Tag: news

“The World Is Scary, Markets Not So Much” (For Now)

Despite huge intraday swings, stocks have been range-bound for a month as Treasury yields tumble and the yield curve inversions extend to 12-year lows.

Source: Bloomberg

But, despite the relatively tranquile range of stocks, former fund manager and FX trader Richard Breslow notes that traders are having a devil of a time dealing with intraday volatility.

But, Breslow notes, perhaps the most useful skill one can have in these unsettled markets is picking your canaries judiciously. It’s easy to pick out ones that match your outlook and go with them. Ignoring the ones that don’t suit. Especially in an environment where it is hard to find all that many people who are feeling optimistic.

Via Bloomberg,

Emerging market currencies as an asset class certainly look ugly. That’s often a good one to keep an eye on. The MSCI Emerging Market Currency Index made a new year-to-date low today. The inversion of 2s/10s on the U.S. Treasury yield curve might fit the bill. Yet after the early August dramatics, the MSCI Asia ex-Japan equity index looks positively stable, and is trading currently at a price seen multiple times over the last few weeks. Hong Kong’s Hang Seng, which has every right to be falling, sits some 2.5% above important technical support, having handily held that level — which it tested two weeks ago.

German economic numbers continue to look appalling while the spread of BTPs to Bunds, as wacky as it can be, traded today within 5 basis points of its narrowest levels of the year. There are a lot of conflicting signals out there. More than most traders probably expect. Even within the Governing Council of the ECB you can find diverging opinions to suit your view. Jens Weidmann’s “Dr. No” versus Olli Rehn’s “let’s give the market a package that will really impress them.”

Earlier this month there were suggestions that the Fed might consider convening an emergency rate meeting. A few days later the S&P 500 was attempting to get back above its 55-day moving average. Last Friday a lot of people were sure the gauge was going to collapse. It never took a serious look at its 200-DMA. And despite sometimes feeling like death, Monday’s close was at a price we saw on eight of the previous 15 trading days.

Source: Bloomberg

Particularly at this time of the summer, with two long weekends either side of the week, it is completely understandable if an individual proprietary trader decides to call a time-out. And who could fault someone working in Hong Kong for having a very different world view and perception of risk than a short-term interest rate trader with an office in Canary Wharf?

I’m sure quantitative models have taken down leverage on their own just based on their ability to forecast P&L volatility. They don’t like random social media broadsides either. Just less so than humans, who may find it’s prudent to pick their spots more selectively, be very mindful of lining up liquidity sources and stick closer to their knitting. In retrospect, taking a “nothing can go wrong” approach to Argentina was perhaps somewhat cavalier.

Source: Bloomberg

But there isn’t anything to suggest that the markets have become untradeable. And whether it’s appropriate or not, will ultimately do any good or not, central banks are unambiguously in easing mode. Think how easy it was earlier today for RBA Deputy Governor Guy Debelle to make it clear quantitative easing is very much in their toolkit if needed. Thankfully, he seemed to have steered away from the notion of negative rates. So, extra credit to him.

No one said it was guaranteed to be easy. Or even fun. Obviously things can go wrong. And there are plenty of candidates trying to make that happen. But as one of the most successful quantitative hedge fund managers I’ve ever known told me, to take off risk just because you are scared or tired is a self-defeating strategy.

You can forecast many things, but not when opportunities will present themselves.

via ZeroHedge News https://ift.tt/341FDsy Tyler Durden

Americans Haven’t Been This Confident About The Current Situation Since 2000

According to the latest survey from The Conference Board, Americans are most confident about the current situation since November 2000 (but expectations for the future dipped in August).

  • Headline consumer confidence in August fell to 135.1 vs 135.8 in prior month.

  • Present situation confidence rose to 177.2 vs 170.9 last month

  • Consumer confidence expectations fell to 107.0 vs 112.4 last month

That is the highest level of ‘Present Situation’ since Nov 2000

Source: Bloomberg

The Labor Differential indicator exploded higher (from 33.1 to 39.4) back near record highs…

Source: Bloomberg

 

 

 

 

 

 

 

via ZeroHedge News https://ift.tt/2MEpeEY Tyler Durden

Watch Dave Chapelle Eviscerate Cancel Culture

I don’t expect cancel culture to die off anytime soon, but if it does, it will be because Dave Chapelle shot it to death with the 12-gauge shotgun he was apparently saving for heroin-addicted white people trespassing on his property.

