Tag: finance

Heading into Monday, there was speculation that Speaker Paul Ryan would rescing his endorsement of Republican presidential nominee Donald Trump after the emergence of the Trump Tapes, following an exodus of his lawmaker peers doing the same over the weekend. The Speaker had a conference call scheduled for 11 a.m. on Monday with House Republican, to assess Donald Trump’s debate performance and advise rank-and-file Republicans on how to deal with fallout from leaked audio.

As of last night, no decision had been made, but as Politico adds, “that the speaker of the House has even mulled abandoning his own party’s presidential nominee is illustrative of the extraordinarily bizarre political climate in the Republican Party. “I think they all face the same dilemma to varying degrees,” a senior House Republican leadership aide said, echoing the sentiment of multiple high-level aides and lawmakers interviewed by POLITICO. “How to express displeasure in a meaningful way… How best to help members in tough races… How to try to rebuild the party post the anticipated apocalypse. I think they are all having individual and group discussions wrestling with this.”

And while it remains unclear what has been decided, moments ago, Politico’s Jake Sherman tweeted that while there was no formal decision, Paul Ryan announced that he won’t defend Trump and “will focus the next 28 days on keeping the House majority”

BREAKING– @SpeakerRyan tells house republicans he won’t defend trump and will focus the next 29 days on keeping the house majority.

— Jake Sherman (@JakeSherman) October 10, 2016

PAUL RYAN just told House Republicans that if Hillary Clinton wins the White House, Republicans can’t let her have a blank check in congress

— Jake Sherman (@JakeSherman) October 10, 2016

Put this all together– Ryan is basically done with trump. Wants to keep the house.

— Jake Sherman (@JakeSherman) October 10, 2016

 

 

Wow, wow. From source on House GOP conference call, Ryan said: “you all need to do what’s best for you in your district” — > http://pic.twitter.com/Dw8hn7RUOK

— Hallie Jackson (@HallieJackson) October 10, 2016

Which is as close to Ryan abandoning Trump as the House speaker could have gone without officially withdrawing his support, and leading to even greater chaos for the republican party.

via http://ift.tt/2dGbDt4 Tyler Durden

With the endless jawboning from officialdom that 'everything is awesome' (or about to be) in a desperate attempt to keep the status quo fumbling along, it is once again refreshing when an ex-insider 'fesses up that, in fact, nothing is awesome and it's a total shitshow below the surface.

UBS Chairman Axel Weber is a former policymaker at The ECB and was the president of Germany's Bundesbank.

Speaking on the sidelines of ther annual meetings of the IMF and World Bank this weekend, CNBC reports Weber warning…that monetary intervention is causing international spillovers and major disturbances in global markets.

"They (central banks) have taken on massive interventions in the market, you could almost say that central banks are now the central counterparties in many markets. They are the ultimate buyer,"

 

"Investors have been driven into investments where they have very little capability for dealing with what is on their plate and I think that is a sure reminder of where we were in a different asset class in 2007," he said.

 

"So I think the central bankers need to be very careful that they do not continue to produce disturbances in the markets, which they acknowledge – it's a known side effect – but the perception that the underlying impact of monetary policy outweighs the potential side effect in my view is starting to be wrong," he added.

 

Since the global financial crash of 2008, central bank policy has focused on buying up bonds in large quantities and cutting interest rates to record lows. The Federal Reserve has since looked to unwind its own policy which focused on the Treasury market and the yield curve, but the Bank of Japan and the ECB's large-scale bond-buying programs continue.

 

"I don't think a single trader can tell you what the appropriate price of an asset he buys is, if you take out all this central bank intervention," Weber warned, adding that it often meant investors were making bad choices with where to put their money.

