Gundlach

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2015 Year In Review - Scenic Vistas From Mount Stupid





“To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything.” ~Edward Abbey

 
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What The Market Chose To Ignore In Yesterday's Fed Announceent





The hard part now is how to ween the market away from the old narrative, the one which has pushed the S&P to record highs over the past 7 years on bad economic news, and to renomralize the market's own "reaction function" to that of the Fed. The problem is that from day one there is a major discrepancy between the two: as previouslly observed, the Fed did not deliver the desired dovish hike, and kept its 2016 year-end fed funds rate unchanged at 1.4% suggesting 4 rate hikes in the coming year, and which as Breslow notes means "being less dovish than the meeting previews suggested is now a sign of bullishness on the economy." This sets the Fed on a collision course with the market because "with the market pricing fewer hikes than the Fed suggests, someone is going to end up being wrong."

 
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Global Stocks Slump As Mining Rout Accelerates, Concerns Grow About Chinese "Stealth Devaluation"





Overnight market action has largely been a continuation of Tuesday's key themes with European stocks falling as a selloff in mining companies extended to a 7th day, even as metals prices rose and crude oil rallied modestly from a six-year low after yesterday's API crude inventory draw. U.S. equity futures have rebounded from modest declines, as emerging-market shares extended their losing streak to a 6th day while Asian stocks dropped to 2 month lows.

 
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Bloodbath In Bonds - Yields Jump Most In 7 Months





The entire Treasury curve is getting battered with 30Y +13bps, back above 3.00%. The belly is the most dramatic with 7Y yields up over 11bps - the biggest single-day surge in 7 months. 5Y yields are up over 9bps pushing back to the "wall" of resistance...

 
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Weekend Reading: Differing Diatribes





Importantly, while the "bias" of the market is to the upside, primarily due to the psychological momentum that "stocks are the only game in town," the mounting risks are clearly evident. From economic to earnings-related weakness, the "bullish underpinnings" are slowly being chipped away.

 
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DoubleLine's Gundlach Warns "These Markets Are Falling Apart"





The odds of a December rate hike have slipped in recent days from over 70% intraday to 64.0% today as, while economists remain convinced that rates will rise in December, traders appear a little less confident. One of the most outspoken - having doubted The Fed (and questioned the economy's ability to handle even a 25bps rate hike) since Spring - DoubleLine Capital co-founder Jeffrey Gundlach said on Sunday that the Fed may hesitate to raise rates given rocky economic and financial conditions making it clear, as Reuters reports, "certainly [a Fed] No-Go is more likely than most people think. These markets are falling apart."

 
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Global Stocks Fall For 5th Day On Disturbing Chinese Inflation Data; Renewed Rate Hike Fears; Copper At 6 Year Low





The ongoing failure of China to achieve any stabilization in its economy, after already cutting interest rates six times in the past year, and the prospect of a U.S. interest rate hike in December, had made markets increasingly jittery and worried which is not only why the S&P 500 Index had its biggest drop in a month, but thanks to the soaring dollar emerging market stocks are falling for a fourth day - led by China - bringing their decline in that period to almost 4 percent, and the global stock index down for a 5th consecutive day.

 
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Prominent Permabull Says Correction Not Over Yet, Expect "Final Capitulation"





"The strong stock market rally during the last few days has pushed the S&P 500 near its highest closing level since the correction began in late August. This has boosted optimism that the recent selloff may be ending. While this could certainly prove to be the case, we remain less sanguine that the vulnerabilities, which initially produced this correction, have yet to be resolved. Ultimately, we expect a more fearful investment culture suggesting a final capitulation and more importantly, a lower stock market valuation level able to withstand a less hospitable recovery as the economy nears full employment."

 
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BIS Warns of ‘Major Faultlines’ In Global Debt Bubble





BIS Warns of ‘Major Faultlines' In Global Debt Bubble - "Unrealistic and dangerous to expect that monetary policy can cure all the global economy’s ills"

 
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Gundlach Explains Why The Market Hasn't Crashed Yet: "People Are Holding And Hoping"





 "The reason the markets aren't going lower is people are holding and hoping." Incidentally, there is a reason why hope is not a strategy: in the end, it always fails.

 
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"We Will Have A Downturn", Dalio Warns, Return To QE Inevitable





"What scares me, or what worries me, is what the next downturn in the economy looks like, with asset prices where they are and a lesser ability of central banks to ease monetary policy."

 
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