Exposing The Lie Behind “Efficient” Markets

We’ve talked tirelessly about how correlated and interconnected markets have become in the post crisis world. If you believe in the efficient market hypothesis, you believe - generally speaking - that asset prices always reflect available, relevant information. In other words, you can’t “beat the market.” It’s always going to “beat” you to the mark…

A Tale Of Two Manufacturing Prints

So it was more mixed signals about the state of the global economy on Thursday with manufacturing reports out of the UK and the US painting starkly different pictures of economic health. At around 4:30 ET we got the UK print. Here’s the Bloomberg summary: U.K. Aug. Manufacturing PMI 53.3 vs 48.3 in July; Est.…

Stop The Madness

Sometimes really smart people say things that seem really silly in times when rationality has been pushed aside by some powerful force exerting undue pressure on markets. Allow us to give you an example. The following are excerpts from Friday’s commentary by Bloomberg’s Mark Cudmore, a former FX trader who writes a daily missive: “Stop…

Dollar Dilemma Looms As Greenback Hits Three-Week High

“We’re in a world where they seem to work. They may be difficult to deal with for savers, they go along with quite decent equity prices.” That rather disquieting quote is from Fed Vice-Chair Stanley Fischer who was the Fed speaker du jour on Tuesday in yet another week where markets are simply waiting around…

Looking Ahead To Friday: NFP Preview

Citi has some “things” they want you to take note of headed into the Friday jobs number that could ultimately determine “to hike or not to hike” next month. Here are the bullets (these are based on the initial print, i.e. not the revision): In these 19 years the August initial print has been above…

Stocks Rise, Crude Tumbles As All Eyes On NFP

On Saturday we noted that “buy the dip” has now ceased to be a condescending nod to retail investors and/or a critique of central bank largesse. Instead, Wall Street now openly advocates it. Here’s the quote from Deutsche Bank: “We suspect the Fed’s insistence to raise again will therefore allow bouts of market price adjustment…

It’s So Simple: “Buy The Dip”

If you believe the Street, “buy the dip” has become scripture. We talked extensively this week about the Fed doing everything it can to preserve its optionality going forward. That was readily apparent on Friday when Yellen and vice Chair Fischer adopted seemingly contradictory lines. Optionality or no optionality, it’s starting to feel like we’re…

Konichiwa

Alright, well we made it. It’s Friday. Yellen spoke and we survived. The rally lives. Another few red points on the Dow and S&P and the Nasdaq’s marginally green. This was pretty easy to see coming. The optionality is critical. This is another one of those situations where you have to wonder what the alternative…

Confusion Reigns After Yellen Jackson Hole Speech

Well, we waited around all week only to get… nothing. Here’s the bullet point summary of Yellen’s Jackson Hole speech: FOMC STILL SEES GRADUAL HIKES APPROPRIATE OVER TIME OUR ABILITY TO PREDICT FED RATE PATH IS QUITE LIMITED FOMC EXPECTS LABOR MARKET TO CONTINUE TO STRENGTHEN SOME ESTIMATES SHOW REAL NEUTRAL RATE CLOSE TO ZERO…

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…