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US Equity Futures Mini-Flash-Crash As Japanese Econ Minister Opens Mouth
Just as the machines had learned the "Buy when Japan opens" signal, Japanese leaders unleash their usual stream of utter tripe and break the bid. Tonight's chosen member was Japanese Economy Minister Amari who said "it is important for markets to act calmly, not move in a volatile manner," adding "stock markets are not reflecting fundamentals," reflecting on the fact that G-20 ministers had discussed China and "monetary tightening was likely in some advanced countries." This sparked a plunge in USDJPY and an instant 100-point plunge in Dow futures.
US equity futures mini-flash-crash
Led by USDJPY...
It appears the admission that an advanced nation was likely to tighten combined with his calls for calm were seen as increasing the odds of a rate hike being imminent for The Fed.
It looks like The BoJ will have to get back to work tonight, since China is still on holiday. As it appears Kuroda likes this level (the red dashed line)...
Charts: Bloomberg
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Back into $XIV I guess.
Not sure what else to do, it's like a stop light except you sell when it's green and buy when it's red.
Darling, its all down from here...
I've heard that for some time. I do agree with you though. I just think it's going to bump-and-dump all the way down. One day it won't bounce and that's when I'll know it's time to spark the cigar, pour a nice 3 finger glass of blue label and count the boating accidents that I've been in since I started running red lights.
Anything else you want to brag about you arrogant dick head?
Wouldn't a great time for the Fed to tighten be just before a holiday weekend when traders are boozing it up in the Hamptons?
Not much time now. Maybe two weeks. Too many plates spinning in the air. Several in progress of crashing to the ground, or already have crashed.
I'm taking tomorrow off for a four-day weekend. Going to enjoy these days as much as possible.
Currency war. Check. Trade war. Check. Shooting war. On deck.
AmariCares
Were it not going to be so destabilizing Japan would be low comedy in an Econ 101 class.
They never ask for calm on a crazy up day! Let the markets do as they will and learning will take place. Only after governments quit their interventions will they actually get the markets and "calm" they want.
The whole thing is fucked. I just tipped zerohedge on an email I've never seen out of Forex before about tomorrows job numbers.
Basically the way I see it, it's fucked either way. Too high is no good and too low is no good.
Or too high is good and too low is good. Who can really say but the ones moving the market.
Honestly, if the Fed really wants to get off the free money bandwagon, they should raise 75bp all at once and then immediately say they are done for at least 1 year. I am guessing that the market would lose 1000 and then recover half that by the end of the day. Bonds would do rather poorly, but oh well!
That would require truth and transparency from a central bank...never going to happen. (Not that I disagree with you).
deer oh deer
Fucking moron.
Long UVXY,ready to down with the ship or make retirement. this fish is starting to smell bad.
Agree. It's down from here. Oil hedging on one side, currency games on the other, EM USD debts marching upward. Nobody has income.
Japan is a Keynesian Zombie.
Been economically dead for a while. Abe's stimulus is having a decreasing effect.
Stimulation only works for a while.
Abe keeps turning up the the voltage to stimulate his people.
Eventually it will fry them.
There must be another epic crisis event planned on a certain day... It's like the big boys are doing massive unpublicized manipulation to keep this crash postponed, but also not wanting to pump the market up to a bull recovery. It's too coincidental that jade helm just happens to be live at the same time as this market chaos. Something is rotten in Denmark.
-170 or was whoa red everywhere ppt kicking in scared...
why is red a good colour right now? it confirms my anti normalcy bias, ha -lol...
http://www.reuters.com/article/2015/09/04/us-markets-global-bonds-analys...
Investor flight from U.S. stocks fails to lift bond market
NEW YORK | By Gertrude Chavez-Dreyfuss
The "flight to safety" into bonds many expected when U.S. stocks slumped last week never took off, making big losers out of prominent fund managers and further confusing investors at a volatile time in the market.
Stocks plunged in the second half of August, largely on fears of China's worsening economy, but U.S. Treasury yields did not see the kind of safety bid that many were expecting and has been typical in times of stock-market stress in the past.
