iftttwall

If Friday’s selloff can be indirectly – and humorously – blamed on Gartman being “pleasantly” long of equities going into the rout, then perhaps a rebound looms, because as DG writes in his latest note, he quickly went “net short” of equities moments after realizing the momentum is not with him. Here is the key section from his latest note:

SHARE PRICES, GLOBALLY, ARE DOWN VIOLENTLY AND “RISK HAPPENS FAST” as already noted several times above as our old friend, Doug Kass, likes to tell us, for all ten of the markets comprising our International Index have fallen since Friday, with 5 of the 10 having  fallen by more than 2% and with one… the market in Brazil… having fallen by nearly 4%. Trend lines that had been sloping upward in instance after instance and which had held for months have been broken through to the downside, proving themselves to be readily vulnerable. “Reversals,” one after another, have evolved, and not merely daily reversals, but in many instances weekly and now even monthly reversals to the downside have either already evolved or are on the verge of doing so.

 

Risk does indeed happen fast, with the blame today going to be cast upon the Federal Reserve Bank for the thought that it may actually vote to tighten monetary policy at its meeting next week. We have never been of the mindset that the Fed was prepared to tighten  policy and to raise the o/n Fed Funds rate next week, but many were and more had become so following Mr. Rosengren’s comments on Friday that he was beginning to err toward tighter policies… this from one of the more “dovish” of the voting, regional Federal  Reserve Presidents. That was all that was needed to change the market’s collective psychology at a moment’s notice, and although we are quite certain that the global market’s bearish rush shall quell any further consideration on the part of various FOMC voting  participants about tighter policies, it shall not likely make any difference; the die’s been cast and risk has indeed happened fast.

 

We shall not mince words here today: on Friday we came into the market “pleasantly” long of equities, being long of aluminium, hedged to a great degree with “derivatives” in place, and long of gold in EUR denominated terms; however within minutes of the opening we quickly shifted our positions for something seemed to us to be amiss… and clearly was. Something seemed not right; the market was not acting bullishly despite having made new highs only a few days earlier. Volume was coming in on the downside, not on the “up” and trend lines that had been inviolate were being violated instead. We reduced our aluminium position by selling some of the shares outright and by then selling near-the-money calls against the rest of the positon. We added to our “derivatives” position aggressively and we even bought out-of-the-money puts in the SPY. By mid-morning we were… and we still are… net short of equities. We changed our position that much and that quickly. We had no choice:

Looking at futures, the rebound off the lows may have already started.

via http://ift.tt/2cxYGTx Tyler Durden

It all started with a note by JPM’s Marko Kolanovic last Wednesday, in which he warned that the period of market calm is ending, and volatility was about to surge, which in a reflexive fashion would lead to accelerated selling by quant, systematic and risk-parity funds as a result of near-record leverage.  According to Kolanovic while a driver of the recent market stability the “relatively stable macro data and a seasonal decline in trading activity” he explained that “a significant driver of the volatility collapse was derivatives hedging effects, also known as pinning”, as well as the near all-time high leverage for Volatility Targeting and Risk Parity strategies. However, “this is all about to change as a number of important catalysts materialize this month (ECB, BOJ, Fed meetings), seasonals push market volatility higher, and leverage in systematic strategies and option positioning provide fuel for volatility.”

For those who missed his must-read note, which predicted the Friday plunge with uncanny precision, this is what he said:

As market volatility plummeted, investors added to option protection and moved (struck) it closer to current price level. The market would need to move only 1-2% lower for option hedging to push volatility higher (as opposed to suppressing it, which was the case past 2 months). Given the low levels of volatility, leverage in systematic strategies such as Volatility Targeting and Risk Parity is now near all-time highs. The same is true for CTA funds who run near-record levels of equity exposure. Our estimate of equity exposure for these strategies is shown in Figure 1.

 

 

Record leverage in these strategies and option hedging could push the market lower and volatility higher, if there is an initial catalyst to increase volatility. In fact, we may not even need a specific catalyst, apart from the seasonal increase in market volatility which is typical for September and October. Figure 2 above shows that equity volatility tends to increase by ~20-30% in September and October  (September also tends to be the worst performing month, with an average -1% return). This seasonality is also present after removing prominent outliers (e.g. 2001, 2008, 2011, and 2015). When it comes to deleveraging of systematic strategies, even this seasonal increase in realized volatility would produce outflows of ~$100bn, which could push the market lower.

* * *

So, following Friday’s broad-based deleveraging across all quant, and certainly risk-party funds, the topic of forced selling has dominated sellside research, with BofA releasing a report overnight according to which “multi-asset vol controlled portfolios that use a systematic approach similar to our models may be subject to $12bn in global equity selling pressure in the coming days ahead. Likewise, we estimate about $40bn in global equity selling pressure via CTAs in the near term. Between the two, we could see ~$52bn in near-term selling pressure, half of which may be through US markets. Global equity selling pressure via CTAs could also increase as European and Asian markets had closed before a large portion of the move lower in US equities on Friday.”

Even more interesting is BofA’s comparison of what happened today with the post-Brexit selloff: according to BofA Friday was worse, as the notional volume traded in S&P500 E-mini futures alone was $516bn. “While the current selling pressure we estimate from quant funds is only ~10% of the volume traded, the key question is if this is just the beginning of more volatility that ultimately puts more selling pressure on the market. In comparison with past shocks, during Brexit our models estimated ~$50bn of selling but only from CTAs and over a ten-day period in August-2015, ~$115bn from CTAs and ~70bn from multiasset risk-parity like funds. Importantly, in a fragile market with low conviction, the risk is that negative price action alone drives further selling.“

So far this is precisely what is going on.

Here is the full note by BofA’s Chintan Kotecha and team, which if correct, means even more pain for stocks in the coming days.

Record lull in volatility finally breaks as shock risk runs high

Through Thursday Sep 8th, the S&P500 recorded its longest stretch (42 trading days) in history (since 1928) of trading within a range of 1.77%. Friday, this lull was broken as the S&P fell 2.45%, its largest daily move since Brexit. However, unlike the Brexit selloff, Treasuries also fell, causing a greater jump in multi-asset portfolio volatility. As we have highlighted, markets remain vulnerable to a shock as the recent low vol has pushed up leverage and long positioning across a range of investment strategies.

Low vol + rising equity = elevated leverage & positioning

In our weekly report two weeks ago, we noted the degree to which low volatility and rising equities could potentially be increasing leverage and long positioning from certain quantitative based funds. Specifically, our models showed leverage levels across multiasset &  other portfolios that target fixed volatility may have been at their max limits. As well, our bottom-up CTA model suggested that positioning in global equities via trend following managed futures funds could be at its highest levels since 2015. For both classes of funds, the theoretical risk of deleveraging can be highest when vol spikes up from low levels and when assets had been trending higher, much like environment prior to Friday. In addition, BofAML US quant strategy has recently noted that a number of long-only and hedge fund positioning metrics are back to 2015 or higher levels.