In his new Netflix special, aptly titled “Sticks and Stones,” Chapelle takes aim at the woke scolds, and he’s firing buckshot because birdshot, well “that won’t kill a man.” Here’s one of his first jokes:

Chapelle humorously critiques school mass shooting drills, Jussie Smollett, the excesses of the #MeToo movement, and LGBTQ activists—or “the alphabet people” as he calls them—for thinking they should be immune from mockery.

“Everybody loves me, and I love everybody,” Chapelle assures the audience. “I got friends who are Ls, who are Bs, and I got friends who are Gs. But the Ts hate my fucking guts.”

As if proving his point, the usual suspects in the media are already denouncing Chapelle. Vice accuses him of “tarnishing his own legacy.” The Ringer contrasted Chapelle with Aziz Ansari: The latter is “circumspect and performatively torn” in his latest comedy routines, while the former is regrettably “openly combative.” That Ansari is required to beg for forgiveness after being publicly smeared by clickbait-driven hacks—and to remain grateful for this second chance—is exactly the kind of insanity Chapelle is deftly skewering.

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Saxo Warns Equities Are “Treading On Thin Ice”

Saxo Bank’s head of equity strategy, Peter Ganry, is unequivocal in his latest note, equities are treading on thin ice and have terrible risk-reward attributes.

Via Saxo Bank,

As we released our Q3 Outlook a couple of months ago the world was slowing down fast and the probability of a recession was rising.

Nevertheless, investors were buying the Powell Put elevating equities to new highs. Hope and confidence were in abundance. We zoomed out and wrote our Q3 Outlook around the theme of global supply chain shock, economic slowdown, US-China decoupling, higher input costs from green policies and inequality driving a wage war. Overall our stance going into Q3 was underweight equities vs bonds.

Equities have terrible risk-reward

Comparing global equities (hedged into EUR) against global government bonds (hedged into EUR) equities are 5.6%-pts behind as the escalating trade war is finally making investors to adjust their views of the world. The global economy continues to slow down with OECD’s leading indicators showing the worst economy since 2009 and economic activity close to recession levels. South Korea, which is one of the most tuned economies to growth, is still sending distressing signals which is a good proxy that China is still slowing down. Given the events we are observing we put the probability of Germany already in a recession at around 80% and the world seems to be following.

Based on leading indicators we maintain our view that investors should be underweight equities vs bonds and that exposure within equities should be in defensive and high-quality stocks. We main a more positive on US equities and investors should consider leaning into more pro-cyclical equity markets to have exposure when the macro cycle turns. But overall equities do not have an attractive risk-reward ratio relative to bonds for the rest of the year.

Lower interest rates have held up valuations but if a recession hits lower profits should begin to offset the expansion in the equity risk premium from lower rates. Equities are indeed treading on thin ice for the rest of the year.

50 bps cut coming?

The Fed is not moving fast enough on rates as the central bank’s models are looking at variables that are most likely not driving the dynamics for next recession. In our view the US-China trade war is the key dynamic to understand all the things that are happening. But the Fed’s problem is that it wants to be objective and model-driven, but the US-China trade war is highly dynamic and not something that can be modeled.

The Fed should most likely cut by 50 bps at the September FOMC meeting, but market consensus is pricing in 25 bps and another 25 bps at the October FOMC meeting. But this could change quickly if market conditions worsen due to Trump rhetoric.

Germany needs to reset

The developed country that has benefited the most from globalization since the early 1980s is Germany, but the export-driven economic machine is sputtering in this new era of reconfiguration of the global supply chain.

Germany’s intense focus on a balanced fiscal budget has led to low domestic surplus in the corporate sector forcing German industry to seek growth elsewhere. As a result of Germany’s policy choice, the economy has evolved into an export machine tuned for globalization. The surplus from exports have been recycled into capital markets and not domestic consumption and investment. This has led to an infrastructure deficit and outrageously depleted Internet access infrastructure for a highly developed country; Germany is ranked 27th on Internet speed. Not the ideal starting point for a digital economy.

