It’s All About The Flow
So one of the themes we’ve explored here and elsewhere recently is the extent to which the move into NIRP across Europe and in Japan has herded investors into USD credit thus putting a bid under Treasurys. However, as the dollar funding crunch has accelerated, hedging that exposure has nearly eliminated the spread. Deutsche Bank…
Aimless Markets Cast Wary Eye Toward Jackson Hole
It’s yet another day of aimlessness across markets as the entire financial universe awaits Janet Yellen’s Jackson Hole speech. Just about the only other thing anyone seems to care about this week is EpiPen prices. As far as Yellen goes, Citi conducted a survey to find out what the market expects. Here are the results:…
Boy, Oh Boy
Boy, oh boy, you know it’s August when this is a Bloomberg “headline”: DUNKIN' COLD-BREW COFFEE LAUNCH WAS `VERY STRONG’ Fantastic. We’re not sure what the counterfactual there would be (maybe “Dunkin’ says cold-brew launch was complete dud”), but hopefully this market will get some caffeine next week once everyone has the weekend to decode…
R.I.P. “Real” Markets
Well, just as we said on Monday evening, we’re still sleepwalking ahead of Yellen. A Wednesday in August ahead of a hotly anticipated Jackson Hole speech by a Fed chair is about the sleepiest scenario one can possibly imagine, but there are some notables (thank God). First of all there’s crude. EIA data was actually…
Rampant Complacency
You just have to laugh. Stocks closed green across the board and the Nasdaq hit an all-time intraday high as investors cheered upbeat housing data and a big beat from Best Buy which, along with Wal-Mart’s decent quarter, goes some ways towards allaying fears about the American consumer. Frankly though everyone is just shaking their…
“We Have Ignition”: Iran Tape Bomb Sends Crude Higher
We’ve said it before and we’ll say it again: when it comes to crude prices, it’s all about geopolitics one way or another. There’s way too much emphasis placed on discrete rig count prints and US inventory data. Concurrently, there’s way too much credence given to the idea that OPEC is “dead.” The whole point…
The Most Dangerous Word In All Of Finance
There is perhaps no more dangerous word in the financial lexicon than “contained.” As a general rule, anytime someone tells you something is “contained,” it’s probably not. After all, they wouldn’t be talking about it in the first place if it were. Nothing can be truly “contained” anymore. It’s not possible in a globalized world…
Dog Days Drag On As Markets Eye Yellen Speech
“It’s the epitome of the dog days of summer,” Kent Engelke, managing director at Capitol Securities Management Inc told WSJ today, adding that “we’re all just sitting on our hands.” Indeed. Fed Vice Chair Stanley Fischer spoke in Colorado on Sunday and although the message was just as muddled as you’d expect it to be…
Looking Out For Landmines
It’s been a good run since late June. If you were in US or European equities you racked up double-digit gains. Meanwhile, we’ve got dead vol walking: And although we’ve discussed this countless times, given where we are valuations wise (i.e. stretched to the max at something like 18X for the S&P) and where we…
“Emerging” Problems? BIS Warns On $3.5 Trillion In EM USD Debt
In a column posted elsewhere earlier this week, we took a look at what rising LIBOR means for China’s currency. Essentially, Chinese corporates that borrowed in dollars post-crisis are now frantically trying to reduce their debt as the cost to service it is tied to LIBOR. Effectively, that means selling yuan to buy dollars, which,…
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