Strategists link the lack of a move to bonds to a number of events: Hawkish rhetoric from Fed officials even as the equity market stumbled; a bout of selling by hedge funds that had expected a rally in the bond market that they didn't get; and bond sales by central banks in China and other emerging market economies trying to protect their currencies from depreciating.
Reduced appetite from overseas, along with the outlook for the Fed, will be crucial in coming weeks if equities fall again and bonds don't respond. The Fed decision on September 17 could mark the first rate increase in almost a decade, and uncertainty surrounding that decision is likely to keep many in the bond market on the sidelines.
"The correlation between bonds and stocks is more situational now because it's the central banks calling the shots," said Robert Vanden Assem, head of developed markets investment grade fixed-income at PineBridge Investments in New York.
During the recent U.S. stock market sell-off in the third week of August, for instance, the S&P 500 .SPX dropped 9 percent, but U.S. 10-year Treasury yields, which move inversely to prices, fell by only 12 basis points.
That's not typical. According to Bank of America Merrill Lynch, the relationship between stocks and bonds that has held since 2009 suggests 10-year yields should have declined by 22 basis points.
Bond yields since then have drifted higher and buying interest has been minimal. The lack of a rally in the U.S. Treasury market made big losers out of notable hedge funds, including Bridgewater Associates' All-Weather Fund, which fell 4.2 percent in August.
These funds borrowed heavily to augment their returns, but as things became turbulent, that leverage generated losses that forced them to wind down that borrowing.
Strategists say part of what kept Treasury yields from reflexively falling through a run to safe-haven debt were hawkish signals from the Fed, particularly Fed Vice Chair Stanley Fischer.
At last week's central bank gathering in Jackson Hole, Wyoming, several Fed officials, including Fischer, seemed to boost the odds on a rate increase if not in September, then certainly in December. The message the Fed delivered over the weekend came between a Friday and Monday that saw the U.S. Standard & Poor's 500 lose 7 percent of its value.
Leading brokerages, including Citigroup and Bank of America, commented that though it's a close call, the odds favor an increase in the next few weeks.
"Unless the U.S. economy shows signs of slowing, the bond market is likely to keep yields relatively firm," said Alan Gayle, director of asset allocation at RidgeWorth Investments, even if the S&P 500 falls in the weeks ahead on concern about growth in China and other emerging market economies, he said.
Interest rate futures this week saw a more than 50 percent chance of a rate hike in December FFZ5 and a 28 percent probability in September FFU5, according to CME Group's FedWatch program.
If that happens, bonds won’t look as attractive. Higher interest rates diminish the value of an investor's bond holdings, resulting in lower portfolio returns.
"Treasuries have been a good diversifier to portfolios, but their benefit as a diversifier has been reduced because yields are already extremely low and the Fed is starting to normalize rates," said Rick Rieder, chief investment officer of fundamental fixed income at BlackRock in New York.
CHINA, CURRENCY INTERVENTIONS
Further supporting yields on U.S. Treasuries was the sell-off in reserves by China and other emerging market economies to shore up their slumping economies. U.S. Treasuries represent the bulk of the Chinese and emerging market reserves.
Fears over weakened growth prospects and plunging commodity prices in some emerging markets have taken a toll on their currencies. As China sold currency reserves in recent months, real yields have moved higher since the beginning of the year, while inflation expectations have declined.
China and emerging markets led the build-up in global foreign exchange reserves following the 1997 Asian crisis to a peak of $12 trillion last year. This cash pile shielded them from the 2007-08 crisis, and it looks as if it is once again being deployed.
It's not clear whether China has sold U.S. Treasuries over the last month, or if so, how much. Bank of America Merrill Lynch speculated in a research note that if China sold between $7 billion to $10 billion a day of U.S. Treasuries in the three weeks since the Chinese yuan devaluation on Aug. 11, it might have dumped as much as $150 billion in U.S. government bonds.
These are large numbers given the fact that the total net issuance of Treasuries this year will only be about $500 billion, said Bank of America Merrill Lynch in its research note. As of June 2015, China held $1.27 trillion in U.S. Treasury securities, according to capital flows data from the U.S. Treasury Department.
"The presence of central banks within our markets is over-riding and it's all-encompassing and has driven the activity since 2008," said PineBridge's Vanden Assem.