Declining equity/bond diversification leading to higher vol

Three-month correlation between the S&P500 and 10-Year US Treasury bond prices set its YTD low on the Monday post-Brexit at -0.66. As a result, risk parity-style portfolios likely fared well through Brexit as sharp moves lower in global equities were diversified by the strong performance in bonds. In the almost three months since then, the correlation of daily moves between the two increased to -0.08 and over the last month alone, the correlation has turned positive to 0.27. Increasing correlation implies less diversification for risk parity-style portfolios and could be a precursor to higher vol.

Friday’s shock alone likely larger than Brexit for quant funds.

As a result of Friday’s decline, we estimate multi-asset vol controlled portfolios that use a systematic approach similar to our models may be subject to $12bn in global equity selling pressure in the coming days ahead. Likewise, we estimate about $40bn in global equity selling pressure via CTAs in the near term. Between the two, we could see ~$52bn in near-term selling pressure, half of which may be  through US markets. Global equity selling pressure via CTAs could also increase as European and Asian markets had closed before a large portion of the move lower in US equities on Friday.

While not dominant driver of flows; still key to watch

For perspective, on Friday, the notional volume traded in S&P500 E-mini futures alone was $516bn. While the current selling pressure we estimate from quant funds is only ~10% of the volume traded, the key question is if this is just the beginning of more volatility that ultimately puts more selling pressure on the market. In comparison with past shocks, during Brexit our models estimated ~$50bn of selling but only from CTAs and over a ten-day period in August-2015, ~$115bn from CTAs and ~70bn from multiasset risk-parity like funds. Importantly, in a fragile market with low conviction, the risk is that negative price action alone drives further selling.

via http://ift.tt/2coZZ3o Tyler Durden

• Selloff gathers pace as stimulus pullback fears deepen (Reuters)
• Clinton’s bout of pneumonia raises worries for Democrats (Reuters)
• Google’s Self-Driving Car Project Is Losing Out to Rivals (BBG)
• OPEC sees more oil supply from rivals, implying larger 2017 surplus (Reuters)
• Oil falls as U.S. drills more (Reuters)
• Bridgewater Said to Get $22.5 Billion in New Money Since 2015 (BBG)
• North Korea ready for another nuclear test any time (Reuters)
• China Rethinks Its Alliance With Reeling Venezuela (WSJ)
• Florida Tests Divergent Strategies of Clinton, Trump (WSJ)
• Italy to cut growth forecasts – economy minister tells paper (Reuters)
• HSBC Banking Vice Chairman Spencer Lake Leaves Firm After Decade (BBG)
• Hanjin ship unloads in U.S. as fresh funds pledged (Reuters)
• Brexit Banks Risk Finding No Offices If Quitting London for EU (BBG)
• Six shot, one dead, at Alabama rally: media reports (Reuters)
• New Tricks Make ISIS, Once Easily Tracked, a Sophisticated Opponent (WSJ)

Overnight Media Digest

WSJ

– Hillary Clinton’s campaign said Sunday she had been diagnosed with pneumonia and would cancel a planned two-day swing through California, hours after the Democratic presidential nominee abruptly left a 9/11 memorial ceremony in New York for what her aides described as her feeling “overheated.” on.wsj.com/2c2Mu8Z

– China’s concerns about Venezuela’s debt and the safety of expatriates there have prompted emergency meetings between the Chinese envoy and state companies. on.wsj.com/2conexu

– Hundreds gathered in lower Manhattan Sunday morning to commemorate the 15th anniversary of the Sept. 11 terrorist attacks on the World Trade Center, and to honor the thousands of people who lost their lives. on.wsj.com/2chUGEz

– Islamic State terrorists now use a mix of encrypted chat apps, face-to-face meetings, written notes and misdirection, all of which leave few electronic clues for Western intelligence agencies. on.wsj.com/2cbMERD

– With less than four weeks until Florida officials start mailing ballots to voters, the race in the nation’s biggest swing state is shaping up to be a defining test of political enthusiasm versus traditional organization. on.wsj.com/2cPoeJo

– Investors who had bet heavily on calm seas ahead were jolted Friday as prices of stocks, bonds, oil and gold all slid amid mounting concerns over the willingness and ability of central banks to prop up markets. on.wsj.com/2chRyqL

– A major financial scandal swirling around the Malaysian prime minister is drawing fresh attention to his glamorous wife, Rosmah Mansor, who newly revealed documents show has racked up at least $6 million in credit card charges in recent years -despite having no known source of income beyond her husband’s salary. on.wsj.com/2c3rNOW

 

FT

New Age, an Africa-focused oil explorer, is considering an initial public offering that would put it among the UK’s biggest independent oil companies by market capitalisation.

Korea Electric Power Corp, a South Korean energy group, is closing in on a multibillion investment in a new nuclear power station near Sellafield on the Cumbrian coast.

The UK Treasury said it would ask parliament to approve new regulations allowing insurance-linked securities (ILS) to be issued in London from next year.

Tesla Motors Inc has unveiled an update to its autopilot technology, which will now rely mainly on radar sensors after a fatal crash raised questions on the safety of the system.

 

NYT

– Tesla Motors is readying improvements to its Autopilot technology that might have prevented an accident in May that took the life of an Ohio man, Tesla’s chief executive said on Sunday. http://nyti.ms/2ckLJeu

– More than 11 years after civil charges were filed, New York’s case against Maurice R. Greenberg, the former chief executive of insurance giant American International Group, goes to trial this week. http://nyti.ms/2ckMpAg

– Amazon and Pandora Media are set to introduce new versions of their streaming services in coming weeks, charging as little as $5 a month, according to multiple people with direct knowledge of the plans who spoke on condition of anonymity because the process was ongoing. http://nyti.ms/2ckMd43

– Rob Pardo, who was the lead designer on Blizzard’s World of Warcraft, plans to announce the formation of a new company, Bonfire Studios, with a handful of game veterans. http://nyti.ms/2ckMMem

 

Britain

The Times

Simon Kirby, the boss of HS2, the high-speed railway, is leaving to join Rolls-Royce Holdings plc as chief operating officer. http://bit.ly/2cPGEh2

A nuclear power station being built in France using the same design earmarked for Hinkley Point in Somerset may have to restrict its output or could be abandoned because of the costs of correcting safety flaws, experts have warned. http://bit.ly/2cPHWsC

The Guardian

Britain’s economy will grind to a near standstill over the coming months as post-referendum uncertainty triggers a slump in business investment, a leading business group has warned as it slashed its growth forecasts. http://bit.ly/2chqDv6

