and expect different result is to doom victim of insanity."
TYLERS CHECK THIS OUT
MUST WATCH VIDEO; watch how cops operate in a legit business . the new norm in AMRIKA
Santa Ana pot shop raid sparks investigation:watch cops destroying cams , they forgot one https://www.youtube.com/watch?v=JTKTfUHfeKM
If Grexit seems to be such an issue, I wonder what Brexit would do to the EU...
Brazil is not as member-state of EU, no?
with the illiquidity, treasury yields should drop like a stone when equities (finally) get a clue
Bring It!
Boris is drop stone of bladder. Very painful! Is not recommend!
schwarzman absolute tool.
a-hole who equated raising taxes on rich to panzers thru poland ... one year paid himself $300K in salary ... and $300 MILLION in dividend (to get lower tax rate + no FICA)
Gas hit $2.99 here in Michigan yesterday...
gas never fell below 3.05 in chicago.... 3.50 for regular and still over 4$ for 'premium' @ the 'premium' brand stations.
it went up to $2.79 on tuesday.. someone Fucked up and they had to raise it Higher on thursday...
Now sometime is cheaper high-proof Russia potato vodka!
gas will be heading lower ... a lot lower
"Investors" I don't think that word means what you think it means.
"Treaury yields ended the week lower... after all that hand-wringing about bonds collapse"
the road may get bumpy time to time ... but it leads (ultimately) to 10 yr yield @ 1%
Deflation (asset bubbles popping) / recession on deck
Well, we've been in a depression, but otherwise yes, rates are going lower.
“I Have Forgiven Janet” by Morrissey
I was a good trader, I never did my firm harm
It was a nice gig, with a nice expense account
Forgive me for any losses that may have clung to you
With the Fed’s help, I know, new highs are always near to you
But Yellen hurt me when she deserted me
But, I have forgiven Janet
For all the liquidity she placed in me
When there’s nothing I can do with this desire
I had a good run, made tons of dough
My stocks went straight to the Moon with you
Carried IB’s mobile app in my hand
Do you understand? Do you understand?
But Yellen hurt me when she perverted me
But, I have forgiven Janet
For all of this “cash on the sidelines”
When there’s nothing I can buy without wincing
Monday, distribution; Tuesday, stagnation
Wednesday, barely VWAP; Thursday’s parasitic
By Friday, this market has killed me
By Friday, this market’s killed me
Oh, deceitful One; Oh, deceitful One
Why did you give me so much QE
when there is nowhere I can go to offload this desire?
And why are you such a dove in a hawkish world?
There is nowhere I can turn to unlock all this love
And why did you stick me in 0.00005% yielding short bond funds
Janet! -- do you hate me?
And why did you stick me in self-correcting biotech ETFs?
Do you hate me? Do you hate me?
great .... extreme fear is always bullish for the stop hunting crew.
http://ca.reuters.com/article/businessNews/idCAKBN0OS0CA20150612
Bond selloff a wild card that could delay Fed rate hike
NEW YORK (Reuters) - The sharp bond market selloff is starting to pinch American consumers and companies, causing a mild economic tightening that, if sustained, could raise alarms at the Federal Reserve and even delay a plan to hike interest rates in coming months.
U.S. mortgage rates have reached their highest level in a year-and-a-half, auto loans are getting a bit more expensive, and corporations across the board have seen their borrowing costs jump as U.S. and European debt retrenched in recent weeks.
With benchmark U.S. government debt having jumped from 2.13 percent to as high as 2.49 percent so far this month, Fed officials headed into a policy meeting next week will be asking how long the selloff could last -- and how much it could slow the economic rebound from a winter slump.
"It's got to be part of their calculus. And I do think that they will try to micro-manage the market," said Craig Dismuke, chief economic strategist at Memphis-based broker dealer Vining Sparks.
After 6.5 years of ultra easy monetary policy, Fed officials would welcome at least some evidence of tightening financial conditions as they increasingly telegraph a rate hike.
The concern is a repetition of 2013, when then-Fed Chairman Ben Bernanke set off a market rout that threatened the recovery when he suggested a stimulative bond-buying program could soon be curbed.
Investors and economists said that while the recent market move is on the Fed's radar, given its volatility, alarm would grow if the 10-year U.S. Treasury yield were to soon rise above 2.75 percent.
Such a tightening could imperil the all-important housing market, as it did during the so-called "taper tantrum" two years ago, which prompted a flurry of dovish speeches by Fed officials attempting to control the damage.
