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…

ECB To Loosen Rules On QE In Bid To Keep The Kool-Aid Flowing

The British pound wasn’t the only thing stirring in FX markets on Thursday. Have a look at the EUR: Ok, so we know what happened at 11 am ET. As we detailed earlier, that was Bank of England governor Mark Carney telling everyone what they already knew - policy easing from the BoE is on…

Pounded: British Pound Plunges, Stocks Soar As Bank Of England Comes To Rescue

This is yet another one of those days where everything can pretty much be explained in one chart. Here it is: Bank of England governor Mark Carney gave his second speech since the Brexit vote on Thursday and all but assured the market that more BoE easing is in the cards. “The economic outlook has…

Are You For Real? Enjoy The Rally, But Remain Incredulous

First thing’s first. Here’s the only chart you need to make sense of the two-day risk-on move (i.e. the rally): You’ll likely see several versions of that throughout the rest of the day assuming equities hang on to outsized gains. Basically, Treasurys aren’t buying what stocks err … aren’t selling. Ok, that’s a confused attempt…

A Look At Active Manager Positioning And A Chinese Intervention

On Tuesday, we took a look at what works as a hedge during equity drawdowns. Last week, we took stock (no pun intended) of which companies and sectors were most exposed to Brexit and also to a rising dollar. No sooner had we finished analyzing where to turn in turbulent times than risk went crazy.…