Royal Dutch Shell Plc has started production at the world’s deepest underwater oil and gas field, 1.8 miles beneath the sea surface in the Gulf of Mexico. http://bit.ly/2chptzN

The Telegraph

The chairman of Tesco Plc, John Allan, has blamed the supermarket industry’s near obsession with opening more shops for its past errors. http://bit.ly/2chq9Fs

Sky News

The motor insurance group esure Group Plc is this week set to unveil plans for a 500 million pound demerger of its price comparison unit, Go Compare. http://bit.ly/2chpGTI

North Korea has dismissed as “laughable” moves by the United States to impose fresh sanctions following its fifth nuclear test. http://bit.ly/2chpAM5

The Independent

Theresa May should begin the formal process of Brexit within a matter of weeks rather than waiting until next year to trigger Article 50, according to former minister John Whittingdale. http://ind.pn/2chpiVm

French police have arrested a 15-year-old boy suspected of planning an “imminent terror” attack. http://ind.pn/2chpF25

 

via http://ift.tt/2cQgmrb Tyler Durden

While there is no much to add to our previous market wrap earlier this morning, now that traders in the US are arriving at their trading desks, the selloff appears to be accelerating and as Bloomberg notes, “a selloff in fixed income is starting to snowball into a global market rout”driven by what Reuters dubbed “growing concerns that global central banks’ commitment to the post-crisis orthodoxy of super-low interest rates and asset purchase programs may be waning.”

It appears Kuroda broke markets once again, the reason being the central bank insistence to steepen yield curves to avoid suffocating banks and pension funds, while keeping the broader easing theme on hold even as it means trillions in longer-dated bonds now find themselves in limbo as frontrunning central bank purchases is no longer possible. So what do traders do? Why they sell of course.

As Bloomberg adds, “shares in Europe and Asia dropped the most since the aftermath of the U.K. Brexit vote in June, and U.S. stock-index futures fell as concern spread that central banks are preparing to wean markets off unprecedented stimulus. Treasuries extended their slide into a fourth day as the U.S. prepared to sell three- and 10-year notes, and the yield on benchmark German bunds reached the highest since Britain’s decision to exit the European Union was confirmed. Oil sank toward $45 a barrel as nickel tumbled the most in four weeks. The yen advanced and the won slid. Samsung Electronics Co. tumbled after airlines and regulators warned against the use of its Note 7 smartphones.”

Come to think of it, it really is starting to look like a bloodbath, especially considering the dominant color in the following market summary table.

Last week Zero Hedge first warned that the incipient selloff in long-dated bonds, which the market had ignored for months, would spill over into all global markets and products, and sure enough that is precisely what is taking today, continuing Friday’s sell off. Starting with a tumble in longer-dated government bonds, “financial markets have been jolted out of a period of calm by an uptick in concern over the outlook for central bank policies. Lael Brainard, a member of the Federal Reserve’s board of governors, speaks Monday in Chicago, days after Fed Bank of Boston President Eric Rosengren said the economy could overheat.”

 Not helping risk sentiment, the ECB last week played down the prospect of further stimulus and Bank of England Governor Mark Carney said the chances of a U.K. recession had fallen. With the the Bank of Japan set to unveil the results of a comprehensive policy review at its its Sept. 20-21 meeting, traders are on tenterhooks especially after a Friday Reuters report that the BOJ is now actively considering steepening the JGB yield curve.

“It was only a matter of time for this selloff,” said Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf, Germany. “We had seen post Brexit a really notable rebound in markets even if fundamentals hadn’t improved accordingly. I expect some more downside going forward. There’s also the risk of the Fed meeting coming up.”

As a result, the MSCI All-Country World Index of shares fell for a third day, dropping 0.8 percent in early Europe trading. All major western-European stock markets dropped as the Stoxx Europe 600 Index lost 1.7 percent. The VStoxx Index tracking euro-area equity volatility headed for its biggest jump since January, signaling a return of instability after an extended period of stable prices. Miners posted the worst performance of the 19 industry groups on the Stoxx 600 today as commodity prices retreated. Energy companies slid as oil extended declines after U.S. producers increased drilling.  Linde AG tumbled 8.4 percent after saying it terminated talks for a combination with Praxair Inc. EON SE slid 15 percent after spinning off its Uniper SE unit. RWE AG fell 3.1 percent after confirming plans for an initial public offering of Innogy SE shares in the fourth quarter. SVG Capital Plc jumped 15 percent after HarbourVest Global Private Equity Ltd. offered to buy it for about 1 billion pounds ($1.3 billion) in cash.

Emerging Markets allowed no safe haven today, and the MSCI Emerging Markets Index slid 2.3%, the most since the June 24 Brexit vote. The gauge has tumbled 4.2% in two days, poised for a one-month low. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong sank 4 percent, the most in seven months, and South Korea’s Kospi lost 2.3 percent. Samsung plunged 7 percent after U.S. regulators joined the company in cautioning users to power down their Note 7s and refrain from charging them. Aviation authorities and airlines have called on passengers to stop using the gadgets during flights. The company announced a recall of millions of big-screen smartphones on Sept. 2 after about three dozen of them were found to have batteries that caught fire or exploded.

S&P 500 Index futures slipped 0.7%, and were aggressively propped up by the key support level of 2,100. 

Crude oil was down 1.7%, flirting with $45, after Friday’s Baker Hughes report that U.S. active rigs rose once again, while bets on falling prices also increased. OPEC’s monthly market report due at 6:45am ET. 

But the asset class currently in the driver’s seat remain bonds, where the selloff at the long end continues. Germany’s 10-year yield climbed four basis points, or 0.04 percentage point, to 0.05 percent, and touched the highest level since June 24. Spanish bonds with a similar maturity dropped a fourth day, pushing the yield to the most in seven weeks. Yields on 10Y Treasuries rose two basis points to 1.69 percent, before sales of a combined $44 billion of three- and 10-year notes. The three-year noes being sold later on Monday yielded 0.95 percent, an increase of 10 basis points compared with the previous auction on Aug. 9. Brainard, seen as a leading opponent of rate increases for much of the past year, is the last scheduled Fed speaker before the self-imposed blackout period running up to the Sept. 20-21 policy meeting. Any hawkish shift in her rhetoric may stoke volatility in financial markets, which on Friday put the probability of a hike in borrowing costs this month at 30 percent. Ten-year yields in Australia surged nine basis points to 2.05 percent, after gaining 10 basis points on Friday, and that for New Zealand debt with a similar due date jumped 11 basis points to 2.47 percent. Japanese government bonds with maturities of less than a decade advanced and longer-dated securities declined. The moves follow a Reuters report on Friday that said the Bank of Japan was studying options to steepen the nation’s yield curve. The cost of insuring corporate debt against default jumped the most since late June. The Markit iTraxx Europe Index of credit-default swaps on highly rated companies climbed four basis points to 72 basis points. A measure of swaps on junk-rated corporate issuers rose 16 basis points to 332 basis points. Both gauges are at the highest in about two months.

