US equity futures continued their Monday ramp, rising 0.5% alongside advancing stocks in Europe after investor focus shifted to earnings and the economic outlook, and away from fading geopolitical and trade war risks.
Gross leverage at Long/Short hedge funds just suffered the fastest collapse in gross exposure on record; a pattern that is oddly similar to what happened during the last euphoric surge in mid-2007.
The key economic releases this week are retail sales on Monday and industrial production on Tuesday. In addition, there are numerous scheduled speaking engagements by Fed officials this week.
"Whenever one invokes the words 'late-cycle' or 'end of the cycle', the natural response is to want to sell everything, especially since memories of the 2008-09 or 2000-02 corrections are still vivid."
As any rollercoaster ride goes, fasten your seat belt and keep all arms and legs in the vehicle. With the first three months of 2018 behind us, it is clear that this year will be very different from the last...
"Far from deflation, the Fed’s only response to the next credit crisis will be to take measures that will lead to the final destruction of the dollar. Other central banks are set to follow. Deflationists don’t have a leg to stand on..."
"Due to the many criticisms and changing methodologies of the consumer price index as a true measure of inflation, we use the price of gold as a very good proxy of the true value of a dollar over long periods of time."
For the 3rd day in a row, the Hong Kong Monetary Authority (HKMA) intervened in the FX markets and for the 3rd day in a row, failed to lift the Hong Kong Dollar off the lower limit of its peg band.
"Low vol is gone and this changes everything: We recommended starting to invest in convexity, as the window for pricing to catch up, or overshoot, is likely to be small."
Attention was focused on JPM's income statement, and specifically how the bank's high-margin FICC and sales and trading group performed in a time of rising volatility. The answer: quite well with FICC flat, but equity markets revenue surging to a record high.
As DB's Jim Reid says this morning, "Welcome to Friday 13th. As everything is so calm and stable in the world at the moment what could possibly go wrong today?" As of this moment, not much judging by the solid bid in overnight markets.
