Category: zerohedge

Another day, another collapse in a measure of the 'peoples' confidence. Despite the animal spirits of euphoric dot-com bubble betting that is the new-normal US equity markets, it seems both rich and poor are not loving it. Bloomberg's consumer comfort index dropped to -37.9 – its lowest since October 2012 having dropped for the 6th week in a row. The last time we saw a collapse of this size, the Fed saved us all with QE3… what this time?

 

 

"they" better hope confidence comes back soon…

Via Citi,

Is consumer confidence set to turn?

Consumer Confidence is once again following a dynamic where we see it move higher for 4 years and 4 months before beginning to collapse

• Moves higher from 1996-2000 with a smaller dip halfway through in October 1998
• Moves higher from 2003-2007 with a smaller dip hallway through in October 2005
• Moves higher and so far tops out in June 2013. Also sees a small dip halfway through in October 2011.

 

Higher yields do not help confidence…

 

A sharp rise in mortgage rates has a negative feedback loop to consumer confidence. For those families and individuals that were now looking/able to enter the housing market, the recent spike in rates acts as a headwind.

 

In addition to the economic backdrop, there is plenty of tail risk as we head into the end of the year. Oil prices have been rising since the summer began (and in reality since the Summer of 2012), partially due to geopolitical risks which are very much “top of mind.” A bigger spike due to a supply shock would choke the economic recovery.(In our view)

In the US, the appointment of a new Fed Chairman and the upcoming budget/debt ceiling debates are likely to bring added volatility. Tapering itself can also induce concern as the “Bernanke put” is being removed from markets.

In Europe, many of the structural problems related to the single currency union have not actually been addressed and the peripheral countries could still create turmoil going forward (see Fixed Income section focusing on Italy in particular for more on this). There has also been little concern with both the German elections and the German Court decision on the constitutionality of the OMT program. A surprise in either of these could be cause for concern.

Emerging Markets are still not out of the woods yet as growth has been weak relative to expectations and countries with current account deficits are beginning to feel pressure in their FX and Bond markets. This is an issue we believe is only starting to develop which we will continue to expand on at later dates.(We have also looked at this in our EM FX section this week)

Overall, the weak economic backdrop, poor housing recovery and potential for tail risk events over the next few months suggest that we have topped out in Consumer Confidence, a warning sign for equity markets.

 

The relationship between Consumer Confidence is clear, and IF June did mark the high and Confidence continues to decline, then we would expect to see that translate to weakness in the equity markets. The removal of the “Bernanke put” only adds to this concern.

A major turn has taken place in equity markets on average four months after Consumer Confidence turns, which would point to a decline beginning around September-October. As we have previously expressed, we remain of the bias that a correction in equity markets on the order of 20%+ is likely this year/ into 2014 and the current dynamics support such a move.

Should we see a decline of that magnitude, it is almost certain that yields would move lower in a rush to safe assets.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/CLJf726XtEA/story01.htm Tyler Durden

This is what client-facing desks are seeing at various banks across Wall Street right now. One example below:

PLEASE DO NOT ENTER ANY MARKET ORDERS FOR TWTR UNTIL AFTER THE STOCK STARTS TRADING. THESE ORDERS ARE CAUSING A LARGE NUMBER OF REJECTS WHICH MAY DELAY ENTRY OF YOUR ORDER.

 

THANK YOU FOR YOUR CO-OPERATION

Translation: slow down damn it, there will be more than enough shares sold to satsify all demand. Why is there a scramble? Because of this: TRADING RANGE: TWTR (NYSE): 40.0000-44.0000

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/By1IBQA1tHk/story01.htm Tyler Durden

“I’m buying coz everyone is talking about it…”

 

 

We note that, according to Reuters, the IPO is 30x oversubscribed, and bear in mind that banks have advised internally to cancel all limit orders that are over 15% below the NBBO. Which means keep a trailing limit order at 14.99% or less below the NBBO in case of ‘market events’.

We are sure, given all these ‘extra’ rules that greed will take a back seat, that the machines will cross their arms and wait patiently, and that TWTR will open just as CNBC’s Bob Pisani hoped – higher with a gentle drift higher all day… </sarc>

 

(h/t @MWellerFX)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/rtCaxmvp1gI/story01.htm Tyler Durden

The initial ramp-and-revert in gold (and silver) prices gave way to a $20 price collapse once Draghi began speaking – as if someone decided that Draghi’s speech was somehow ‘credibility-providing’ for the status quo… we assume this move is reflective of Draghi’s ‘dis-inflationary’ warnings (though th einitial move seemed sparked by the better-than-expected GDP print – so Taper on?) What the un-reflexive jerk in precious metals fails to see – it would seem – is the need for the European central bank to reflate by whatever means possible that deflationary trend…(even if the Fed slows, it will be back soon enough). Gold futures saw volume explode as he began speaking (and US GDP pronted) but price plunged and volume legged even higher as Draghi mentioned the ‘d’ word…

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1bfUch_Iss0/story01.htm Tyler Durden

A day of fireworks that started with the stunner by Goldman’s head of the ECB has just gotten its second wind following the preliminary announcement of Q3 GDP, which roared from 2.5% to 2.84%, far above expectations of a 2.0% annualized number.

