Category: zerohedge

With home prices in the UK driving people to live in boxes and Bob Shiller worried about the US, Bloomberg's Niraj Shah notes that the Knight Frank global house price index has risen to a record. The index, now 4% above the previous high in Q3 2008 is led by China and Emerging Nations (with Europe weakest) as investor speculation amid central bank liquidity fuels yet another bubble (that no one could see coming again).

 

Via Bloomberg's Niraj Shah (@economistniraj),

Record High for Global Index

Global house prices are gaining traction. Values rose an annual 4.6 percent in the third quarter compared with 1.7 percent in the same period in 2012, and the index is 12.7 percent above its financial-crisis low in 2009. Prices in more than 69 percent of the countries tracked by the index grew in the year through September, compared with 55 percent two years ago. The Knight Frank index incorporates house prices in 53 countries.

China, Emerging Countries Lead Price Growth

Prices in China rose the most, gaining 21.6 percent. Emerging economies made up the rest of the top five, with Taiwan, Indonesia, Turkey and Brazil recording price growth of more than 10 percent. The U.S., the biggest housing market, grew an annual 11.2 percent. The only countries outside Europe to experience declines were Japan, South Korea and New Zealand. Dubai recorded the largest growth rate for a city with 28.5 percent.

Europe Remains Weakest Region

While average values rose in every region, European property prices were the weakest performers in the year through October. Prices increased 0.8 percent in Europe, compared with 17.9 percent in the Middle East. Fourteen of the 17 countries experiencing annual price declines were in Europe. Average prices in Europe resumed growth in the second quarter.

European Prices Diverge

There is a widening divergence between countries in Europe. Annual house prices in Germany rose the most in the third quarter — 11.2 percent — while prices plunged 19.7 percent in Croatia over the same period. Ireland achieved the biggest turnaround, with values rising 4 percent in the three months through September. Property values were falling at a rate of 5.4 percent each quarter less than two years ago.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/6K7EhTNcS6I/story01.htm Tyler Durden

Despite misses on stocks and gold, Citi FX Technicals' excellent "12 Charts of Christmas" performed well in 2013 directionally across FX, bonds, and commodities. This year, Tom Fitzpatrick and his team unveil 2014's most important charts – establishing a starting point for their outlook in the year ahead. From a slowing housing market to expectations of a strong USD; and from a "roll-over" in Consumer Confidence to strength in gold, they see the "repair process" continuing albeit at a slow pace but worry that the stock markets are looking more and more like 2000.

 

Via CitiFX Technicals,

What do we believe for 2014?
 

• The USD bullish trend remains intact and the DXY Index should set new trend highs (90+).
• EURUSD: We expect a sharp turn lower that could see EURUSD in the 1.18-1.22 range in 2014. A very easy ECB policy will likely be a contributing factor here.
• USDJPY: Remains in a broad uptrend and we would expect a move towards at least 110-111 this year. This should continue to be supportive of the Nikkei.
• Consumer Confidence: Looks set to “roll” lower in a fashion similar to 2000 and 2007. This may have implications for the U.S. Equity market which looks stretched at this point in a fashion similar to 2000.
• Housing looks better than it was at the lows but nowhere near the traditional recovery/escape velocity of prior cycles. In 2014 we may even see a pause in its improvement.
• US yields: Similar to last year we suspect that an initial move lower may well emerge towards at least 2.40% (10 year) and 3.50% (30 year) and possibly lower. This is within a longer trend dynamic where they will likely move higher again thereafter. We would expect significantly higher yields in the next few years to materialise.
• Gold finally looks to be forming a base for a move higher. However we need both more convincing price action and likely a struggling equity market to solidify this potential.
• In Local Markets the USDBRL chart is one of the more convincing pictures and suggests a much weaker BRL is in prospect in 2014.

Overall: We see a backdrop where the “repair process” of recent years continues at a slow pace but where the US continues to look like the “best house on a bad street” when it comes to the major developed nations. This should also benefit the USD and keep the relative picture for yields (monetary policy) in favour of the US.

 

The corrective platform could be the “launch pad” for a move to new highs in the trend and a stronger USD all the way to 2016 as per previous post housing collapse cycles.

EURUSD turning lower like it did in 1998? A move towards 1.20 this year and much further over the next 2+ years looks likely.