In our view Germany should take advantage of low interest rates and increase deficit spending massively to upgrade its infrastructure but also create a domestic surplus in its corporate sector to offset the loss from weak export markets. Given the trajectory of the US-China trade war, Germany should not bet on globalization to take Germany back to trend growth. It should take matters in its own hands stimulate growth. For Europe it would be a game changer.

via ZeroHedge News https://ift.tt/30DW6kz Tyler Durden

Watch Dave Chapelle Eviscerate Cancel Culture

I don’t expect cancel culture to die off anytime soon, but if it does, it will be because Dave Chapelle shot it to death with the 12-gauge shotgun he was apparently saving for heroin-addicted white people trespassing on his property.

In his new Netflix special, aptly titled “Sticks and Stones,” Chapelle takes aim at the woke scolds, and he’s firing buckshot because birdshot, well “that won’t kill a man.” Here’s one of his first jokes:

Chapelle humorously critiques school mass shooting drills, Jussie Smollett, the excesses of the #MeToo movement, and LGBTQ activists—or “the alphabet people” as he calls them—for thinking they should be immune from mockery.

“Everybody loves me, and I love everybody,” Chapelle assures the audience. “I got friends who are Ls, who are Bs, and I got friends who are Gs. But the Ts hate my fucking guts.”

As if proving his point, the usual suspects in the media are already denouncing Chapelle. Vice accuses him of “tarnishing his own legacy.” The Ringer contrasted Chapelle with Aziz Ansari: The latter is “circumspect and performatively torn” in his latest comedy routines, while the former is regrettably “openly combative.” That Ansari is required to beg for forgiveness after being publicly smeared by clickbait-driven hacks—and to remain grateful for this second chance—is exactly the kind of insanity Chapelle is deftly skewering.

from Latest – Reason.com https://ift.tt/2LcaUjW
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Is Biden’s 2020 Lead Over? A New Poll Says Yes…Until You Read the Fine Print

A new national poll about the 2020 Democratic presidential candidates could be a bad sign for heretofore frontrunner Joe Biden. The poll, from Monmouth University, showed Sens. Bernie Sanders (I–Vt.) and Elizabeth Warren (D–Mass.) now in a two-way tie for first place, with both being the top candidate for 20 percent of poll respondents.

Biden, who was previously polling in the low 30s, was the top choice for just 19 percent of voters in the latest Monmouth poll. This represents a 13 percentage point drop for Biden, and a modest jump for both Warren and Sanders.

Other Democratic candidates polling at one percent or above include:

  • Sen. Kamala Harris at 8 percent
  • Sen. Cory Booker and Pete Buttigieg at 4 percent
  • Andrew Yang at 3 percent
  • Julián Castro, Beto O’Rourke, and Marianne Williamson tied at 2 percent
  • Bill de Blasio, Rep. Tulsi Gabbard, and Sen. Amy Klobuchar at 1 percent

Yet, as folks were quick to point out, these poll results are based on a relatively small sample size of voters—just 298 people—and they come with a large margin of error:

The Monmouth University Poll was conducted by telephone from August 16 to 20, 2019 with 800 adults in the United States. Results in this release are based on 298 registered voters who identify as Democrats or lean toward the Democratic Party, which has a +/- 5.7 percentage point sampling margin of error. The poll was conducted by the Monmouth University Polling Institute in West Long Branch, NJ.

For more on the current state of the Biden/Bernie/Warren divide, see the latest from Nate Silver, who is skeptical about the Monmouth poll results.

FREE MINDS

A new study on social media hostility suggests that while “people at large do indeed perceive online environments as more hostile than offline,” as scholar Michael Bang Petersen put it, it’s not the “impersonal online environment” that causes this.

FREE MARKETS

Sealed memos show how the feds manufactured a case against online classifieds site Backpage.com, despite knowing that Backpage was doing much more than other platforms to prevent underage posters and help law enforcement.

“Unlike virtually every other website that is used for prostitution and sex trafficking, Backpage is remarkably responsive to law enforcement requests and often takes proactive steps to assist in investigations,” wrote Catherine Crisham and Aravind Swaminathan, both assistant U.S. attorneys for the Western District of Washington, in an April 2012 memo to their boss.

