Front Running

Will Thursday's Final TLTRO Finally Spark Carry Trades?

On Thursday, the ECB will hold its fourth tender under the TLTRO-II (Targeted Long-Term Refinancing Operations) programme. A large take-up is expected. A poll published by Reuters had a  median forecast of EUR 125bn net borrowing, with estimates as high as EUR 300bn. From a rates perspective, what matters is whether these funds will trigger flows into the bond or swap markets as banks set up carry trades.

Index Investing Unmasked: 96% Of Stocks Are Garbage

"Index investing means buying a box of garbage stocks sprinkled with a few hope and glamour stocks whose price gains are solely a result of underperforming fund managers grasping for quarterly bonuses and retail investors juicing up their portfolios in a doomed attempt to catch up on their retirement targets."

Weekend Reading: Copious Cognitions

If this market rally seems eerily familiar, it’s because it is. In fact, the backdrop of the rally reminds me much of what was happening in 1999...

Hugh Hendry: "We Are Running A Trumpian Portfolio"

  • In Europe we anticipate further duress in the political commitment to the European project as the success of Trump’s economic stimulus plan keeps US growth humming
  • The combination of Trumpian economics and Japanese 10-year nominal yields being trapped at zero by the Bank of Japan should mean the yen continues to weaken.
  • And finally, there are Chinese trades which generate positive carry should the status quo persist yet remain long volatility should pressure on the renminbi intensify

Can The Market Hang On To Support Here?

It is critical for the markets to “hang on” to current support at the previous breakout highs. A failure to do so will put the markets back into the previous trading range that has existed going back to 2014.

The Disgusting Silence Fueling Crony Capitalism

Free market capitalism - the very heart, soul, and driving engine that has propelled technology, medicine, transportation, manufacturing, efficient markets, and so much more - is not only under assault; it is being left out to hang like some dried, dead leaf by the very people who should be at the forefront for its defense. i.e., CEO’s and business leaders of all stripes. Yet, so far – the silence is deafening.

The US Real Estate Big Picture... A Thesis In Moral Hazard

Given central banks are all in and have no credible ideas (or credibility period), a NIRP driven speculative new housing bubble (for a population that is barely growing...hello China?) seems most likely.  If you haven't already, get busy front running the next moral hazard moonshot and then stay tuned.  Because as you read this, central bankers are already devising their next (even more destructive) "plan".