A move similar to 1978-1982 could see USDJPY as high as 118 eventually while a repeat of 1995-1998 would suggest as far as 139. An average of the two could see USDJPY close to 130 by 2015. For 2014 we would expect a move to at least 110-111

Another 4 year and 4 month trend coming to an end?

The last 2 peaks in Consumer Confidence led the S&P by 3-4 months. That pretty much takes us to now… big divergence between the Equity market and the real economy.

Peak in the 1,820-1,830 area? Prior peaks have seen pretty quick falls to the 200 week moving average.

Is the US 30 year yield double topping as it has done so many times before?

The potential double bottom will target 3.70 with a break above 2.62. Beyond there the all-time USDBRL high at 4.00 could well be eventually tested.

And summarising their strong conviction 2014 views:

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

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MERRY CHRISTMAS ED, wherever you are…

From WilliamBanzai7 and the rest of the fringe low brows at Zero Hedge 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/MkCJdccN4Xc/story01.htm williambanzai7

Bloomberg has been kind enough to summarize the epic confusion gripping the sellside on the topic of the Taper, which once again everyone thought would not take place until 2014, and now there is palpable panic may hit as soon as next week. Kudos to the Fed on its “transparent” communication strategy.

Below is Bloomberg’s recap of the main viewpoints on when FOMC will start to Taper, with estimates ranging from FOMC’s Dec. 17-18 meeting in Washington to Jan. or March, based on published research.

Barclays

• Fed will wait until March to taper

BMO

• Do not expect “Yuletide Taper”

BNP

• QE to end by early 2015

BoT-Mitsubishi

• Fed should take immediate action on QE taper
• Fed officials dragging feet on QE exit

Capital Economics

• Jobs data points to tapering this month
  
• QE tapering this month “very close call”

Citi

• Expectations for Fed tapering in Dec. increase in poll
• Fed to discuss tapering in “concrete” way

 

CRT

• Fed “apprehensive” about impact of tapering

DB

• USD to benefit as jobs data seals Dec. taper

GMP

• Payrolls “not good enough” for Dec. taper

GS

• Jobs data strong, still expect March taper

HFE

• Payroll gain points to taper as soon as next month

ING

• Jobs data suggests tapering is closer

JPMorgan

• Nov. jobs report “smells a little like tapering”
• Fed cut to IOER rate would complicate communications

Miller Tabak

• Drop in jobless rate signals Dec. QE taper

Mizuho

• Economy not yet ripe for tapering

Morgan Stanley

• Fed to taper in March, cut UR threshold to 6%

MUFJ

• Aug.-Nov. labor market data supports Dec. taper

Natixis

• U.S. economy’s fragility urges Fed caution

Newedge

• Fed could go beyond tapering next week

Nomura

• 37% See Fed tapering next week
• Expect no Dec. tapering

Pimco’s Gross

• Odds of Fed tapering are 50% in Dec., clear that Fed wants out of QE

Renaissance

• Fed will wait to taper in 1Q instead of Dec.

Sunrise

• Taper-tightening link looks stronger on payrolls

TD

• Fed’s tapering-isn’t-tightening message begins to resonate
• Odds of Jan. tapering now above 50%

* * *

Good luck.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/YH5VRDzLKyk/story01.htm Tyler Durden

Bloomberg has been kind enough to summarize the epic confusion gripping the sellside on the topic of the Taper, which once again everyone thought would not take place until 2014, and now there is palpable panic may hit as soon as next week. Kudos to the Fed on its “transparent” communication strategy.

Below is Bloomberg’s recap of the main viewpoints on when FOMC will start to Taper, with estimates ranging from FOMC’s Dec. 17-18 meeting in Washington to Jan. or March, based on published research.

