Morgan Stanley

The First Victims Of The Libor Surge Have Emerged... In Japan

So far US banks have escaped the recent Libor surge, but the higher funding costs and shrunken market are hitting Japanese banks particularly hard, as they have been sourcing as much as a third of their U.S. dollar liquidity in the short-term U.S. market. Japanese banks have about $125 billion to $150 billion of CP and CDs maturing before the end of September.

Madness In Mario-World: European Companies Issue Debt Simply Because The ECB Will Buy That Debt

Things are so absurd in the Eurozone that the ECB is buying private placement debt with little regard for safety. In turn, private equity companies issue debt simply because they know in advance the ECB will buy it. It’s a startling example of how the market is adapting to extremes of monetary policy, and it’s a safe conclusion the experiment will not end well.

OPEC Ignites Biggest Short Squeeze In History: Hedge Funds Cut Oil Shorts By Most On Record

The past week saw the biggest crude oil short squeeze on record as money managers cut bets on falling prices by the most ever.  Hedge funds trimmed their short position in WTI by 56,907 futures and options during the week ended Aug. 16, the most in data going back to 2006. As a result WTI soared nearly 10% in the past week, pushing it into a bull market just three weeks after it tumbled into a bear market.

Morgan Stanley: "This Is The Most Dangerous Time As Hope And Greed Overtake Fear And Loathing"

"It is often said that a rising tide lifts all boats, but perhaps the more pertinent question just now is whether this logic works in reverse... Although equity valuations continue to look extremely attractive relative to bonds, there is always a plausible argument that the equity rally will continue; however, this is potentially the most dangerous time for investors as hope and greed overtake fear and loathing."

"The Most Difficult, Treacherous Year" - What The Market Wall Of Worry Looked Like In 2016

2016 has been according to one buysider, "the most difficult, treacherous year" for the hedge fund community in recent history as a result of unprecedented shifts in market sentiment, choppy trading, low conviction, investor redemptions, illiquidity and  volatility month after month, which has left the hedge fund community exhausted and reeling even as the S&P hits all time highs.

Oil Prices Continue To Rise On Hollow Saudi Comments

This is just the latest confirmation that Saudi Arabia has taken center stage when it comes to oil. Nobody cares anymore about fundamentals, everyone listens to what Riyadh says. If Riyadh is bullish on oil, then oil prices rise, despite any production data that might contradict their words. If Riyadh decides for some reason to be bearish, the market follows. The extent of this dependency of traders on every word that comes out of Khalid al-Falih’s mouth (and other Saudi officials) becomes all the more evident in light of the latest production forecasts for Saudi Arabia.

S&P Futures Unchanged As Europe Rises; Dollar Slide Sends Oil Above $47

In the latest quiet trading session, European shares rose while Asian stocks fell and S&P futures were little changed. Minutes of the Fed’s last meeting damped prospects for a U.S. interest-rate hike, sending the Bloomberg Dollar Spot Index doen 0.3%, approaching a three-month low. Dollar weakness continues to buoy commodities, with the Bloomberg Commodity Index set for the most enduring rally in more than two months, as WTI flirted with $47

European Stocks Drop, Futures Flat As Rising Dollar Pressures Oil, EMs: All Eyes On The Fed Minutes

European stocks are down led by tech, chemicals, alongside EM stocks which retreated from near a one-year high and oil fell for the first time in a week after hawkish comments from Federal Reserve officials revived bets on U.S. interest rate rises this year, and pushed the dollar higher from 7 week lows ahead of today's Fed Minutes. S&P 500 futures were little changed following yesterday's drop from record highs

Frontrunning: August 16

  • World stocks edge away from one-year peak, dollar on defensive (Reuters)
  • Central Banks Could Be This Market’s Pets.com (WSJ)
  • Clinton announces transition leadership should she win in November (Reuters)
  • Oil Trades Near $46 a Barrel as Nigeria Sees OPEC Cuts Unlikely (BBG)
  • BHP Billiton Reports Worst-Ever Annual Loss (WSJ)

What Hedge Funds Bought And Sold In Q2: The Full 13-F Summary

Today is the deadline for hedge funds to submit their Q2 13-F filings. Among the more notable changes was the previously reported 55% increase in Warren Buffett's Apple shares, offset by the cut in his Wal-Mart stake; Elliott's addition to stakes in security firms Qualys, Fortinet, CyberArk; ValueAct's new stakes in Morgan Stanley, Seagate; Tiger's exit of Netflix; Jana addition of Time Inc, and Soros' cut of his gold miner positions.

Morgan Stanley Says The Oil Squeeze Will End On August 17: Here's Why

"A large option position and delta hedging left the market vulnerable to a rally. Thus, bullish comments from OPEC and the IEA caught the market uniquely offside to reverse bearish positioning (see detail and calcs inside). Yet, once option expiry passes on Aug 17th, this issue should fade. Moreover, this move higher also brought in bullish buying from those who believe the worst is past, and the call skew is now shifted bullish for Sep."

A German Bank Finally Caves: Will Charge Retail Investors A Negative 0.4% Deposit Rate

Raiffeisen Gmund am Tegernsee, a German cooperative savings bank in the Bavarian village of Gmund am Tegernsee, with a population 5,767, finally gave in to the ECB's monetary repression, and announced it’ll start charging retail customers to hold their cash. Starting September, for savings in excess of €100,000 euros, the community’s Raiffeisen bank will charge a 0.4% rate. That represents the first direct pass through of the current level of the ECB’s negative deposit rate on to retail depositors.

Mexico's "Legendary" Oil Hedging Desk Is Quietly Preparing For The Next Plunge

While oil longs and Saudi Arabia are enjoying this week's latest, substantial short squeeze, prompted if not so much by the latest set of cheerful, if repetitve, IEA "rebalancing" forecasts, the fundamental reality as confirmed not only by a recent Morgan Stanley report which sees oil dropping to the mid-$30s, but also by the just released Baker Hughes oil rig count which reported a spike of 15 rigs in the past week, the most since 2015, suggests that there is more downside pressure in store for oil. Some are already actively hedging for just that.

Futures Rise, Global Stocks Flat After Ugly Chinese Economic Data

One day after all three US indexes hit record highs for the first time since December 31, 1999, US equity index futures, European stocks and Asian equities are little changed after the Nikkei jumped on the back of a Yen weakness, while China reported disappointing economic data and the PBOC suggested that the flood of new debt is slowing which pushed Chinese stocks higher by 1.6% on hopes of more stimulus.