Still we are sure this is probably nothing to worry about…

via http://ift.tt/2d7mUQN Tyler Durden

After listening to ridiculous comments as expected from a Clinton, that are offensive on multiple levels, we need to set the record straight about one of the best economic periods in American History; the late 80’s and 90s.  During the career of Bill Clinton, something happened in American politics which was a transformation of a ‘political’ system, where intellectuals would debate issues of the day, and suggest policy changes – to one of a ‘pay for play’ business regime, culminating in the shadow government we have today.  Talking about special interests in modern politics is a joke – ‘special interests’ control the entire system.  The idea of a Trump is that this isn’t an issue, because he’s self-funding his campaign, and well – he’s not a politician.  But that doesn’t mean he can as a single individual stand up to the special interests – he may be very well overrun by this virus that’s eaten away the core of our political system.  As we explain in Splitting Pennies – Understanding Forex – the world isn’t as it seems, the world works in simple ways – those in power just like to make it look complicated.

The thing that business people have to understand about politics as a business – it’s not a normal business.  Making a business out of politics is very corrupt.  Accepting money for the formation of laws, is an uber – conflict of interest.  

Business people must fulfill a need, perform excellent customer service, or create something unique that the market wants.  Businessmen are ALWAYS tested by the market – and they’re always one trade away from ruining their entire business.  One recall from Toyota- risks their entire business.  One bad property deal from Trump – one deal with the ‘wrong’ person – risks the entire operation.  POLITICIANS DO NOT HAVE THAT PROBLEM.  They are never ‘tested’ for performance and if they are ever ‘questioned’ about it, they can simply use their power to make these risks minimal.  Unfortunately, they are all on board with this system.

Politicians, have no value per se, they do not need to have a skill, be literate, do their jobs properly, or perform excellent customer service.  In fact, quite the opposite.  Once elected, a politican needs to be proven to commit huge crimes in order to be ousted from office.  And that, as we’ve seen with HRC, is nearly impossible (because, they control the police, FBI, etc.).  Politicans have no value or skill – they have POWER.  Because once they are in office, they can enact ordinances, executive orders, create taxes, declare emergencies, zone property, create business licenses, enforce or not enforce regulations, and many other powers.  So during the course of the last 60 years, they realized they can sell on the open market their one asset – power.  It goes to the highest bidder.  Make no mistake – they are not complete puppets for their customers, they are subject to market forces that change things, make mistakes, and do not always acheive the outcomes they desire.  However, this power broker system persists in Washington to this day, and is the dominating cog in the political system.  

Bill Clinton in some way was a genius in capitalizing on this system first locally in Arkansas and then riding this gravy train all the way to the White House.  Bill Clinton was not a businessman, not an economist, not an intellectual.  He was a musician by vocation and lawyer by occupation:

Sometime in my sixteenth year, I decided I wanted to be in public life as an elected official. I loved music and thought I could be very good, but I knew I would never be John Coltrane or Stan Getz. I was interested in medicine and thought I could be a fine doctor, but I knew I would never be Michael DeBakey. But I knew I could be great in public service.^[3]

The 90’s was a culmination of the 80s, and several key factors, were macro circumstances that produced the boom of the 90s:

• The collapse of the Soviet Union – leaving many vassal states for the US to claim, expand business, provide loans – it was a gold rush!
• A continual lowering of the interest rate – not quite QE, but at the time, it was extreme
• Strong European financial economy, being supported by the US – culminating in the Euro in 1999
• Due to collapse of USSR, Military budget was slashed, billions flowed into technology instead of bombs, which allowed the massive tech sector to be built (Internet, Google, Microsoft)
• Immigrants, capital, and ideas all flowed into the USA during this time, supporting the economy
• China in early expansion, during a period where China ‘needed’ USA, Wal Mart expanding, US-China trade exploding (both ways – not only imports)
• Iraq war, although a huge economic waste, had less economic devastation than other wars (like Vietnam) and enabled 10 years of cheap oil and strong US Dollar

These are just some of the economic markers.  Each should be allowed its own elaboration, as many of these points fall through the cracks of modern macroeconomics, i.e. FOREX.  That’s because 99% of economists don’t consider money supply in their analysis.  Let’s be practical, there’s hundreds of billions of dollars flowing into the United States during the 90s from other countries – is this significant?  Does this support the US Dollar?  Of course it does.  And more importantly, the money stayed here, it grew the economy, built businesses, created jobs – it was the ideal climate.  There wasn’t a conspiracy, unlike what some may tell you – macro economics & politics is an animal of its own.  We can describe the 90s as ‘good weather’ after the storm.  

