Red Light, Green Light

Earlier this week, we explained how pretty much everything you’re seeing in terms of market swings can be at least partially explained by central bank frontrunning. Stocks up? Investors anticipate the Fed will delay its next hike thanks to the Brexit debacle. Dollar up? Investors know that even if the Fed doesn’t hike, it’s still…

Fed Minutes Reveal Pernicious Policy Paradox; Bond King Says Hang On To Gold

They needed some “additional data.” Data like a vote count from the UK, where the possibility of an imminent black swan landing sealed the deal for no FOMC hike in June. "Members generally agreed that, before assessing whether another step in removing monetary accommodation was warranted, it was prudent to wait for additional data on…

Markets Look To Fed Minutes, Jobs Report With Wary Eyes; Goldman Sees “Drawdown”

If you think it feels a bit tenuous out there you’d be right. On the heels of a rather inauspicious Tuesday session that saw the British pound hit a 31-year low while crude and gasoline futures plunged on (over)supply concerns, it was risk-off overseas, a sentiment that muddied the waters on Wall Street ahead of…

Free Fall: British Pound Hits Three Decade Low, Crude Collapses

Ok, so two things: the British pound and oil. They’re both crashing. Let’s turn first to GBP, because it’s sitting near a 31-year low (inset). “There’s a lot of nervousness in the sterling market,” Commerzbank’s Thu Lan Nguyen dryly remarked on Tuesday morning. Yes, “a lot of nervousness.” You know, it’s the whole “a 30yr…

The Tired Rally That Refuses To Die

We’ve talked a lot about the likelihood of a US recession over the past couple of days (see here and here) - probably not exactly what everyone wanted to hear over the holiday weekend. It’s not so much that we want to come across as doomsayers. Rather, the point is to assess the extent to…

Another Take On Recession Risk And One Bank’s Look At Market “Stress”

If you’re looking for signs that the US economy will steer clear of recession, don’t look at the yield spread between 2-year and 10-year Treasurys: As Bloomberg’s Tracy Alloway noted on Monday, the curve is getting “flat as a pancake,” and that’s not generally a good sign for the economy. Bloomberg was referencing the latest…

Silver, Gold, Havens Bid Ahead Of Critical Week For US Equities

We’ve talked quite a bit of late about bonds and stocks sending conflicting signals. In fact, the bond/stock mixed message was in many ways the most important takeaway from last week’s euphoric bounce off the post-Brexit lows. Here’s a look at how risk performed versus yields on US, German, and Japanese government bonds: Notice yields…

“See No Evil”: A Recession Is Coming, But Who Cares?

Last year, the Bureau of Economic Analysis did away with recessionary GDP prints through the magic of “residual seasonality.” The thing about numbers is that they don’t, generally speaking, lie. But statistics sure do. That’s because numbers are just numbers until humans start tinkering with them. Once the human element is introduced, you can throw…

Look East On The 4th, That’s Where The Real Fireworks Are

As we head into the holiday weekend, why not think about China? Actually, wait. Don’t answer that. It’s the 4th of July. Independence Day. So for US traders, that’s probably one reason not think too hard about China. Let’s try that again: as we head into the holiday weekend, it’s important to remember that as…

Love It? Well Then Buy It!

If you see something, buy something. That’s been the mantra since Tuesday. Put simply: it’s up. It’s all up. Every single bit of it. Stocks, oil, gold, Treasuries, bunds. All of it. UK equities have rallied an astounding 10% since Tuesday. And why not? It’s not like they just voted to leave the EU. There…