Month: September 2014

This week's 35bps rise in high-yield credit spreads (or ~10%) is the worst since at least June of last year and anxiety spread through other asset-classes appropriately as cheap-buyback-funding and liquidity concerns weighed on all equities – most aggressively small caps. The Russell 2000 is down around 4% from FOMC (and for the year) even with today's buying-panic this afternoon trying to rescue yesterday's losses. Much of today's moves were thanks to The Bill Gross Effect – Treasury short-end sold (2Y-5Y +5bps, 30Y unch), corporate bond spreads jumped wider (HY +20bps, IG +4bps), and European bonds (and German stocks) lurched lower. Markets recovered some of the early move but 2Y closed at 2014 yield highs. The USD closed 1% higher for the 11th week in a row to June 2010 highs. WTI crude close +1.5% on the week, gold unchanged, and copper and silver lower. VIX jumped 22% on the week, closing above 14.5.

 

Stocks rescued from really dismal performance today…as the machines desparately tried to recover yesterday's losses…

 

On the week, it's all red… led by Russell 2000 weakness

 

And post-FOMC, redderer… (but note that the Dow was ramped to almost unchanged)

 

Credit's early weakness recovered a little but nothing like stocks…

 

as HY credit suffered its worst week since June 2013…

 

Stocks and the long-bond decoupled…

 

Stocks and JPY recoupled…. then faded…

 

Stocks and VIX remain in love…

 

Treasuries very mixed on the week as The Bill Gross Effect dominated today…

 

The USD rose for the 11th week in a row, with CAD and AUD the weakest (but EUR driving)

 

Pushing the USD Index to June 2010 highs

 

Despite USD strength, gold closed unchanged and oil rose…

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/1ncMTuc Tyler Durden

This week's 35bps rise in high-yield credit spreads (or ~10%) is the worst since at least June of last year and anxiety spread through other asset-classes appropriately as cheap-buyback-funding and liquidity concerns weighed on all equities – most aggressively small caps. The Russell 2000 is down around 4% from FOMC (and for the year) even with today's buying-panic this afternoon trying to rescue yesterday's losses. Much of today's moves were thanks to The Bill Gross Effect – Treasury short-end sold (2Y-5Y +5bps, 30Y unch), corporate bond spreads jumped wider (HY +20bps, IG +4bps), and European bonds (and German stocks) lurched lower. Markets recovered some of the early move but 2Y closed at 2014 yield highs. The USD closed 1% higher for the 11th week in a row to June 2010 highs. WTI crude close +1.5% on the week, gold unchanged, and copper and silver lower. VIX jumped 22% on the week, closing above 14.5.

 

Stocks rescued from really dismal performance today…as the machines desparately tried to recover yesterday's losses…

 

On the week, it's all red… led by Russell 2000 weakness

 

And post-FOMC, redderer… (but note that the Dow was ramped to almost unchanged)

 

Credit's early weakness recovered a little but nothing like stocks…

 

as HY credit suffered its worst week since June 2013…

 

Stocks and the long-bond decoupled…

 

Stocks and JPY recoupled…. then faded…

 

Stocks and VIX remain in love…

 

Treasuries very mixed on the week as The Bill Gross Effect dominated today…

 

The USD rose for the 11th week in a row, with CAD and AUD the weakest (but EUR driving)

 

Pushing the USD Index to June 2010 highs

 

Despite USD strength, gold closed unchanged and oil rose…

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/1ncMTuc Tyler Durden

With over half of all the stocks in the Russell 2000 and Nasdaq already in a bear market, US equity market indices are becoming increasingly driven by a highly concentrated set of stocks that lack any relationship to macro factors. As BofA shows in the charts below, participation in the record-high exuberance in stocks is waning… and waning fast…

 

S&P 500 and NYSE Breadth is diverging…

 

The Nasdaq's breadth is plunging…

 

And the Russell 2000's component participation is a disaster…

 

But, the biggest concern, as BofA warns, a new low for net free credit at -$182 billion is a major risk should the market drop..

 

Net free credit is free credit balances in cash and margin accounts net of the debit balance in margin accounts. Net free credit dropped to -$182b and moved to a new low below the prior record of -$178b in February. This measure of cash to meet margin calls remains at an extreme low or negative reading below the February 2000 low of $-129b.

The risk is if the market drops and triggers margin calls, investors do not have cash and would be forced to sell stocks or get cash from other sources to meet the margin calls.

This would exacerbate an equity market sell-off.

via Zero Hedge http://ift.tt/1Bi1Pbr Tyler Durden

With over half of all the stocks in the Russell 2000 and Nasdaq already in a bear market, US equity market indices are becoming increasingly driven by a highly concentrated set of stocks that lack any relationship to macro factors. As BofA shows in the charts below, participation in the record-high exuberance in stocks is waning… and waning fast…

 

S&P 500 and NYSE Breadth is diverging…

 

The Nasdaq's breadth is plunging…

 

And the Russell 2000's component participation is a disaster…

 

But, the biggest concern, as BofA warns, a new low for net free credit at -$182 billion is a major risk should the market drop..