As anyone can see in the Southeast after a Hurricane passes, the weather is simply breathtaking.  That’s what happened in the 90s.  Not because of Bill Clinton.  If anything, you can blame Bill Clinton for taking this economic opportunity and creating many of the problems we have today, such as the Welfare state (entitlement programs), regulation of markets, government inefficiency, and an extension of Washington’s ‘pay for play’ game, which has turned a system of politics into something else all together.  It’s an unregulated power market.  Too bad there’s not an exchange, we can go short Clinton and hedge our risks.

To learn more about the way the world REALLY works, checkout Splitting Pennies – Understanding Forex – or checkout Fortress Capital Trading Academy, who offers a great Introductory course.  Forex = The reality of how the world works.

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Submitted by Tim Urban via WaitButWhy.com,

In case you missed it, I took the time to transcribe the entire second presidential debate. Here’s what happened:

Martha Raddatz: Hi I’m Martha.

Anderson Cooper: And I’m Anderson. And we’ll be your moderators tonight.

Martha: We’d like to remind all audience members that they’re props more than anything and should stay silent through the debate. The format of the debate will be a series of questions from members of the audience. We’ll start with a woman named Patrice Brock.

Audience Question: Thank you and good evening. The last presidential debate could have been rated as MA—mature audiences—per TV parental guidelines. Knowing that educators assign viewing the presidential debates as students’ homework, do you feel that you are modeling appropriate and positive behavior for today’s youth?

Clinton: I want to do all kinds of things. I want to do good things. There’s nothing we can’t do together, you and me Patrice. I want to work with people of all ethnicities. I want to heal the country. Make it a better place. For you and for me and the entire human race. And our children. And grandchildren.

Trump: This country’s going to shit. Healthcare costs are going up. We made Iran great again. We get killed on trade—an $800 billion deficit last year. We’re gonna make great trade deals. We’re gonna bring back law and order. Did you hear about those policemen that were shot today? We need justice. I want to fix the blacks in the cities. I want to fix the Latinos, Hispanics, etc. I want to make them great again. Make America great again.

Anderson Cooper: Neither of you remotely answered the question, whatsoever. You literally both ignored Patrice. Anyway, I also don’t care about Patrice. Let’s talk about the tapes. Donald, you talked about kissing women without consent. Grabbing them by the pussy. That’s really very much definitely sexual assault. You bragged about sexually assaulting women. This is a real thing that happened. It is a thing that’s real.

Trump: Wrong. I don’t think you understand what sexual assault is. Grabbing women by the pussy is locker room talk. Assaulting women is grabbing them by the pussy. I’m sorry I grabbed women by the pussy. I never did that. And how can you say that’s worse than ISIS? ISIS is beheading thousands of people. How can you compare me to ISIS? They drown people in steel cages. I’ve never done that once. How dare you Anderson. We’ll see tomorrow what the American people have to say about you saying that ISIS isn’t a big deal. What do you think our enemies are saying when they see what’s going on here. Yes, it was locker room talk. Yes, I hate it. I have advanced strategies for ISIS. I will defeat ISIS.

Anderson: Okay, but do you assault women?

Trump: Nobody has more respect for women than I do. Nobody. Not Mister Rogers. Not Susan B. Anthony. No one. Moving on a married woman is a sign of respect, something Mister Rogers and Susan B. Anthony never did. I’m what every parent hopes their daughter marries. All women respect me.

Anderson: But like literally—do you assault women?

Trump: Only with my respect. We’re gonna build a wall. We’re gonna have borders. People are pouring into our country from the Middle East to grab American women by the pussy. We’re gonna make America safe again. We’re gonna make America great again. We’re gonna make America safe again. We’re gonna make America wealthy again. China.

Anderson: Secretary Clinton, would you like to respond?