Market Snapshot

• S&P 500 futures down 0.6% to 2104
• Stoxx 600 down 1.8% to 339
• FTSE 100 down 1.6% to 6670
• DAX down 2% to 10366
• German 10Yr yield up 4bps to 0.05%
• Italian 10Yr yield up 4bps to 1.29%
• Spanish 10Yr yield up 2bps to 1.1%
• S&P GSCI Index down 0.8% to 351.9
• MSCI Asia Pacific down 2.1% to 137
• Nikkei 225 down 1.7% to 16673
• Hang Seng down 3.4% to 23291
• Shanghai Composite down 1.8% to 3022
• S&P/ASX 200 down 2.2% to 5220
• U.S. 10-yr yield up 2bps to 1.69%
• Dollar Index down 0.08% to 95.26
• WTI Crude futures down 1.7% to $45.12
• Brent Futures down 1.4% to $47.34
• Gold spot up less than 0.1% to $1,329
• Silver spot down 0.2% to $19.02

Global Headline News

• Global Stocks Sink With Bonds, Commodities as Fed Angst Builds: Fed’s Brainard is among officials due to speak on Monday
• Linde, Praxair Agree to Terminate Discussions on Merger: Deal would’ve created world’s biggest industrial gas supplier
• HP Inc. Buying Samsung’s Printer Business for $1.05b: HP seeking to become a bigger player in copiers and printers
• North Korea Seen Ready to Conduct New Nuclear Test at ‘Any Time’: ‘High’ probability next detonation could come this year
• Clinton, Suffering From Pneumonia, Cancels Trip to California: Incident fuels speculation about Clinton’s health
• Perrigo Targeted by Activist Starboard With New 4.6% Stake: Activist critical of missteps since drugmaker rebuffed Mylan
• Starbucks New Tea Line Chases China’s $9.5b Tea Market: Launches tea products in Asia-Pacific after U.S. growth

Looking at regional markets, we start in Asia where stocks traded negative across the board following Friday’s US sell-off, where all 3 major indices slumped over 2% following hawkish Fed rhetoric and weakness in commodities. ASX 200 (-2.2%) printed fresh 2-month lows, weighed on by commodity weakness in which WTI crude futures declined over 3%, while a firmer JPY dampened hopes of a rebound in Nikkei 225 (-1.7%). KOSPI (-2.3%) fell below 2,000 amid continued geopolitical concerns and losses in Samsung Electronics. Shanghai Comp (-1.9%) and Hang Seng (-XX%) conformed to the widespread negative tone in the region, with the latter suffering from an increase in Hong Kong money market rates after the 3-month HI BOR gained the most since February amid speculation that the PBoC could be intervening in the CNH to prevent CNY depreciation ahead of the first Special Drawing Rights (SDR) operation at the start of next month. 10yr JGBs fluctuated with early support seen as the downbeat tone across equity markets increased demand for safety, however, prices then reversed aggressively in late trade following the BoJ’s buying operations which was for a relatively reserved amount.

Top Asian News

• Traders Most Bearish on Yuan in Four Months as Loan Rates Surge: Bonds extend drop as 10-year yield rises to 7-week high
• China Proposes Tighter Bond Market Leverage Rules After Defaults: An investor’s repo holdings can’t exceed 70% of bond holdings
• Bond Rout in Japan Will Pass, Says Analyst Who Picked Rally: Falling liquidity exposes market to spike in yields, Sano says
• Ex-SAC Trader Said to Shut Hedge Fund Backed by Alibaba Founders: Pinyin is led by Bazarian, who worked at SAC for 10 years
• Samsung Drops After Warnings to Stop Using Note 7 Phones: Global aviation authorities warn against use while on planes

Friday’s selloff in the US remains at the forefront of traders’ minds today, with the downside filtering through to Europe, with all major European indices in the red (Euro Stoxx: -2.3%). In terms of a sector breakdown, all sectors reside in negative territory, with financials and materials among the worst performers. E.on (-12.5%) remain the worst performer, given that today sees the first day of trade for Uniper, combined with reports of higher liabilities for nuclear waste storage. Also of note, Linde (-8%) are among the worst performers after their merger with Praxair fell through. Fixed income markets have also continued their decline, with Bund yields soaring further into positive territory, with the US weighed on by a significant quantity of supply, in the form of USD 24b1n 3yr notes and USD 20b1n 10yr note auctions.

Top European News

• Deutsche Bank CEO Says Asset Management Is ‘Essential Part’; Cryan tells staff not to become distracted by ‘speculation’
• Basel Capital Revamp Endorsed Without Assurance Sought by Europe: Basel aims to finish capital framework revision this yr
• HarbourVest Offers to Buy SVG Capital for About $1.3b: SVG shareholders will receive 650p in cash for each share they hold
• Carney to Assess Post-Brexit Strength as BOE Rate Seen Unchanged: BOE will announce policy decision on Thursday
• EON Loosens Grip on Old Power Plants as Uniper Starts Trading: Uniper starts trading at EU10.015/share in Frankfurt
• AB Foods Drops as Primark’s Summer Slowdown Prompts Selloff: Primark’s same-store sales declined about 2% in 4Q
• Schaeuble Goes Global to Crack Financial Transaction Tax Dilemma: Austria’s Schelling says decision needed in October
• Volkswagen Eyes Bond Sale as Carmaker Seeks to Move Past Scandal: Has ‘pretty good handle’ on scandal’s financial risk

In FX, the Bloomberg Dollar Spot Index fluctuated near a one-week high before Brainard’s speech, with regional Fed chiefs for Atlanta and Minneapolis also lined up to speak on Monday. The yen appreciated 0.6 percent versus the greenback. There’s “growing caution over a rate hike as the day of the Fed’s decision draws closer,” said Masashi Murata, a currency strategist at Brown Brothers Harriman & Co. in Tokyo. “Markets had been too confident that a hike wouldn’t happen. But global economies are not in a critical phase, so there’s a limit to selling on risk aversion. Money will eventually seek yields and underpin high-yielding currencies.” The won slumped 1.4 percent, the worst performance among major currencies, after Yonhap News reported that U.S. and South Korean intelligence authorities see a high chance that North Korea will conduct an additional nuclear weapons test after holding one on Friday. The MSCI Emerging Markets Currency Index slid 0.4 percent, leaving it down 1.3 percent over two days.

