Freddie Mac

Frontrunning: October 5

  • ECB 'taper' talk hits stocks, sterling hits 31-year low (Reuters)
  • Crude Rises to Three-Month High After U.S. Stockpiles Plunge (BBG)
  • Gross Says He Shortened Duration on Europe After Taper News (BBG)
  • Chicago Fed's Evans 'fine' with December hike if data stays firm (Reuters)
  • Euro zone business growth at 21-month low in September (Reuters)
  • Deutsche Bank Brings Too-Big-to-Fail Quandary Home to Merkel (BBG)

Crude Declines As OPEC Deal Doubts Emerge; Futures Roll Over

After oil soared over 5% yesterday, its biggest jump since April, overnight skepticism and doubts have emerged about the viability and compliance with the deal, coupled with a boost in production by non-OPEC producers, and as a result WTI has dipped back under $47, down 0.5%, suggesting that the OPEC surge may be short-lived, and modestly pressuring US equity futures.

Perry Capital Shutting Down His Iconic Flagship Fund

The writing was on the wall three weeks ago when we reported that iconic hedge fund Perry Capital had lost some 60% of his AUM as LPs were rushing to withdraw their money.  So it is probably not very surprising that having lost more than half his assets moments ago Bloomberg reported that Perry's flagship fund is shutting down: PERRY CAPITAL TO CLOSE FLAGSHIP FUND AFTER ALMOST THREE DECADES

"Home Prices Are Out Of Hand Again"

"Since 1999 year-end through 2015 home prices have risen 76% while household mean real income has grown less than 2%; the millennium-to-date gap between the two growth rates peaked at 84% during 2005-2006 and has risen back to 74% as of 2015 year-end. Gap at year-end 2007 was 75%."

"The Big Short's" Steve Eisman Reveals What The Next Big Short Is

Asked to name the next big short, Eisman initially declined. “I’m not in such a rush to do it again,” he said. “It took years off my life.” Then he relented, saying, “The only big short out there is when the world loses confidence in QE.”

US Futures, European Stocks Rebound, Bonds Fall Ahead Of US Data Deluge

The overnight session started with more weakness out of Asia, where chatter that the BOJ may end up doing nothing despite all the trial balloons (as we hinted yesterday), sent the USDJPY sliding, pushing the Nikkei lower, leading to a 7th consecutive decline in the Topix, the longest such stretch since 2014 even though the BOJ is now actively buying a record amount of ETFs. However, the modest dip in S&P futures and European stocks proved too much for BTFD algos, and risk promptly rebounded.

With All Eyes On The ECB, Catatonic Global Markets Remain In State Of Near Paralysis

As the market's comatose trading range continues with no notable moves for nearly 40 consecutive days, there is some hope volatility may return after today's main event, the ECB's announcement due in just two hours, when Mario Draghi may surprise the market in either direction. As of today, the S&P500 has held in a band of 1.5% for 39 days, the narrowest ever for that length of time.

Global Stocks Decline Along With The Dollar, As Jackson Hole Begins

Global stocks declined broadly, led by European equities which fell for the first time this week while currency markets continued their subdued tone even as the recent 4-day rally in the USD appears to have topped out, as investors took to sidelines ahead of the Jackson Hole meeting which begins tonight. Japanese and Chinese stocks had suffered modest drops in Asia.  S&P 500 Index futures slipped 0.2%, continuing yesterday's modest selloff.

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

US Futures Rebound, European Stocks Higher As Oil Rises

The summer doldrums continue with another listless overnight session, not helpd by Japan markets which are closed for holiday, as Asian stocks fell fractionally, while European stocks rebounded as oil trimmed losses after the the IEA said pent-up demand would absorb record crude output (something they have said every single month). S&P futures have wiped out almost all of yesterday's losses and were up over 0.2% in early trading.

Musical Chairs

Economics is a bit like musical chairs. In a recession, the economy takes a hit and there are some casualties. Some players fail to get a chair in time and are out of the game. The game then goes on without them. The economy eventually recovers. But a depression is a different game entirely...