Clinton: Reagan. Bush. Eisenhower. Did they grab women by the arm? Yes. By the hand? Probably. Around the shoulder? Sure. But by the pussy? I don’t think so. Donald Trump is a bad man. He’s an everything-ist. He’s Matt Damon in School Ties. He’s the uncle in The Long Walk Home. He’s the mean slave owner in 12 Years a Slave. He’s the main German guy in Die Hard. He’s the woman in The Grudge. He’s Bluto. He’s Jafar. He’s the Joker. He’s a white walker. He’s a death eater. He’s a zombie. He’s a ghost. I, on the other hand, want to form one of those huge circles of different colored people that stretches all the way around the Earth where everyone’s holding hands. Can you paint with all the colors of the wind?

Trump: 30 years. 30 years this lady’s running the country and never once have I, nor has anyone else, been part of a circle of different colored people that stretches all the way around the Earth where everyone’s holding hands. 30 years of this fucking lady and never once did she paint anything with paint, let alone the colors of the wind.

Martha: Okay but back to your locker room assault. You’ve said that this campaign has changed you—that though being a clear predator in that video at the age of 59, you’ve now become good. Is that really true?

Trump: Martha—I don’t know how much clearer I can make this. I told detailed assault stories that included specific dates, names, and body parts. That’s just classic locker room talk. Every guy talks to other guys about detailed stories of his previous assaults that include specific dates, names, and body parts. You don’t know this because you’re not there—but whenever guys are alone, they talk about their previous assaults. That doesn’t mean they assaulted anyone, obviously. Unless they’re Bill Clinton. Bill Clinton is a bad fucking dude. Bill Clinton told me about when he held a Taco Bell employee down by the neck in the restaurant’s utilities closet and had intercourse with her. Bill Clinton told me about having a foursome with Chelsea’s three best friends while Chelsea was sleeping upstairs. Hillary missed it because she was busy laughing at a 12-year-old rape victim who by coincidence is sitting right over there.

Martha: Nicely done. Hillary?

Clinton: I’ll let Michelle Obama do the talking here. She said, “When someone talks about that time when your husband held a Taco Bell employee down by the neck in the restaurant’s utilities closet and had intercourse with her, you go high.” It works for Michelle, and it works for me. Also, you insulted a Muslim war hero’s parents and said a Latino judge was inherently biased and mocked a disabled reporter and said Obama was foreign.

Trump: The first three, sure. But you’re the one who said Obama was foreign. Also, Michelle Obama has openly said you’re the worst ever. Also, you cheated to beat Bernie Sanders. Also, you deleted 33,000 emails you sneaky fuck. And when I’m Führer, I’m hiring a special prosecutor to come after you.

Clinton: He’s lying about everything, it’s all on my website, and let’s just be happy that this loose cannon isn’t in charge of the law in this country.

Trump: Because you’d be in jail.

Audience: Oh dayome!

Anderson: We’d like to remind the audience to stop being a piece of shit.

Martha: But really, Hillary—what’s up with the emails you sneaky fuck.

Clinton: It was a mistake. I wrote 33,000 emails about Chelsea’s wedding and a yoga class, and I shouldn’t have deleted them. Now let’s get to the questions from the audience.

Trump: Of course—anything to divert from this question, you crooked shrew.

Clinton: Anything to divert from your campaign, you incompressible jizztrumpet.

Anderson: That’s enough. Now let’s resume this town hall farce with our second audience question.

Trump: Typical.

Anderson: Huh?

Trump: You never ask Hillary about her emails. You never spend time with me. You don’t care about me. This is one on three.

Anderson: No it’s not. Just a little. Next question.

Audience Question: Obamacare made things more expensive, not less. How will you bring healthcare costs down?

Trump: Well—

Anderson: No Hillary’s supposed to go first here.

Clinton: No it’s fine I’d rather go second.

Trump: No it’s fine you go first.

Clinton: No you.

Trump: No you.

Clinton: No you.

Trump: No you.

Clinton: No you.

Trump: No you.

Clinton: Obamacare is good.

Trump: Obamacare is a disaster.

Anderson: Hillary, your husband Bill also said Obamacare is a disaster.

Clinton: No he didn’t.

Trump: Bernie Sanders says Hillary has bad judgment.

Anderson: Let’s move on. Audience question.

Audience Question: I’m a Muslim. How can you help me not be hatecrimed?