In commodities, the Bloomberg Commodity Index fell 0.6 percent, after sliding 1.3 percent on Friday. Crude oil sank 1.6 percent to $45.14 a barrel in New York after American producers increased drilling, adding to a glut. U.S. rigs targeting crude rose to the highest since February, according to data from Baker Hughes Inc. Nickel slid 3.4 percent in London, dropping for the first time in eight days, while tin tumbled by the most since May. Gold rose 0.1 percent, after retreating 1.6 percent over the last three sessions. Iron ore fell in China to the lowest since June amid speculation the nation’s policy makers will tighten property curbs and so cool demand for steel. Steps should be taken to restrain bubble-like expansion in the housing market, Ma Jun, chief economist of the PBOC’s research bureau, said in an interview with China Business News. Wheat in Chicago fell 0.7 percent to about $4 a bushel, approaching a decade-low of $3.8675 reached on Aug. 31. Money managers have their biggest-ever bet on price declines and a global stockpile estimate by the U.S. Department of Agriculture is forecast to still be at a record high after the figure is updated on Monday.

On today’s calendar, with the FOMC blackout period taking effect from Tuesday the Fedspeak is frontloaded to today. Lockhart will speak at 1.05pm BST, Kashkari at 6pm BST and perhaps most significantly the uber dovish Brainard is scheduled to speak at 1.15pm Chicago time.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

• Friday’s selloff in the US remains at the forefront of traders’ minds today, with the downside filtering through to Europe
• Commodity currencies vs the JPY have been the primary target for risk sellers, and this has eventually weighed on USD/JPY which is now eyeing another test below 102.00
• Looking ahead, highlights include comments from Fed’s Lockhart and Brainard

US Event Calendar

• 8:05am: Fed’s Lockhart speaks in Atlanta
• 1:00pm: Fed’s Kashkari speaks in St. Paul, Minn.
• 1pm: U.S. to sell $24b 3Y notes; $20b 10Y notes in re- opening
• 1:15pm: Fed’s Brainard speaks in Chicago
• 6:30pm: Reserve Bank of Australia’s Kent gives Bloomberg Address in Sydney

DB’s Jim Reid concludes the overnight wrap

After a tight Treasury range for well over a month and with the S&P 500 not having a more than +\- 1% move since July 8th (the longest run since April-July 2014), the peace was suddenly shattered on Friday. Starting with US rates, 2y and 10y yields closed up +1.2bps and +7.6bps respectively. The move for the latter in particular means that the 10y has now busted out of the 1.50%-1.60% range in style, closing at 1.676% and the highest yield since the Brexit referendum. It also makes for an impressive two-day move (+13.6bps) which is second only to the July 11th-12th move (+15.2bps) for the largest this year. It was a similar story in European bond markets where yields were up anywhere from 7-9bps. In fact Friday even saw 10y Bunds rise +7.3bps or a more eye watering +115% to close at +0.009% and in positive territory for the first time since July 15th (which they only managed to hold for 24 hours). This morning in Asia we’ve seen similar maturity yields in Australia, New Zealand and South Korea rise 5-9bps, although interestingly 10y JGB yields initially opened higher but have since retreated and are currently 1bp lower. 30y yields are however nearly 4bps higher and so the curve has steepened which fits in with recent headlines that the BoJ wants to maintain a comparatively steep yield curve.

It won’t come as much surprise to hear that it was a good day on Friday for the Greenback then with the USD index closing +0.33%. On the other side of the coin it was a rough day for emerging market currencies though with the likes of the Colombian Peso (-2.60%), South African Rand (-1.93%), Brazilian Real (-1.85%) and Russian Ruble (-1.25%) falling sharply. In equity land the S&P 500 (-2.45%) had its worst day since the post-Brexit reaction on June 24th and as a result the worst week since early February. High yielding dividend stocks were hit hardest on Friday with the likes of real estate, utilities and telecoms sectors all down well over 3%. Financials and specifically Banks did perform better given the steepening across yield curves. This was most evident in Europe where the Stoxx 600 tumbled -1.09% but the Stoxx 600 Banks index closed +0.30%. On a related note it was also interesting to see that the S&P 500 vs. US 10y Treasury yield 20-day correlation is now approaching the most negative (-0.520) in five years having traded with a positive correlation for most of 2016.

The risk off moves weren’t just confined to equity markets as credit spreads also blew wider. CDX IG finished over +4bps wider by the end of play while in Europe the iTraxx Main and Crossover indices were +3bps and +14bps wider. Meanwhile the VIX rose 40% and to the highest since June. Finally Oil (WTI -3.65%) had its worst day since July 13th while Gold (-0.78%), Silver (-2.91%) and the wider base metals market also had days to forget.

A big contributor to Friday’s collapse was the Fedspeak and in particular hawkish comments from Boston Fed’s Rosengren midway through the day. We’ll touch on his comments shortly but with that in mind and with the FOMC blackout period kicking in tomorrow it’s worth keeping a close eye on Fed Governor Brainard’s comments this evening at 6.15pm BST/1.15pm EST. As a reminder this scheduled event was only added very recently and there’s some suggestion that it could be used as an opportunity for the Fed to raise market expectations and give the FOMC some more wiggle room at the September meeting, given Brainard’s position as one of the most dovish committee members. We’ll also hear from Lockhart and Kashkari today, so it has the makings of another busy day.
Looking at the rest of markets this morning in Asia, it’s been a rough opening for risk where equity bourses are tracking Wall Street’s losses on Friday. There have been heavy falls for the Nikkei (-1.51%), Hang Seng (-2.38%), Shanghai Comp (-1.56%), Kospi (-1.77%) and ASX (-2.17%) while credit indices in Asia and Australia are 3-4bps wider. US equity index futures are also currently in the red. It’s worth noting that headlines this morning are also dominated by another story, that being the latest in the US presidential race where Democratic nominee Hilary Clinton has been diagnosed with pneumonia, hours after leaving a memorial event on Sunday. The health of both Clinton and Trump has been a talking point in the race and while this may end up being a largely irrelevant story in the grand scheme of things, and also in markets, it will be interesting to see if this causes any sharp swings in upcoming polls given that it is a subject which has divided opinions. One to watch.

Back to the Fed comments on Friday. The most notable was the chatter from Rosengren (voter) who is typically seen being a more dovish member of the Fed camp. Specifically he said that a ‘reasonable case’ can be made for a rate hike, helped by ‘modest increases in wages and salaries’ that ‘seem to me consistent with tightening in labour markets beginning to appear more strongly in the wage data’. Rosengren also added that ‘a failure to continue on the path of gradual removal of accommodation could shorten, rather than lengthen, the duration of this recovery’. DB’s Peter Hooper believes that Rosengren is pretty clearly in the September hike camp and his remarks, by themselves, should have moved the odds on September above 50/50.