 

Net free credit is free credit balances in cash and margin accounts net of the debit balance in margin accounts. Net free credit dropped to -$182b and moved to a new low below the prior record of -$178b in February. This measure of cash to meet margin calls remains at an extreme low or negative reading below the February 2000 low of $-129b.

The risk is if the market drops and triggers margin calls, investors do not have cash and would be forced to sell stocks or get cash from other sources to meet the margin calls.

This would exacerbate an equity market sell-off.

via Zero Hedge http://ift.tt/1Bi1Pbr Tyler Durden

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

The German political party known as the AfD, or “Alternative for Germany,” first came to my attention a year ago. Upon reading about it, I became so interested in this new party (it has only been around since early 2013) that I composed a post titled: Anti-Euro Party in Germany Makes Significant Headway into Parliamentary Elections. Here’s an excerpt:

German parliamentary elections are coming up on Sept. 22, and Chancellor Angela Merkel has a problem on her hands. A euro-skeptical political party known as AfD is rising in the polls and could deny her Christian Democratic Union and its coalition partners the majority they need to continue governing.

 

AfD, or Alternative for Germany, currently holds no seats in the Bundestag, and until recently it barely registered in public-opinion polls. But a survey released on Sept. 4 by the Forsa polling group showed it with 4 per cent support—just shy of the 5 per cent needed to win Bundestag representation.Peter Matuschek, Forsa’s chief political analyst, says the poll may have underestimated the party’s strength. Many supporters, he told Spiegel, “are too embarrassed to admit that they are planning to vote for the AfD,” which wants Greece, Spain, and other crisis-hit countries to leave the euro zone, and possibly break up the existing monetary union itself.

That was then, this is now. From Ambrose-Evans Pritchard at the UK Telegraph:

Standard & Poor’s has issued an extraordinary credit alert on the eurozone, one that deserves close attention.

 

It warns that the rise of Germany’s AfD anti-euro party calls into question the euro bail-out machinery and queries the pitch for any form of QE, stimulus that has already been pocketed and spent in advance by the markets.

 

It will force Angela Merkel to take a tougher line on Europe, and further complicates the management of the (already dysfunctional) currency bloc.

 

The rating agency said it will henceforth monitor any sign that Germany is digging in its heels on EMU matters as it seeks to head off this rising political threat. The report is written by Moritz Kraemer, head of sovereign ratings in Europe. He is German. This is not an Anglo-Saxon analysis.

 

Alternative für Deutschland is blowing across Germany like a tornado. The party won 12.6pc in Brandenburg and 10.6pc in Thuringia a week ago, following its success in Saxony. It has now broken into three regional parliaments. The free market FDP is being systematically destroyed. Now AfD is ripping into the Left-wing base of Die Linke as well.

Let’s not forget the huge “End the Fed” rallies happening in Germany.

Looks like things are heating up in Deutschland.

via Zero Hedge http://ift.tt/1Bi1RQs Tyler Durden

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

The German political party known as the AfD, or “Alternative for Germany,” first came to my attention a year ago. Upon reading about it, I became so interested in this new party (it has only been around since early 2013) that I composed a post titled: Anti-Euro Party in Germany Makes Significant Headway into Parliamentary Elections. Here’s an excerpt:

German parliamentary elections are coming up on Sept. 22, and Chancellor Angela Merkel has a problem on her hands. A euro-skeptical political party known as AfD is rising in the polls and could deny her Christian Democratic Union and its coalition partners the majority they need to continue governing.

 

AfD, or Alternative for Germany, currently holds no seats in the Bundestag, and until recently it barely registered in public-opinion polls. But a survey released on Sept. 4 by the Forsa polling group showed it with 4 per cent support—just shy of the 5 per cent needed to win Bundestag representation.Peter Matuschek, Forsa’s chief political analyst, says the poll may have underestimated the party’s strength. Many supporters, he told Spiegel, “are too embarrassed to admit that they are planning to vote for the AfD,” which wants Greece, Spain, and other crisis-hit countries to leave the euro zone, and possibly break up the existing monetary union itself.

That was then, this is now. From Ambrose-Evans Pritchard at the UK Telegraph:

Standard & Poor’s has issued an extraordinary credit alert on the eurozone, one that deserves close attention.

 

It warns that the rise of Germany’s AfD anti-euro party calls into question the euro bail-out machinery and queries the pitch for any form of QE, stimulus that has already been pocketed and spent in advance by the markets.

 

It will force Angela Merkel to take a tougher line on Europe, and further complicates the management of the (already dysfunctional) currency bloc.

 

The rating agency said it will henceforth monitor any sign that Germany is digging in its heels on EMU matters as it seeks to head off this rising political threat. The report is written by Moritz Kraemer, head of sovereign ratings in Europe. He is German. This is not an Anglo-Saxon analysis.

 

Alternative für Deutschland is blowing across Germany like a tornado. The party won 12.6pc in Brandenburg and 10.6pc in Thuringia a week ago, following its success in Saxony. It has now broken into three regional parliaments. The free market FDP is being systematically destroyed. Now AfD is ripping into the Left-wing base of Die Linke as well.

Let’s not forget the huge “End the Fed” rallies happening in Germany.

Looks like things are heating up in Deutschland.

via Zero Hedge http://ift.tt/1Bi1RQs Tyler Durden