At the time, stock markets plunged and mortgage rates shot up to 4.8 percent, spooking home buyers. While today's economy does not face that sort of trouble, there are warning signs.
A 30-year fixed mortgage averaged 4.17 percent last week, its highest level since November 2014, prompting a rush of applicants to lock in the rate before costs rise any more. The cost of new car loans is also edging higher, though from a record low in the fourth quarter of 2014.
Fed officials regularly highlight housing and autos as drivers of what is expected to be stronger consumer confidence and broader GDP growth in the second half of the year.
Robust job gains suggests the rebound is underway, with Fed Chair Janet Yellen eyeing an initial rate hike this year and economists predicting it will come in September.
Yet U.S. productivity has mysteriously sagged and wages have not climbed as expected, leaving the economy fragile. Meanwhile, Fed Governor Daniel Tarullo has emphasized the central bank's long-simmering concern that markets may not be liquid enough to withstand a volatile selloff.
The sharp U.S. bond selloff is a response to sturdy U.S. economic data, as well as easing concerns over deflation across Europe, which has sent German benchmark Bunds tumbling too.
whoever wrote this article ... in for a surprise ... a big one
Yes, "weak hands" being shaken out everywhere. The problem being that these are now pretty big players.
eventually, the oligarchs start eating each other...
Who writes this shit for RTRS?
"The sharp U.S. bond selloff is a response to sturdy U.S. economic data, as well as easing concerns over deflation across Europe, which has sent German benchmark Bunds tumbling too."
The bond markets in Europe and the U.S. lack liquidity which is driving yields higher. There's nothing substancial left to buy to drive down yields.
I guess the fed could "reverse twist" its long end holdings and buy short term debt back again [under 3 years]
That might provide liquidity for longer term paper while driving shorter term debt lower in yield so they can raise rates a measly 25bps.
The Fed Intrest Rate Raise can is gonna get kicked even longer than Grexit...The Feds can't hike, more than a face-saving .25, which will be taken back the next meeting.
The most interesting man in the world says, "Stay hedged my friends". ;-)
Stay light, tight, & nimble on your trades.
"And SMART money flow is notably divergent..."
What about the FED money flow? Nobody every accused them of being smart, just evil.
According to Credit Suisse:
http://is.gd/xvIeB9
A bubble in equities: why this seems the probable endgame
- What's improving: earnings revisions; Chinese housing data; high yield spreads; US growth (with payroll income growing at 4.3%); and now Bunds are oversold.
- The cost of equity could fall further: The equity risk premium on our earnings numbers is 5% (versus our fair value model of 4.6%) but, crucially, a number of factors suggest the ERP can fall below 4%, and market peaks have occurred when the ERP has fallen to 2.4% on average. The critical issue is that the cost of equity is still close to its norms at 8.5% in the US and Europe, and we think it can fall to 7-7.5%. On our model, the fair value forward P/E for the S&P 500 is 18.3x. However, market peaks have occurred historically when the P/E has reached 23x on average, which would imply 40% upside from the current S&P 500 12-month forward P/E of 16.8x.
- Other factors remain highly supportive: excess liquidity (M1 money supply in excess of nominal GDP growth) is consistent with a re-rating of 20%; corporate net buying is running at 6.6% of market cap (with $5.5trn of potential firepower); and risk appetite is only at neutral levels, consistent with ISM new orders of just 52.
- We believe there is a 60-70% chance that a bubble could form. Bull markets in most assets end in bubbles; despite Fed tightening this year, central banks are likely to keep policy abnormally loose (fearing 'false dawns', and with core inflation likely to be kept in check by disruptive technology, de-regulation and China exports deflation) and the dollar might do the majority of the tightening; an equity bubble developed two years after the last two supply-driven oil shocks (1985 and 1998); retail and institutional involvement in equities has been abnormally small in this bull market to date; and, above all, corporates are under-investing.
- Not a bubble yet: On our bubble scorecard, only c1.5 out of 8 factors (falling NIPA profits and a pick-up in M&A activity, although the latter is not yet close to market peak levels) are flashing amber.
- What are the risks to this thesis: Chinese housing, US wages and the prospect of corporate over-investment (i.e. buybacks as a style underperforms).
- Market leadership in bubbles: asset managers, new economy (biotech, internet) and perhaps financials (which are currently under-earning).
Thus, we keep our overweight of equities and slightly raise our year-end target on the S&P 500 to 2,200 from 2,170 and keep our Euro Stoxx target at 4,000. We introduce a mid-2016 target of 2,300 on the S&P 500.