Trump: Being hatecrimed is a shame. But we have a problem. Which is that you’re not telling us when the other Muslims are gonna kill us. In San Bernardino, there were Muslims that killed us and you didn’t tell us about them. If you had told us about them, we could have stopped it. I don’t think you ever told us about Orlando either, or 9/11 for that matter. I know that because if you had told us about 9/11, I’m pretty sure you’d be famous, and famous people don’t go to town hall meetings.

Clinton: You are Muslim. I am Muslim. Captain Khan, who died serving this country and who Donald hates, was Muslim.

Martha: Hey Donald, remember your Muslim ban? Let’s discuss.

Trump: I love Captain Khan. I have his name tattooed on my lower back. An American hero. Who Hillary killed by starting the Iraq War, another thing I hate.

Martha: Fuckin—dude—no. Answer the question.

Trump: Who made you so mean? Was it your parents? And who made you so simultaneously nice to Hillary? Also your parents?

Martha: Does the Muslim ban still hold?

Trump: Hillary wants to merge the US with Syria into one nation. She wants to increase the number of refugees from 10,000 to 65,000.

Martha: What the fuck Hillary?

Clinton: That picture of the dead four-year-old boy on the beach with the little sneakers.

Martha: Totes.

Clinton: Also, Donald literally wants to ban an entire major religion from entering the US. Can we just all reflect on that for a second? And also, he started the Iraq War, not me.

Trump: I was against the war in Iraq.

Clinton: No you weren’t.

Trump: Yes I was.

Clinton: No you weren’t.

Trump: Yes I was.

Clinton: No you weren’t.

Trump: Yes I was. Bernie Sanders says Hillary Clinton has bad judgment.

Martha: Okay new question. Hillary, you said in a secret speech that politicians need both a public and private position on certain issues. Is it okay for politicians to be two-faced?

Clinton: That was Abraham Lincoln, not me. More importantly, Trump is obsessed with Putin.

Trump: I’m not obsessed with Putin. I paid taxes. I took deductions. Hillary’s friends took deductions. Hillary is friends with rich people.

Anderson: The fuck? Okay well now that we’re here:

Audience Question: How will you ensure that wealthy Americans pay their fair share of taxes?

Trump: Well the first thing I’d do is (by the way one of the first provisions is (by the way you know I give up a lot when I run cause I change the tax code (by the way you know she could have done this years ago but she didn’t because her rich friends don’t want her to (30 fucking years, folks—30 years with this lady and nothing changes—nothing ever will change)))) get rid of carried interest. I’m also lowering taxes on the wealthy, and by the way Hillary is raising your taxes, which is a disaster. There’s no growth in this country. This country’s going to shit. China’s killing us.

Clinton: Literally all lies from this douche again. He will cut taxes for the super rich and raise them for the middle class.

Trump: Yeah she’ll close corporate loopholes—as long as they’re ones her rich friends don’t use. Also, Bernie Sanders says she has bad judgment. 30 fucking years, folks, with this lady. 30—

Clinton: 30 years my dick, Donald. I’ve done 400 legislation things in 30 years.

Trump: Nah.

Martha: New question. Aleppo’s in the shit. Thoughts?

Clinton: We need to stand up to Russia and Assad and save Aleppo.

Trump: And save who in Aleppo, the rebels? They’re worse than Assad. We need to fight ISIS.

Martha: But Mr. Trump, your running mate agrees with Hillary. He even wants to use military force to stand up to Russia and Assad.

Trump: Well he’s dumb. We need to be fighting ISIS. I know more about ISIS than the generals.

Clinton: Fucking no you don’t.

Anderson: Audience question.

Audience Question: Do you believe you can be a devoted president to all the people in the US? 

Trump: I want to help all Americans. The black Americans. The Latino Americanos personas. The Indian chiefs. Our cities are a disaster. Our education is a disaster. Poverty is a disaster. Natural disasters are a disaster. She said basket of deplorables.

Clinton: I want to help all Americans—the deplorables and the non-deplorables. I talked to an Ethopian kid who was scared of Trump.

Anderson: But what’s up with the deplorables thing?

Clinton: I only meant that truthfully, not publicly.

