China’s central bank announced a major change to the yuan's fixing regime, effectively removing a key component - the "counter-cyclical factor" - used by banks to calculate their submissions to the currency’s daily reference rate.
“Potential consequent reactivation of sanctions may cause Iran to export oil using the Chinese Yuan denominated contract, which launches on 18 January...This may spark a move away from the present long-established U.S. Dollar (USD) denominated oil trading regime.”
The MSCI World is currently at its longest streak in history without a 5% correction, while the MSCI EM is at its longest streak in history without a 10% correction.
On the surface, it looks like downside risks have been destroyed - papered over by ultra-low interest rates. But he said they've only "shifted it in form and time creating new and unique fragilities as they try to transmute what cannot be changed."
"Stocks are surging and signs of receding skepticism are everywhere. Broker clients are adding stocks hand over fist. Price targets meant to last a year, last days."
"No speculative mania has ever been easier for everyone in the world to participate in than the crypto markets, yet this would qualify as the most underowned, concentrated bubble in history."
This week's post payrolls data calendar is pretty modest: the US reports consumer credit today, small business optimism tomorrow, but attention is reserved for CPI and retail sales on Friday.
"From my perch, markets are engaged in a historic blow-off move fueled by artificial liquidity & complimented by a temporary earnings boost. The combined resulting excess in conjunction with no visible improvements to structural problems will worsen the impacts of an eventual recession. "
While labor market fundamentals appear solid, some banks such as Goldman expect a deceleration from the pace of job gains in October and November as well as a modest drag from winter storms around the December survey period.
"Amidst all of the bullish talk about cryptocurrencies we know that a strike back from the banking system and its owners is coming. In fact, the attack as I see it is well underway..."
"We recently took our remaining high yield positions to zero as we prepare for deterioration in lower-quality earnings in the U.S. led by lower operating margins.”
“As a historian of the great equity bubbles, I recognize we are currently showing signs of entering the blow-off or melt-up phase of this very long bull market...Good luck. We’ll all need some."
2017 was not a good year for Byron Wien's traditional list of economic, financial political "surprise" forecasts, so let's see if 2018 will be any better.
"2017 will be remembered as the Year of the Blockchain. There’s no doubt in my mind that blockchain technology is here to stay. But, at the same time, as I look around I see the explosion of blockchain projects and wonder about their usefulness..."
