Goldman Sachs

After sliding early in Sunday pre-market trade, overnight US equity futures managed to rebound on the now traditional low-volume levitation from a low of 1938 to just over 1950 at last check, ignoring the biggest single-name blowup story this morning which is the 23% collapse in Volkswagen shares, and instead have piggybacked on what we said was the last Hail Mary for the market: the hope of more QE from either the ECB or the BOJ. Tonight, it was the latter and while Japan's market are closed until Thursday for public holidays, its currency which is the world's preferred carry trade and the primary driver alongside VIX manipulation of the S&P500, has jumped from a low of just over 119 on Friday morning to a high of 120.4, pushing the entire US stock market with it.

Presenting Exhibit A: Goldman's latest YTD performance breakdown by strategy basket. It reveals is that far from suffering even the most modest correction, the "Hedge Fund Hotel" strategy (aka the most concentrated holdings), is massively outperforming not only the broader market, but has returned double the second most profitable strategy - investing in companies with high revenue growth. In a world in which the Fed just saw its credibility crushed, expect this to change shortly.

Each of the 3 stages needed to move to a sustainable price have to be given time to play out. The rig count story has been told with a brutally fast 60 percent drop. Meaningful production declines are on. Next will be inventory draw downs; in that order. As to the latter, we’re just beginning to see the effects of the rig count. Large drawdowns will be here sooner than predicted.

What the Fed really decided Thursday was to ride the zero-bound right smack into the next recession. When that calamity happens not too many months from now, the 28-year experiment in monetary central planning inaugurated by a desperate Alan Greenspan after Black Monday in October 1987 will come to an abrupt and merciful halt. Yellen and Co should be so lucky as to only face torches and pitch forks.

“Most Texans do not want to break away from the United States. Most Texans consider themselves Americans. But if ever being American means sacrificing our liberties, we will just prefer to be Texans.”

Goldman Sachs said yesterday that financial markets are vulnerable because nobody can agree on what the Fed will do. While equity investors have been anticipating this moment with all the excitement and tension of a prizefight, as Bloomberg reports, bets on the outcome from the Federal Reserve’s rate decision are far more complicated than simply “win or lose” for stocks. Amid the tumultuous background, here are predictions of nine money managers and strategists on what to expect this afternoon...

The long awaited day is finally here by which we, of course, mean the day when nobody has any idea what the Fed will do, the Fed included. Putting today in perspective, there have been just about 700 rate cuts globally in the 3,367 days since the last Fed rate hike on June 29, 2006, while central banks have bought $15 trillion in assets, and vast portions of the world are now in negative interest rate territory.

A week ago, we noted Goldman Sachs' 'strawman' that Janet should "think about easing," despite the world's misplaced confidence that rates will rise "inevitably" since the US economy is doing so well. Today, we get to hear what 'god' thinks as the only thing that matters for The Fed's decision is - keep Lloyd happy  - and Goldman CEO Blankfein just said "U.S. economic data doesn’t support the case for higher interest rates."

Will Janet Yellen proudly put the Fed on the side of the angels, announcing that she and her crew have decided to move the Fed’s key interest rate to a more normal level… regardless of how much it costs the cronies? No, she won’t. Once you begin manipulating markets, it’s a hard habit to break. After nearly seven years of emergency financial policies, we are now in a permanent emergency..."What if they say it’s my fault? What if they call it the Yellen Depression? Oh, no... It’s not fair... It’s not fair... Boo-hoo... sob... sob... I should have stayed at Harvard. I’d have tenure. I’d have a nice pension. George and I could go the Martha’s Vineyard in the summer. It would be such a nice life."

Ffor whatever reason starting in the last hour of trading and continuing until the close, the Shanghai Composite - after trading largely unchanged - went from red on the day to up 4.9% after hitting 5.9% minutes before the close - the biggest one day surge since March 2009 - and nearly erasing the 6.1% drop from the past two days in just about 60 minutes of trading, providing a solid hour of laughter to bystanders and observers in the process.

Imagine for a moment the sentiment shock for mainstream Americans if Goldman Sachs' Lloyd Blankfein was probed for insider-trading and publicly scapegoated for causing a nation's equity market (and economy) to collapse. While it may be true, it would never happen in America... But in China, as part of what authorities call "purifying the markets," the president of China’s biggest brokerage has been swept up in a widening campaign to root out financial wrongdoing and assign blame for the nation’s $5 trillion stock rout. As Bloomberg notes, shares are falling further in today's markets as the probe of Citic Securities President Cheng Boming comes after the state-run Xinhua News Agency reported last month that four executives at Citic had admitted to so-called insider trading.

The party is over for tight oil. Despite brash statements by U.S. producers and misleading analysis by Raymond James, low oil prices are killing tight oil companies. Reports this week from IEA and EIA paint a bleak picture for oil prices as the world production surplus continues. EIA said that U.S. production will fall by 1 million barrels per day over the next year and that, “expected crude oil production declines from May 2015 through mid-2016 are largely attributable to unattractive economic returns.” IEA made the point more strongly. “..the latest price rout could stop US growth in its tracks.”

This gold coin 2000 years ago buys the same amount of bread today as it did when Jesus Christ was born. That is a real safe haven asset…

Almost two weeks after we explained why any hope for a QQE boost by the BOJ is a myth, and that any increase in monetization will simply lead to a faster tapering and ultimately halt of Kuroda's bond purchases the market finally grasped this, when overnight the BOJ not only did not easy further as some - certainly the USDJPY - had expected, but kept its QE at the JPY80 trillion level and failed to offer any hints of further easing that many had hoped for, pushing the Nikkei down from up almost 400 point intraday to virtually unchanged and sending the USDJPY back under 120. JGBs also traded lower on concerns there may not be much more QE to frontrun.

Nahhh ... The Problem Is NOT ENOUGH Debt! </sarc>