Those odds did spike up to 38% from 28% following Rosengren’s comments, but some slightly more balanced Fedspeak which followed later in the session saw the September probability actually dip back down to 30% by the end of the day. Indeed it was Governor Tarullo who followed and maintained his usual dovish and cautious stance. He said that while he wouldn’t rule out a hike this year, he remains in the ‘show me’ camp, or in other words wants to see more evidence of firmer inflation. He said that ‘regardless of what measure you use, from my point of view, what is optimal right now is to look to see actual evidence that the inflation rate would continue to go up and would be sustained at around the target’, adding that ‘we’ve had so many false up and downs in the past’. The final comments came from the relatively centrist Dallas Fed’s Kaplan who said that the ‘Fed can to be patient and deliberate in its actions’ but that ‘I still believe that over the last several months the case has strengthened’.

Away from the Fedspeak, the small amount of economic data released on a Friday was largely a sideshow to what was going on in markets. Across the pond wholesale inventories were confirmed as being unchanged in July and so unrevised from the initial flash reading, while wholesale trade sales fell -0.4% mom. The Atlanta Fed revised down their latest Q3 GDP forecast to 3.3% from 3.5% while the NY Fed’s Q3 estimate was held at 2.8%. Prior to this in Germany a much weaker than expected exports reading in July (-2.6% mom vs. +0.4% expected) helped to lower the trade surplus and continued the recent run of weak data in the country. Over in France industrial production was softer than expected in July (-0.6% mom vs. +0.3% expected) while here in the UK the July trade deficit narrowed a little less than expected.

Turning over to the week ahead now. It’s a super quiet start to the week today outside of the Fed speak detailed below with no real significant data due to be released. Tomorrow kicks off in China where the August data dump is due including retail sales, fixed asset investment and industrial production. During the European session tomorrow we’ll get the final August CPI revisions in Germany along with the September ZEW survey. There’s important data due to be released in the UK tomorrow too with the August CPI/RPI/PPI readings due. In the US tomorrow we’ll get the August NFIB small business optimism reading, along with last month’s monthly budget statement. We start in Japan on Wednesday where the final revision to industrial production in July will be made. We then move onto France where the final August CPI revisions are made before the UK comes under the spotlight again with the latest employment report. Euro area industrial production in July will also be released. It’s quiet once again in the US on Wednesday with the only data due being the import price index for August. It’s a busier day all round on Thursday. In Europe we’ll again get more important data out of the UK, this time in the form of the August retail sales data. Euro area trade data and the final August CPI number will also be released before all eyes turn to the BoE meeting at midday. During the afternoon session in the US we’ll get August retail sales, Philly Fed business outlook in September, PPI in August, initial jobless claims, empire manufacturing in September, industrial and manufacturing production in August and business inventories in July. So hold your breath for that one. Closing the week on Friday there’s little to highlight in Asia or Europe. In the US however we’ll get the August CPI report along with a first look at the University of Michigan consumer sentiment survey for September.

Away from the data, as noted earlier with the FOMC blackout period taking effect from Tuesday the Fedspeak is frontloaded to today. Lockhart will speak at 1.05pm BST, Kashkari at 6pm BST and perhaps most significantly the uber dovish Brainard is scheduled to speak at 6.15pm BST. Away from that the ECB’s Lautenschlager speaks tomorrow and the EU’s Juncker speaks on Wednesday.

via http://ift.tt/2cebOiv Tyler Durden

On Friday night, roughly at the same time as the sick Hillary Clinton was attending a Barbra Streisand fundraiser focusong on LGBT issue where she unleashed her condemnation of the “basket of deplorables” aka Trump supporters, she – allegedly – was aware that she had pneumonia, at least according to the latest hastily scripted narrative by the Clinton campaign. Two days later, she infamously fainted during a Sept 11 events in downtown New York, however she assured the media that she was ok, while the sick, and perhaps contagious, presidential candidate took the opportunity for another photo op with a young girl.

“pneumonia is contagious?” http://pic.twitter.com/Bstyu84bRz

— zerohedge (@zerohedge) September 11, 2016

But while Clinton’s previously diagnosed pneumonia was not a reason for Hillary to miss the Friday fundraiser, it appears that the severe deterioration in her health yesterday has been sufficient to force the Democratic presidential candidate to cancel a campaign trip to California. Hillary was due to leave for California on Monday morning for a two-day trip that included fundraisers, a speech on the economy, and an appearance on the Ellen DeGeneres Show.

This will not happen:

JUST IN: Hillary Clinton’s Monday-Tuesday California trip is OFF

— Gabriel Debenedetti (@gdebenedetti) September 12, 2016

Clinton’s personal physician, Dr Lisa Bardack, said: “Secretary Clinton has been experiencing a cough related to allergies. On Friday, during follow-up evaluation of her prolonged cough, she was diagnosed with pneumonia. She was put on antibiotics, and advised to rest and modify her schedule.”

Yet even as Clinton’s health has deteriorated so substantially that the WaPo’s Chris Cilizza became the laughing stock of the “objective journalism” world with his epic flop flop profiled previously…

 

… the Clinton campaign was doing everything in its power to contain the severity of the fallout. Her team said she is suffering with “walking pneumonia” – a less serious type of the lung infection which leaves patients feeling unwell but doesn’t usually require bed rest or hospitalisation. Pneumonia is essentially an infection of the lungs which causes inflammation in the air sacs and fills them with fluid. Symptoms can include a cough, fever, fatigue, chills and shortness of breath.

Anyone can contract pneumonia, although smokers, older people, and sufferers of chronic lung diseases are at increased risk. There are two types – bacterial or viral. Bacterial pneumonia is common and easily treated with antibiotics. Most people with so-called “walking pneumonia” can recover within a few days. Those with weak immune systems or existing conditions can take weeks to recover, and pneumonia can in some cases be fatal.

So as of this moment Hillary is caught between a rock and a hard place: she is clearly not healthy, and is now afraid to make public appearances, yet on the other hand she can’t demonstrate to the world just how truly unwell she is (one wonders if there is a way to test and verify Bardack’s claim that she even has pneumonia) and has had to tone down the excuse she urgently came up with.

Which begs the question: while Hillary will be delighted to avoid public gatherings and, perhaps, the upcoming debates with Trump, she still needs to show herself at the all important fundraisers: how will she do that? We now know the answer.

Just in: attendees of Clinton’s SF $ event Monday—feat. k.d. lang—just got an email telling them Clinton WILL appear…via teleconference

— Gabriel Debenedetti (@gdebenedetti) September 12, 2016

via http://ift.tt/2cignmJ Tyler Durden

Submitted by Fredrico Pieraccini via Strategic-Culture.org,

So much has been said about the Syrian conflict in numerous analyses, yet one of the least discussed topics concerns the strategy and the relationship of cooperation and conflict between the United States, Turkey, the Kurds and Daesh.