Barclays

• Fed will wait until March to taper

BMO

• Do not expect “Yuletide Taper”

BNP

• QE to end by early 2015

BoT-Mitsubishi

• Fed should take immediate action on QE taper
• Fed officials dragging feet on QE exit

Capital Economics

• Jobs data points to tapering this month
  
• QE tapering this month “very close call”

Citi

• Expectations for Fed tapering in Dec. increase in poll
• Fed to discuss tapering in “concrete” way

 

CRT

• Fed “apprehensive” about impact of tapering

DB

• USD to benefit as jobs data seals Dec. taper

GMP

• Payrolls “not good enough” for Dec. taper

GS

• Jobs data strong, still expect March taper

HFE

• Payroll gain points to taper as soon as next month

ING

• Jobs data suggests tapering is closer

JPMorgan

• Nov. jobs report “smells a little like tapering”
• Fed cut to IOER rate would complicate communications

Miller Tabak

• Drop in jobless rate signals Dec. QE taper

Mizuho

• Economy not yet ripe for tapering

Morgan Stanley

• Fed to taper in March, cut UR threshold to 6%

MUFJ

• Aug.-Nov. labor market data supports Dec. taper

Natixis

• U.S. economy’s fragility urges Fed caution

Newedge

• Fed could go beyond tapering next week

Nomura

• 37% See Fed tapering next week
• Expect no Dec. tapering

Pimco’s Gross

• Odds of Fed tapering are 50% in Dec., clear that Fed wants out of QE

Renaissance

• Fed will wait to taper in 1Q instead of Dec.

Sunrise

• Taper-tightening link looks stronger on payrolls

TD

• Fed’s tapering-isn’t-tightening message begins to resonate
• Odds of Jan. tapering now above 50%

* * *

Good luck.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/YH5VRDzLKyk/story01.htm Tyler Durden

Submitted by Scott Belinksi of OilPrice.com,

If one was to believe the picture that most Western media outlets are painting, Ukraine has been lost to Russia. Though the country fought valiantly to sign an Association Agreement with the European Union in Vilnius, Lithuania last month, President Viktor Yanukovych suspended negotiations with the EU at the last possible moment, betraying Ukrainians everywhere. Two recent energy deals that Ukraine has reportedly made, one with Russia and the other with Slovakia, however, show that the reality of the situation is slightly more complex.

Claiming that Yanukovych had always wanted negotiations with the EU to fail would arguably be giving him and his advisors too little credit as political strategists. In terms of public opinion, signing the Association Agreement would have all but secured Yanukovych’s re-election in 2015, whereas his step down from the deal has visibly shaken his legitimacy as President to its core. Rather, too little attention is given to the very real economic pressure Russia has placed on Ukraine and the EU’s reluctance or inability to offset Putin’s ‘trade war’. Furthermore, while Yanukovych did not sign the Association Agreement in Vilnius, he did not commit his country to Putin’s rival ‘Eurasian Union’ either.

Prior to the Vilnius Summit in November, the Ukrainian government found itself between a rock and a hard place. On one hand, Russia was imposing exorbitant gas prices and devastating economic sanctions on Ukraine’s already fragile economy. By October 10th, 2013, trade between the two countries had fallen by 25% and prices for Russian gas, on which Ukraine remains dependent, stood at $420/1000 m3, $50 more than the European average. On the other hand, EU leaders refused to hold tripartite negotiations with Russia and Ukraine, instead using all their leverage to insist that jailed former Prime Minister Yulia Tymoshenko, convicted of abuse of office and embezzlement in 2011, be freed.

All of this comes on top of Ukraine’s dire situation. The country faces $10 billion in principal and interest payments next year and has the third-highest default probability in the world. In an address following his decision to suspend negotiations with the EU, Yanukovych stated, "I would have been wrong if I hadn't done everything necessary for people not to lose their jobs, receive salaries, pensions and scholarships.” While many Ukrainians and outside observers may not take the President’s words at face value, it is no lie that, had Ukraine signed the agreement, economic disaster would have been imminent.

Two energy deals

As there was little the EU could/would offer to offset the immediate Russian reprisals on Ukraine’s economy, the government renounced signing the Association Agreement. However, two gas deals currently in the works show that, far from being sucked forever into Russia’s orbit, Ukraine will continue to flirt with both East and West and, most of all, move towards energy independence.

While the exact details of the deal Yanukovych has hammered out with Russian President Vladimir Putin in Sochi last Saturday remain unknown, Edward Lucas, the international editor of The Economist claims that gas prices for Ukraine will be brought down to $200/1000m3 with a $5 billion cherry payment on top. Lucas also claims that Yanukovych has promised that Ukraine will join Russia’s customs union as part of the deal, though this has been virulently denied by the Russian administration. At the same time, payments for Russian gas transferred from Gazprom to Naftogaz between October and December 2013 have been deferred until the Spring of 2014, all of which gives Ukraine some much-needed breathing room.