Trump: She has tremendous hate in her heart. The hate in her heart is a disaster.

Anderson: So Donald, remember when you kind of woke up in the middle of the night the other night and went on a 3am tirade attacking that random woman and telling people to watch her sex tape? What was…what was the deal with that?

Trump: That slut.

Anderson: Let’s move on to the next question, from a man named Kenneth Bone.

Audience Question: I’m Kenneth Bone. I’m Kenneth Bone and I’m wearing this sweater. And this is my mustache.

Anderson: Is that…is that it?

Ken Bone: What’s your plan with energy policy?

Trump: Coal. Coal is the way of the future. China is KILLING us. China is dumping steel on us.

Clinton: China is dumping steel on your shitty face. You buy a ton of Chinese steel. Climate change is a thing. Coal is a thing. Things are things.

Martha: Okay last question, thank fucking god.

Audience Question: It sounds kind of fun and hilarious to make you two say something nice about each other. Go.

Clinton: His kids aren’t terrible people. Somehow.

Trump: The bitch can fight.

Anderson: I’d like to extend my thanks and apologies to the 790 million people who watched this. Goodnight.

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

Thanks to the miracle of “verbal stimulus” oil prices have recovered to their highest since July 2015…

As UPI’s Daniel Graeber explains, Crude oil prices erased a pronounced slump in early Monday trading after Russia signaled it would join a production agreement reached last month in Algeria.

Oil prices traded in the red overnight in a carry-over from Friday’s slump. A long rally in oil prices faltered last week amid sluggish growth in the U.S. labor sector. Wage growth was slightly better than inflation over the last year, though the U.S. Labor Department said employment gains were worse than last year.

 

Crude oil prices are up more $5 per barrel, or around 15 percent, since members of the Organization of Petroleum Exporting Countries agreed in late September to work toward a goal of capping production levels at between 32.5 million and 33 million barrels per day.

 

Friday’s downturn was supported in part by data from Baker Hughes that show an increase in activity in exploration and production in North America. The increase in North American oil production helped drag oil from $100 per barrel in 2014 to lower than $30 per barrel this year as markets moved in favor of the supply side. Exploration and production activity has yet to translate to real gains in output, however.

 

Monday’s rally was supported in part by Russia moving in support of the production agreement reached last month in Algeria. Russia is already producing oil at record-setting levels, though the Algerian proposal has given the market confidence that oil prices won’t drop below $30 per barrel again anytime soon.

 

The price for Brent crude oil moved up 0.3 percent to start the trading day at $52.66 per barrel. West Texas Intermediate, the U.S. benchmark for oil prices, gained 0.2 percent to open at $50.54 per barrel.

 

Doubts continue to surface about the reality of the Algerian agreement. Writing last week in the midst of one of the most pronounced rallies in crude oil prices for year, Antoine Halff, the director of the global oil markets research program at Columbia University, said the OPEC proposal is nothing more than a letter of intent. Instead, Halff said the market will probably shrink the gap between supply and demand.

 

“Beyond the pump and ceremony, however, the meeting did not really suggest any credible pathway to sustainably higher prices,” he wrote.

 

Similar efforts at a so-called freeze collapse earlier this year along multilateral lines. While struggling members of the OPEC support any action that would drive prices higher, others have said it’s up to non-OPEC members to make the proposal stick.

But what happens next?

 

So higher oil prices are unequivocally good now?

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After last week’s warning by Ray Dalio that a 100 bps rise in yields could lead to trillions in cross-asset losses, it was Goldman’s turn to pick up the bearish torch with a note in which it warned that stock markets are set for volatility in the remainder of the year as a result of potential “growth shocks” which continue to loom until year-end as political risks remain elevated, given the upcoming US presidential elections and Italian referendum, and the UK government’s plan to trigger Article 50 by March 2017.

The report by GS managing direct Christian Mueller-Glissmann comes at the same time that Goldman’s chief economist David Kostin was similarly dour on the upcoming Q3 earnings season which begins this week, “warning that 4 out of 5 factors suggest disappointing results ahead”, as per the following table:

Looking at the market, Glissman was more focused on the continued drift higher in rates, and said that “we have more potential for shocks right now” telling Bloomberg that “we have a slight tilt to be a bit more defensive, and tilt towards Asia and emerging markets relative to more developed markets. We are a bit more bearish on Europe and the U.S into year-end.”