From the beginning of the Syrian conflict, Washington and Ankara have never hesitated to exploit Daesh’s advances. The occupation of Syrian towns near the Turkish border by Islamic extremists has been one of the preferred tactics endorsed by the United States and Turkey. Closing one eye, often both, concerning Daesh’s operations meant attacking the Syrian state indirectly and threatening its integrity whilst simultaneously allowing the creation of safe havens where terrorist groups could receive weapons and material support to spread their attacks on the legitimate government of Damascus over the rest of the country.

In the specific case of Turkey, there were also other assessments. ISIS / ISIL was supported vigorously by Ankara in the process of sweeping Kurdish territories, wreaking death and destruction on the community. Given the historical conflict between Turkey and the Kurds, it is easy to assume that advances by ISIS/ISIL meant a victory for Erdogan and a successful degradation of the Kurdish community in the Middle East.

Subtly and somewhat complacently, the United States reacted to this behavior of Ankara in two ways. It primarily imposed a media blackout on trade deals between Turkey and Daesh and it especially never attacked ISIS in Syria with the so-called international coalition.

What has altered the chessboard is the Russian military intervention in September of 2015. Moscow has been able to smash the wall of silence and collusion present in Syria involving terrorist organizations such as Daesh, Al Nusra Front, Jaysh al-Islam, Ansar al-Islam and countries like the United States, Jordan, Saudi Arabia, Qatar and Turkey. In addition to military action, the Russian Federation has been able to apply strong diplomatic pressure on Western countries and, through the RT news channel, has repeatedly exposed the support of terrorism at any cost by the opponents of the legitimate government in Damascus.

Since September 2015 the war of aggression against Syria has been hit hard by Moscow’s triad of military, diplomatic and media action. The Syrian Arab Army (SAA) quickly recaptured many territories previously lost. The liberation of Palmyra, and the road already opened to Deir ez-Zor, the vast areas around the Russian military base in the province of Latakia cleared, the recent victory at Darayya and Aleppo – these finally showed a clear military solution to the crisis in Syria.

The consequences of the strategic re-conquests made by the SAA, combined with the inability of Washington to more explicitly intervene directly in the conflict with men and materiel, forced the US to change its initial tactics. Hidden support (deliberately never mentioned by TV and newspapers) of terrorist groups continues unabated, the same of which can be said for Washington's allies in the region. But what has changed is the media narrative of the conflict.

The terrorist attacks in recent months in Europe and the United States have arrested the attention of the public; and with a careful direction, especially in the US, thanks to the presidential election, people have been led to believe that a military intervention in Syria and Iraq was necessary to deal with a threat to national security. The inability to intervene directly with boots on the ground pushed Washington to arm and support directly (with the Air Force and with special forces) the Kurds as a force to opposing ISIS / ISIL on the ground.

For their part, not having other options to regain territories previously lost, the Kurds agreed to be the chosen on-the-ground force supported by the international coalition. They preferred to ignore the original sin of Washington (complicity with Daesh) to seize the unique opportunity available to them. It was a choice that in the short term ensured the desired results, with the recapture of several areas and an expansion and enlargement of their territory by over 50%. For some weeks, the Kurds even dreamed of the reunification of areas under their control in Syria and Iraq while Washington was enjoying the (self-proclaimed) media plaudits for combating Daesh, all the while preventing the Syrian Arab Army from regaining territory from ISIS.

From Moscow’s point of view, this change of approach to Syria by the Obama administration is a direct result of Russia’s military, diplomatic and media intervention, and the subsequent reconquests made by the SAA and its allies. It is a limited success, but still a victory against an enemy of Damascus (Daesh). It is a complicated affair, as the conflict in Syria stands out at times, wherein a partial victory is always preferable to the possibility of a defeat.

The second phase of the Russian plan, much more ambitious and difficult to achieve, is a military cooperation with Washington and its allies against terrorist organizations in Syria. The continued refusal of this proposal has once again exposed the real intentions of the United States and regional partners, namely the removing of Assad and the partitioning Syria’s territory.

The massive support given to the Kurds by the Americans created the ideal environment for Ankara to justify an intervention in Syria. The threat of a unification of Kurdish territory on Turkey’s border was a red line the crossing of which Erdogan could not countenance. What we understand is that the use of the Kurds against Daesh by Washington was a temporary move to last some months, probably agreed to with Ankara, designed for domestic consumption to appease public concern over Daesh. With these enabling conditions, Ankara did not hesitate to use them to its advantage. By entering Syrian territory and conquering Jarabulus, Ankara has prevented the reunification of Kurdish territories, has pleased its American ally by providing a structured land force (although very limited for now), and is now trying to clean up its own media image thanks to its portrayal of fighting Daesh. Analysing the battlefield in recent weeks, ISIL/ISIS has often abandoned its territories near the Turkish border without even engaging with the Turkish Army. This behavior is consistent with the thesis that Daesh functions as the West’s cat’s paw for regime change in Syria.

The final American attempt to use the Kurdish card to achieve their strategic objectives against Damascus was the failed attempt to incite the Syrian Kurds against regular police forces in Aleppo. Unfortunately for US policy-makers, the attempt did not last long, thanks to Russian mediation that put an end to the fighting.

The situation continues to evolve in favor of Damascus in recent weeks. Aleppo is now surrounded and sealed off, signalling game over for the terrorist gangs in northern Syria. Washington, running out of options, promptly dumped its momentary Kurdish ally in favor of full military cooperation with Ankara. Erdogan, for his part, had meanwhile consolidated power thanks to the purge following the failed military coup, and juggled his options so that he could easily play the direct-military-intervention card in Syria with the advantage of multiple excuses.

Erdogan even reiterated a few days ago at the G20 held in China that he would be willing to help and collaborate with Washington to regain the city of Raqqa, an ISIS stronghold in Syria. The substance of this change does not alter the balance of the war but exacerbates the conflict and places it on a new level. All armed groups in Syria over the years have shown that they cannot prevail in the military confrontation with Damascus and its allies. The United States, supporting the Kurds, has forced Turkey to become the much-needed force in the battlefield, essential in occupying territories currently held by Daesh, and preventing Damascus from further conquering and unifying Syrian territory.

This is Washington’s Plan B in the making, an old idea of ??the dismemberment of Syria theorized by many Western think-tanks like the Brookings Institute and RAND Corporation. The chances of the plan being realizing remains unknown. Plan A failed miserably: Assad is still in power, and it is only a matter of time before the SAA and its allies finish liberating the rest of the country.

It remains to be seen how Daesh will react to the threat of losing their so-called capital, Raqqa, in favour of the same forces (Turkey and United States) that created and helped them rise from nothing. If ISIS/ISIL should decide to fight and not abandon the city, it would be a first for the international coalition and the Turkish army, finding themselves embroiled in the Syrian quagmire like never before. How would the people of Turkey and America react to their soldiers and special forces being killed, imprisoned or tortured? Would Erdogan and Obama still be able to justify the operation to the broader public?