On the Western front, however, Ukraine agreed on the conditions for a gas deal with Slovakia for importing European Union gas through Slovak pipelines. These new flows, including gas from Poland and Hungary, could exceed 10 billion cubic meters annually, enough to meet Ukraine’s entire import needs. The move, which has long been heralded as a strategy to curb Ukraine’s energy dependence on Russia, comes less than two weeks after negotiations with the EU broke down, questioning the dominant narrative that the Ukrainian government is content to sign itself away to Moscow.

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

The 10 Year may so far be contained below its multi-year high of 3.00% hit in September just before Bernanke’s “no taper” announcement, but the ultra long end, or the 30 Year, keeps dropping. Sure enough, moments ago the latest 30 Year reopening of 29 Year-11 Month CUSIP RD2 priced at a high yield of 3.900%. This may have been half a bp through the 3.905% When Issued, it still was the highest pricing yield on the 30 Year since July 2011, right before the US downgrade and the 20% S&P plunge resulting from the near debt ceiling breach. The Bid To Cover of 2.35 was modestly higher than last month’s 2.16 but had a ways to go to catch up to the TTM average of 2.48. In terms of allotment, Indirects got the bulk of the auction, with 46% or the highest take down since April 2011. Directs were allotted 12.5%, or the lowest since June, which meant Dealers would have to “sell” back to the Fed 41.4% of the auction. So while not as immediately stirring as yesterday’s very weak 10 Year, the sentiment toward the long end continues to deteriorate.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/-F1mIpPNZ1E/story01.htm Tyler Durden

For the last year, every test below the 50DMA for the Russell 2000 has been met with a cavalcade of BTFD-ers (which then transformed into BTFATH-ers). However, we wonder, does the following longer-term chart suggest this time might just be different?

Easy…

 

…”coz if you don’t, you’re a fucking idiot”…

 

Unless… it is different this time…

 

 

Charts: Bloomberg

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/XSoZ4MpvIbg/story01.htm Tyler Durden

The use of Twitter and other social media to predict and trade on or, reflexively, generate interest in various assets is nothing new and has been around for years. Whether or not this strategy works is still unclear: the only “hedge fund” that traded purely on Twitter signals, Derwent Absolute Return, shut down shortly after opening (despite supposedly generating positive returns). Superficially, the thinking behind this made sense: as Venturebeat reported previously, based on research done at Indiana University, published in early 2011, there was a strong correlation between sentiments expressed on Twitter and the direction of the Dow Jones Industrial Average. According to the study, “Twitter mood predicts the stock market”, Twitter sentiment correlates with the ups and downs of the next few days on the DJIA with 87 percent accuracy. A separate study at Pace University in 2011 found that social media could predict the ups and downs of stock prices for three global brands, Starbucks, Coca-Cola, and Nike. And sentiment analysis has become an indispensible part of marketers’ toolkits, thanks to companies like Radian6 and Webtrends.

Expectedly, as more and more amateurs have piled into Twitter, the data stream has been subject to the “Yahoo Finance effect” – there is far too much noise, and not nearly enough actionable signal, especially when one tries to strip away the bias behind any given message (see “Trading Twitter: Where Noise Becomes Signal“).

Yet one entity that appears to have found significant functionality in Twitter is none other than the world’s biggest hedge fund: Bridgewater.

According to Bridgewater’s Greg Jensen, speaking during a recent client conference call, the world’s largest asset manager (except for the Fed of course) with one of the best long-term track records in history, has been using “everything that is available” online, from social media to real-time Internet prices, to model economic activity in what is effectively real-time. As Jensen said, “from Twitter and Facebook (and so on) we can capture every time somebody is saying they bought a new car. We could add those up and can compare that to the stats and be really on the pulse of what’s going on with something like auto sales or, similarly, with home sales.”

Perhaps even more interesting is Bridgewater’s search for equivalents of the famous Billion Prices Projects which tracks real-time prices of goods and services around the globe. Specifically, Bridgewater notes that it uses sites like the “Amazon of India” to track inflation “during a balance of payment crisis on a moment-to-moment basis” and thus confirm if any sharp currency moves have filtered down to end prices just by monitoring the internet.