“At the outset of this investigation, it was anticipated that we would find evidence of candid discussions among [Backpage] principals about the use of the site for juvenile prostitution which could be used as admissions of criminal conduct,” wrote Swaminathan and another federal prosecutor in a 2013 update, following an extensive investigation into Backpage practices that included grand jury testimony from employees and review of internal documents. “It was also anticipated that we would find numerous instances where Backpage learned that a site user was a juvenile prostitute and Backpage callously continued to post advertisements for her. To date, the investigation has revealed neither.”

The prosecutors recommended against criminal charges. Nonetheless, federal and state authorities kept targeting Backpage and, last year, the FBI arrested former executives for alleged conspiracy, facilitating prostitution, and money laundering. “For far too long, Backpage.com existed as…a place where sex traffickers frequently advertised children and adults alike,” then-Attorney General Jeff Sessions said after the arrest, while U.S. Attorney Elizabeth Strange accused Backpage leaders of “placing profits over the well-being and safety” of women and children.

Such claims have long been bogus. Now, thanks to memos obtained by Reason, we know that the Department of Justice understood this all along.

QUICK HITS

  • New York Times columnist Bret Stephens—who likes to complain about how millennial snowflakes and their thin skin will be the death of free speech—tattled to a man’s employer and sent the man a snippy email in response to a tweet (which no one had shared, and in which Stephens himself had not been tagged) where the man called him a bedbug. The internet is responding with appropriately mocking glee.

from Latest – Reason.com https://ift.tt/2NAEWkf
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Philip Morris Confirms Merger Talks With Altria

In a somewhat shocking move, two giant tobacco-related companies have announced their intent to seek an all-stock “merger of equals,” despite the notable differences in market caps.

As a reminder, the companies had been one until 2008, when they divided their operations.

Full Statement:

Philip Morris International Inc. (NYSE: PM) today announced that it is in discussions with Altria Group, Inc. (NYSE: MO) regarding a potential all-stock, merger of equals.

There can be no assurance that any agreement or transaction will result from these discussions. Additionally, there can be no assurance that if an agreement is reached, that a transaction will be completed. Any transaction would be subject to the approval of the two companies’ boards and shareholders, and regulators, as well as other conditions. Philip Morris International intends to make no further comment regarding the discussions unless and until it is appropriate to do so.

RBC Capital Markets’ analyst Nik Modi noted that there are four main strategic reasons why the companies should come get back together:

  1. Geographic alignment with international competitors; both of PM’s global competitors (BAT and Imperial) have exposure to the U.S.

  2. PM would get use of U.S. profit pool for a stable source of cash that could be returned to shareholders

  3. Diversifying PM’s operations to U.S. would help lessen impact of FX on EPS

  4. Combination allows for the full economic benefit of iQOS in the U.S. and global access for JUUL

The reaction in the shares of this “merger of equals” is notable…

Shares of Altria are up 9% and Philip Morris is down over 3%.

While one might believe the chances of this deal passing anti-trust regulators, it is perhaps opportune timing before ‘President Warren’ crushes any hopes and dreams in the future.

Developing…

 

 

via ZeroHedge News https://ift.tt/2zqwTy8 Tyler Durden

The Yield Curve Is Crashing (As Stocks Surge Into Open)

US equity futures are lurching ever higher into the cash market open, because – reportedly – “optimism over US-China trade talks.” The only problem is – the yield curve (and rates) are collapsing…

One could argue that the machines are just running stops…

Because the bond market ain’t buying it at all…

Source: Bloomberg

This is the most inverted the curve have been since Lehman…

Source: Bloomberg

A week book-ended by long-weekends (UK and US) has done wonders for the machines running the stock market; but they just can’t control the bond market yet.

 

 

via ZeroHedge News https://ift.tt/2Zz5316 Tyler Durden

Is Biden’s 2020 Lead Over? A New Poll Says Yes…Until You Read the Fine Print

A new national poll about the 2020 Democratic presidential candidates could be a bad sign for heretofore frontrunner Joe Biden. The poll, from Monmouth University, showed Sens. Bernie Sanders (I–Vt.) and Elizabeth Warren (D–Mass.) now in a two-way tie for first place, with both being the top candidate for 20 percent of poll respondents.