On the surface this was a bad number for Taper watchers, as it may mean the Fed will actually have to moderate its monthly flow precisely at the time when the ECB was forced to do “whatever it takes” in its fight with inflation, however a quick look at the internals shows that once again there is much more than meets the eye: because while the headline print was the strongest since Q3 2012, the core driver of economic growth, Personal Consumption, grew 1.5% below the expected 1.6%. Specifically, of the 2.84% number, PCE was just 1.04%, the lowest since Q2 2011!

Elsewhere, fixed investment – an indication of capex –  was just 0.63%, below the 0.96% reported last quarter. So what drove “growth”? Why the traditional hollow component: Inventory, which amounted to 0.83% of the 2.8% print, double the 0.41% in the prior quarter. Net trade added an additional 0.3%, and finally government ticked on a modest 0.04% – the first positive contribution since Q3 2013.

In short: a little in here for everyone, with the market bulls happy to point out that the US consumer is the weakest he has been in over two years, while economist happy to highlight that the US economy is, in fact, growing at a brisk pace.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/pMpgClA_MMo/story01.htm Tyler Durden

Assuming the last few weeks were useless garbage data and based on the fact that the government claims no states “estimated” data this week, the 5th weekly miss in a row for jobless claims (albeit very minor) has the level reverted to mid-August levels. Notably, extended and emergency benefits rose 65,000 to 1.37 million people.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/25bdPlMwvbI/story01.htm Tyler Durden

We noted yesterday that if the EUR got much stronger then peripheral Europe was going to lose much of its ‘competitive’ gains and while this is a notable surprise to many, we can’t wait to hear how Draghi explains the decision given the world’s insistence that Europe has turned the corner already… (which it clearly has not).

• *DRAGHI SAYS EURO AREA GROWTH RISKS REMAIN `ON THE DOWNSIDE’
• *DRAGHI SAYS EURO AREA INFLATION RISKS ARE `BROADLY BALANCED’
• *DRAGHI: MARKET CONDITIONS POTENTIALLY NEGATIVE FOR ECONOMY
• *DRAGHI SAYS UNEMPLOYMENT REMAINS HIGH
• *DRAGHI: EURO AREA MAY FACE PROLONGED PERIOD OF LOW INFLATION

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/azGi3V6YEiY/story01.htm Tyler Durden

We noted yesterday that if the EUR got much stronger then peripheral Europe was going to lose much of its ‘competitive’ gains and while this is a notable surprise to many, we can’t wait to hear how Draghi explains the decision given the world’s insistence that Europe has turned the corner already… (which it clearly has not).

• *DRAGHI SAYS EURO AREA GROWTH RISKS REMAIN `ON THE DOWNSIDE’
• *DRAGHI SAYS EURO AREA INFLATION RISKS ARE `BROADLY BALANCED’
• *DRAGHI: MARKET CONDITIONS POTENTIALLY NEGATIVE FOR ECONOMY
• *DRAGHI SAYS UNEMPLOYMENT REMAINS HIGH
• *DRAGHI: EURO AREA MAY FACE PROLONGED PERIOD OF LOW INFLATION

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/azGi3V6YEiY/story01.htm Tyler Durden

Draghi’s ‘surprise’ rate cut has sent every correlated asset soaring this morning. Aside from the EUR crashing over 150 pips instantaneously, S&P 500 futures snapped 10 points higher to 1775; Treasury yields dropped 3bps; Silver and Copper jerked 0.5% higher (but quickly reverted in the former as the USD strengthened); European equities (especially Spain and Italy) popped 2%; and peripheral bond yields moved to new multi-year lows with spreads dropping 10bps or so. With Draghi now at ZIRP effectively, who’s next top pass the easing parcel to (not the Chinese). What is interesting is that US equities, Treasury yields, and commodities are all fading just a little off that kneejerk – even as EUR presses lower.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/JrEynW99gQQ/story01.htm Tyler Durden

One momo company that will almost certainly miss out on all of today’s Twitter/ECB induced BTFATH-euphoria, is Tesla which is down 3% premarket at last check for one simple reason: the one shown on the photo below. This is the third reported car fire in the past month. So much for that “best safety rating of any car ever tested” – perhaps it really is time to inquire just what the NHTSA kickbacks were in order to go with that “objective” determination?

Source: Teslamotorsclub

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/cK65vxpUBzQ/story01.htm Tyler Durden