Bridgewater’s end goal: to be “able to track the economy on a day-to-day basis.” Which in a world of high frequency trading, in which millisecond responses to stimuli is critical for alpha-generation, is paramount. It perhaps also explains why traditional periodic data releases such as inflation data, car sales and other formerly market moving macro releases, no longer pack the punch they once did when it comes to market response.

So with Bridgewater blazing the trail in real-time data monitoring, it is only a matter of time before all other macro hedge funds engage in the same strategy of near-constant monitoring of all concurrent data feeds.

At which point the next logical question is: how long until competitors begin introducing artificial and misleading noise in the data stream, and attempt to confuse Bridgewater and others’ signal translators. And how soon before data analytics firm XYZ comes out with its latest offering: one million fake twitter accounts, all of which are programmed to amplify fake economic signals and confuse Twitter algos that translate signal to trades? For a very hefty price of course…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5iN7JKwcsaU/story01.htm Tyler Durden

The use of Twitter and other social media to predict and trade on or, reflexively, generate interest in various assets is nothing new and has been around for years. Whether or not this strategy works is still unclear: the only “hedge fund” that traded purely on Twitter signals, Derwent Absolute Return, shut down shortly after opening (despite supposedly generating positive returns). Superficially, the thinking behind this made sense: as Venturebeat reported previously, based on research done at Indiana University, published in early 2011, there was a strong correlation between sentiments expressed on Twitter and the direction of the Dow Jones Industrial Average. According to the study, “Twitter mood predicts the stock market”, Twitter sentiment correlates with the ups and downs of the next few days on the DJIA with 87 percent accuracy. A separate study at Pace University in 2011 found that social media could predict the ups and downs of stock prices for three global brands, Starbucks, Coca-Cola, and Nike. And sentiment analysis has become an indispensible part of marketers’ toolkits, thanks to companies like Radian6 and Webtrends.

Expectedly, as more and more amateurs have piled into Twitter, the data stream has been subject to the “Yahoo Finance effect” – there is far too much noise, and not nearly enough actionable signal, especially when one tries to strip away the bias behind any given message (see “Trading Twitter: Where Noise Becomes Signal“).

Yet one entity that appears to have found significant functionality in Twitter is none other than the world’s biggest hedge fund: Bridgewater.

According to Bridgewater’s Greg Jensen, speaking during a recent client conference call, the world’s largest asset manager (except for the Fed of course) with one of the best long-term track records in history, has been using “everything that is available” online, from social media to real-time Internet prices, to model economic activity in what is effectively real-time. As Jensen said, “from Twitter and Facebook (and so on) we can capture every time somebody is saying they bought a new car. We could add those up and can compare that to the stats and be really on the pulse of what’s going on with something like auto sales or, similarly, with home sales.”

Perhaps even more interesting is Bridgewater’s search for equivalents of the famous Billion Prices Projects which tracks real-time prices of goods and services around the globe. Specifically, Bridgewater notes that it uses sites like the “Amazon of India” to track inflation “during a balance of payment crisis on a moment-to-moment basis” and thus confirm if any sharp currency moves have filtered down to end prices just by monitoring the internet.

Bridgewater’s end goal: to be “able to track the economy on a day-to-day basis.” Which in a world of high frequency trading, in which millisecond responses to stimuli is critical for alpha-generation, is paramount. It perhaps also explains why traditional periodic data releases such as inflation data, car sales and other formerly market moving macro releases, no longer pack the punch they once did when it comes to market response.

So with Bridgewater blazing the trail in real-time data monitoring, it is only a matter of time before all other macro hedge funds engage in the same strategy of near-constant monitoring of all concurrent data feeds.

At which point the next logical question is: how long until competitors begin introducing artificial and misleading noise in the data stream, and attempt to confuse Bridgewater and others’ signal translators. And how soon before data analytics firm XYZ comes out with its latest offering: one million fake twitter accounts, all of which are programmed to amplify fake economic signals and confuse Twitter algos that translate signal to trades? For a very hefty price of course…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5iN7JKwcsaU/story01.htm Tyler Durden