In what has been another quiet overnight session, which unlike the past two days has not seen steep, illiquid gaps higher in US equity futures (the E-mini was up 3 points and accelerating to the upside as of this writing so there is still ample time for the momentum algos to go berserk), the main event was the price of Brent rising above $50 for the first time since November with WTI rising as high as $49.97.
The single biggest event overnight was the PBOC's devaluation of the Yuan to the lowest since March 2011, setting the fixing at 6.5693, the highest in over 5 years and in direct response to a stronger dollar, which however if one looks at the DXY remains well below the recent highs in the 100 range, suggesting for China this is only just beggining. However, the fact that there was not more volatility in onshore and offshore overnight FX also comforted the market that at the same time as its was devaluing the PBOC was also intervening in the FX market, thus providing some assurance it would not allow runaway "risk off" sentiment prevail, nor would it promote another blitz round of capital outflows, leading to another gradual levitation in overnight risk.
While far less attention is being paid to hedge fund 13F filings, which show a stale representation of equity long stakes among the hedge fund community as of 45 days prior, than in years gone by as a result of increasingly poor performance by the 2 and 20 crowd, they still remain closely watched source of investment ideas but mostly to find out what the new cluster ideas and hedge fund hotel stocks are at any given moment. Here are the highlights from the latest round of 13F filings.
- European Stocks Fall as Chinese Economic Data Disappoint (WSJ)
- Oil Climbs to Highest Since November as European Shares Retreat (BBG)
- Yen weakens on Japan intervention talk before G7 meets (Reuters)
- Wall Street’s Bond Forecasters Splinter as Fed Credibility Wanes (BBG)
- Amazon to Expand Private-Label Offerings—From Food to Diapers (WSJ)
- Oil prices rise on Nigerian outages, Goldman forecast (Reuters)
As we reported earlier today, following the surprising "resignation" of the company's CEO and Chairman, Renaud Laplanche as a result of an "internal board review of sales of $22 million in near-prime loans to a single investor", which resulted in the stock losing a quarter of its market cap in minutes, subsequent revelations have seen the spotlight shining brightly on none other than former Morgan Stanley CEO and current Lending Club board member, John Mack, who according to Bloomberg invested in the same venture that led to the termination resignation of the CEO.
U.S. officials have warned of “diplomatic and economic fallout from the [looming 9/11] legislation.” So what sort of economic fallout do they envision? Part of the concern is no doubt related to the impact on global financial markets from a Saudi fire sale, but there’s a potentially even bigger concern at play. Specifically, Saudi Arabia pays Washington insiders an exorbitant amount of money to put the monarchy’s interests ahead of what’s best for the American people.
If asking traders where stocks and oil would be trading one day after a weekend in which the Doha OPEC meeting resulted in a spectacular failure, few if any would have said the S&P would be over 2,100, WTI would be back over $40 and the VIX would be about to drop to 12 and yet that is precisely where the the S&P500 is set to open today, hitting Goldman's year end target 8 months early, and oblivious of the latest batch of poor earnings news, this time from Intel and Netflix, both of which are sharply lower. We expect that after taking out any 2,100 stops, the S&P will then make a solid effort to take out all time highs, now just over 1% away.
China Proposes Unprecedented Nationalization Of Insolvent Companies: Banks Will Equitize Non-Performing LoansSubmitted by Tyler Durden on 03/10/2016 10:48 -0400
In one simple move, Beijing is about to "guarantee" trillions in insolvent Chinese debt.
- Angry White Males Propel Donald Trump—and Bernie Sanders (WSJ)
- Trump Beats Back Attacks and Tightens Hold on Primary Race (BBG)
- Fed Likely to Stand Pat on Rates, Keep Options Open for April or June (Hilsenrath)
- Draghi Stimulus Fails in Stock Market as Swings Match 2008 (BBG)
- Sabine Oil wins pipeline ruling in a blow to pipeline operators (Reuters)
With China's Plunge Protection Team having intervened and set a positive spin on another poor session, traders put declines in Asia behind them as European markets rose along with U.S. index futures and commodities. European shares advanced for the first time in three days on speculation the region’s central bank will ramp up monetary stimulus on Thursday. A gauge of raw materials rebounded from its biggest selloff in a month, buoyed by gains in oil and copper. Furthermore, the previously noted selloff in Japanese government bonds - one which triggered circuit breakers and which some speculated may have been precipitated by the BOJ itself - dragged Treasuries and German bunds lower, gold fell a second day and the euro dropped versus most of its major peers.
With just two days left in 2015, the main driver of overnight global stocks and US equity futures remains the most familiar one of all of 2015 - crude oil, which, after its latest torrid bounce yesterday has resumed the familiar "yoyo" mode, and again stumbled dropping below $37 on yesterday's surprising API 2.9 million crude inventory build, as well several more long-term "forecasts" by OPEC members, with Kuwait now budgeting for $30 oil, while Venezuela's Maduro said the oil price fell to $28/bbl and is "headed downward." As a result U.S. futures declined and European stocks fell, extending their worst December drop since 2002 in thin volume on the last full trading day of the year.
When the word 'bloodbath' just doesn't quite sum it up, distressed debt investors's bonuses have been obliterated in 2015. Despite seeking safety away from oil and coal companies, one trader exclaimed, the pain is "like cancer, it's spreading throughout the body," as every industry from materials to retail and industrials has collapsed... though, as Bloomberg reports, some investments stood out in their awfulness.
“To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything.” ~Edward Abbey
“They need to show they’re selling quickly to calm markets and stop the free fall of their shares. For that to happen they need to accept the price buyers want to pay.”
As a result of the global commodity weakness, global stocks have fallen for the first time in six days as the sell-off in commodities continued, dragging both US equity futures and European stocks lower. However, putting this in context, last week the MSCI All Country World Index posted its biggest weekly gain in six weeks: alas, without a coincident rebound in commodity prices, it will be merely the latest dead cat bounce.