The silence and proportional protests coming from Moscow in light of the Turkish incursion in Syria confirms these suspicions: territories reconquered from Ankara are not strategic; the Turkish force is numerically limited (hence the objectives), and the ‘race’ to Raqqa would probably cause more damage than gain for Erdogan and Obama. Moreover, the Arab Syrian Army has other strategic priorities to address and does not want to make the necessary countermeasures to arrive first at Raqqa.

Obama and Erdogan's bluff is all summed up in the last lines. Erdogan and Obama, in the efforts to free Raqqa and penetrate further into Syrian territory, hope to oblige Syrian forces to alleviate pressure on terrorist groups elsewhere in the country, especially in Aleppo, diverting troops towards the city of Raqqa. What we have been seeing in recent days are empty statements of small conquests by Turkish troops in Syrian territory, aimed at pushing Damascus to fall into the trap prepared by Washington and Ankara.

The clock is ticking, and it is all in the favour of Moscow, Damascus and Tehran, who observe the situation with relative calm. Their planned strategy is providing most of the desired results, and now America and its allies have only the ability to react to events on the ground, not to determine or create them. Compared to a few years ago, this is a resounding change. If Erdogan and Obama still will want to start doing the dirty work in Raqqa against the same terrorist group they instigated against Damascus, then they are free to do so.

All options available for Washington and its partners-in-terror will have negative effects on the fateful goal to undermine Syria. Raqqa is a Syrian city, inhabited by Syrians, and even if Ankara liberated it, it is never going to be incorporated into an imaginary Turkish territory.

Strategic contortions, moral contradictions, media deception, and the recent military defeats of terrorist groups have transformed Syria into a recipe for disaster for Washington, Ankara, Doha and Riyadh, from which there is no way out or path to victory.

via http://ift.tt/2cPP1Fk Tyler Durden

It appears that Hillary’s pneumonia has spread to global capital markets.

Last Thursday, with the S&P trading just shy of all time highs, we warned readers to “Brace For VaR Shock“, and explained how the BOJ’s surprising intent to steepen its Japanese yield curve could unleash a global bond market selloff, as a result of record high correlations between bond and stock assets. The very next day, accelerated by further hawkish comments by the Fed’s Rosengren who saw a “reasonable case” for a rate hike, the S&P saw its biggest plunge since Brexit as fears about central bank “inaction”, coupled with the realization of the BOJ-driven VaR shock spread through the market, and topped off with news that the Fed’s Lael Brainard was set to deliver an unscheduled last minute speech in Chicago today around noon, which according to some could hint at a September rate hike by the legacy dove.

While it remains to be seen what Brainard will say, the market today is in a sell first, ask questions later mode, as the Friday bond liquidations that started in Japan and spread to the US, has now slammed Europe. Here are some recent indicative levels courtesy of Tradeweb:

• SPAIN’S 10-YEAR BOND YIELD RISES TO 1.13 PERCENT, HIGHEST LEVEL SINCE LATE JULY AND UP 4.5 BPS ON DAY – TRADEWEBWEB
• PORTUGAL’S 10-YEAR GOVERNMENT BOND YIELD RISES TO TWO-MONTH HIGH OF 3.23 PERCENT , UP 6 BASIS POINTS ON DAY – TRADEWEBEWEB
• ITALIAN 10-YEAR BOND YIELD RISES TO HIGHEST LEVEL IN OVER TWO MONTHS AT 1.33 PERCENT , UP 5 BPS ON DAY- TRADEWEBWEB

The biggest pain however is for Japanese bonds, where the 40 Year yield has exploded from 0.6% to 0.61% overnight, resulting in a 15% absolute price decline, from nearly 150 to under 130 in under 2 months,

Here is a snapshot of the current bond rout around the globe:

As we warned last week, and as @Schuldensuehner pointed out moments ago, the correlation between bonds and stocks is now the highest it has been since the financial crisis…

… which means that nobody is spared: the surge in bond yields is spreading to equities, in the case below, the Dax, which is tumbling 2.5% in early trade.

Other European cash indices are not doing better:

• Eurofirst 300 down 1.9% to a 6 week low
• France’s CAC 40 has shed 2.1 per cent
• The FTSE 100 has slipped 1.5 per cent

Not even China was immune: the Shanghai Composite tumbled 1.9%.

 

A recap of the main cross-asset moves:

• Equities: MSCI Asia Pacific (-2%), FTSEMIB (-2%)
• Bonds: German 10Yr yield (+3bps), French 10Yr yield (+4bps)
• Commodities: LME 3m Nickel (-3.1%), Natural Gas Futures (+1.6%)
• FX: Yen spot (+0.4%), Euro (+0.2%)
• Hang Seng China enterprises down 4%
• Vstoxx Index rises 15.5% to 22.29

Finally, US equity futures are likewise dumping, with ES algos aggressively defending the 2,100 level. If the eMini drops below this key support level, the Fed may have no choice but to cut rates, forget about hiking them.

via http://ift.tt/2cl7P07 Tyler Durden

Back in 2013, a meme circulated quickly off of a Reddit post that showed the incredible population density of the southeast corner of Asia.

As Visual Capitalist’s Jeff Desjardins notes, the satellite map showed, quite simply, that “more people live inside this circle, than outside of it”.

 

 

THE POPULATION EPICENTER

We are in the business of explaining the world through compelling and intuitive visuals – and we thought that this powerful “meme” could use a refresh with some additional graphical context.

To start, we’ve used 2016 information on population. There are now at least 3.8 billion people living inside the highlighted circle, and that’s not even including the tally from countries that are partially in the circle like Pakistan or Russia.

The circle holds 22 of the world’s 37 megacities – massive cities that hold at least 10 million inhabitants. It also includes the five most populous cities on the planet: Tokyo, Jakarta, Seoul, Karachi, and Shanghai, which alone combine to hold 144.5 million people.

This geographical region also holds many of the emerging markets of the future, countries that the World Economic Forum expects will lead global growth in years to come. Vietnam, Myanmar, Philippines, Indonesia, and Bangladesh are in the area highlighted, and Pakistan is partially there as well.

POINTS OF INTEREST

As a website called BrilliantMaps explains, there are some other subtleties to the circle that are worth detailing:

The circle contains a lot of people, but it also has:

• The highest mountain (Everest)
• The deepest ocean trench (Mariana)
• More Muslims than outside of it.
• More Hindus than outside of it.
• More Buddhists than outside of it.
• More communists than outside of it.
• The least sparsely populated country on earth (Mongolia)

What a fascinating world we live in.

via http://ift.tt/2cQiL9o Tyler Durden