Biden, who was previously polling in the low 30s, was the top choice for just 19 percent of voters in the latest Monmouth poll. This represents a 13 percentage point drop for Biden, and a modest jump for both Warren and Sanders.

Other Democratic candidates polling at one percent or above include:

  • Sen. Kamala Harris at 8 percent
  • Sen. Cory Booker and Pete Buttigieg at 4 percent
  • Andrew Yang at 3 percent
  • Julián Castro, Beto O’Rourke, and Marianne Williamson tied at 2 percent
  • Bill de Blasio, Rep. Tulsi Gabbard, and Sen. Amy Klobuchar at 1 percent

Yet, as folks were quick to point out, these poll results are based on a relatively small sample size of voters—just 298 people—and they come with a large margin of error:

The Monmouth University Poll was conducted by telephone from August 16 to 20, 2019 with 800 adults in the United States. Results in this release are based on 298 registered voters who identify as Democrats or lean toward the Democratic Party, which has a +/- 5.7 percentage point sampling margin of error. The poll was conducted by the Monmouth University Polling Institute in West Long Branch, NJ.

For more on the current state of the Biden/Bernie/Warren divide, see the latest from Nate Silver, who is skeptical about the Monmouth poll results.

FREE MINDS

A new study on social media hostility suggests that while “people at large do indeed perceive online environments as more hostile than offline,” as scholar Michael Bang Petersen put it, it’s not the “impersonal online environment” that causes this.

FREE MARKETS

Sealed memos show how the feds manufactured a case against online classifieds site Backpage.com, despite knowing that Backpage was doing much more than other platforms to prevent underage posters and help law enforcement.

“Unlike virtually every other website that is used for prostitution and sex trafficking, Backpage is remarkably responsive to law enforcement requests and often takes proactive steps to assist in investigations,” wrote Catherine Crisham and Aravind Swaminathan, both assistant U.S. attorneys for the Western District of Washington, in the April 2012 memo to their boss.

“At the outset of this investigation, it was anticipated that we would find evidence of candid discussions among [Backpage] principals about the use of the site for juvenile prostitution which could be used as admissions of criminal conduct,” wrote Swaminathan and another federal prosecutor in a 2013 update, following an extensive investigation into Backpage practices that included grand jury testimony from employees and extensive review of internal documents. “It was also anticipated that we would find numerous instances where Backpage learned that a site user was a juvenile prostitute and Backpage callously continued to post advertisements for her. To date, the investigation has revealed neither.”

The prosecutors recommended against criminal charges. Nonetheless, federal and state authorities kept targeting Backpage and, last year, the FBI arrested former executives for alleged conspiracy, facilitating prostitution, and money laundering. “For far too long, Backpage.com existed as…a place where sex traffickers frequently advertised children and adults alike,” then-Attorney General Jeff Sessions said after the arrest, while U.S. Attorney Elizabeth Strange accused Backpage leaders of “placing profits over the well-being and safety” of women and children.

Such claims have long been bogus. Now, thanks to memos obtained by Reason, we know that the Department of Justice understood this all along.

QUICK HITS

  • New York Times columnist Bret Stephens—who likes to complain about how millennial snowflakes and their thin skin will be the death of free speech—tattled to a man’s employer and sent the man a snippy email in response to a tweet (which no one had shared, and in which Stephens himself had not been tagged) where the man called him a bedbug. The internet is responding with appropriately mocking glee.

from Latest – Reason.com https://ift.tt/2NAEWkf
via IFTTT

US Home Price Growth Slumps To Weakest In 7 Years

S&P CoreLogic Case-Shiller’s 20-City Composite price index rose just 2.13% YoY in June – the weakest growth since August 2012.

The MoM rise of just 0.04% notably missed expectations of a 0.1% rise and the drop from 2.37% YoY was also a sizable acceleration in the decline.

Source: Bloomberg

This slide has occurred as mortgage rates have plunged…

Source: Bloomberg

But, given the lags in Case-Shiller data, there is an argument that the de-growth in prices could be about to stall (even though that’s not what we saw in early 2016).

New York City saw a decline in prices in June.

via ZeroHedge News https://ift.tt/2PirgN7 Tyler Durden