The Goldman strategist is concerned by high U.S., valuations, saying that current levels can precipitate significant drops in the event of shocks. That’s the case particularly in the absence of sustainable profit growth to support prices. The S&P 500 trades at more than 18 times estimated earnings, compared with a 15.6 average for the past five years.

“Equities are a tough asset to own without a clear, positive trend in growth,” Mueller-Glissmann said. “It’s tough to deal with these equity draw-downs because there are very few places to hide except for cash.”

And indeed, as he writes in his latest note, “we stay defensive in our asset allocation and keep our OW Cash for 3m. We stay inclined to keep cash reserves in case shocks create more attractive entry points. We remain UW Bonds and maintain our 2% target for US 10-year yields by year-end: we expect a more gradual move from here but the risk of ‘rate shocks’ remains elevated due to uncertainty over the BoJ and ECB’s QE programmes, and the timing of the next Fed rate hike given US data recently. We stay OW Credit and N Equities (both 3m and 12m), although 12m forecast returns suggest investors should rotate from credit to equities. We think the case for credit vs. equities has weakened relative to previously.”

In terms of his modest bearish downside, Mueller-Glissmann, he predicts that the S&P 500 Index and the Stoxx Europe 600 Index will each drop by about 2 percent by December. These days that is called an aggressive bearish forecast.

Among the key points discussed is that the outperformance of credit is now over, if only for the time being:

Following the strong performance of credit YTD, in particular high yield and EM, and with equities lagging, we look at relative value and risk in credit and equities in a Q&A format. Credit has performed strongly due to (1) search for yield without a material growth pick-up, and (2) attractive credit valuations after pressure from falling commodity prices, US recession risk fears, and EM and China growth fears. With headwinds fading, spreads have declined sharply but further large declines appear unlikely. Current credit spreads leave less of a buffer for ‘growth shocks’ than previously and US credit fundamentals continue to deteriorate. Rising rates may also act as a drag on total returns, making it necessary to hedge duration risk.

Does that mean that Goldman is switching out of bonds and into stocks?

On the surface, valuations for equities appear more attractive than for credit, as equity risk premia are high, both relative to credit spreads and relative to their history. However, estimating equity risk premia is difficult due to the low level of bond yields and uncertainty on LT growth prospects: high dividend yields (and low bond yields) could just signal lower growth. Until we see a sustained pick-up in growth, we think equities will be stuck in their ‘fat and flat’ range: low positive returns but continued risk of drawdowns. To unlock the ERP and drive outperformance of equities vs. bonds and credit, we need moresigns of a ‘reflation’ scenario. Until then, we still prefer credit to equity.

However, as Goldman admits, “being defensive is not easy given that many ‘safe assets’, such as gold, are already expensive and could suffer from rising rates.” Furthermore, in the rush for year end window dressing by hedge funds, it is likely that TINA will be the primary consideration as hedge funds scramble into high beta, “growth” positions. 

Still, “cross-asset diversification is more difficult as bonds may not hedge ‘growth shocks’ as well as they have previously, given that they are expensive, inflation is picking up and monetary policy could turn less supportive. Moreover, while the BoJ may be able to reduce rate volatility for JGBs by yield targeting, this could reduce the ability of bonds to buffer ‘growth shocks’ and drive more volatility in other assets, such as equities and FX.” More details: 

Goldman also notes the risk of substantial upcoming drawdowns, not only amid the hedge fund community, but the volatility targeting entities such as risk-parity funds, a topic we touched upon last week. As Goldman adds, “this is a risky dynamic for multi-asset investors; as we highlighted in the previous issue of GOAL,equity/bond correlations have been positive since the summer. Large drawdowns in multi-asset portfolios are either because of large equity drawdowns or because of combined equity/bond sell-offs, which tend to particularly affect risk parity and vol target investors. Risk parity and vol target portfolios appear at risk right now because (1) as a result of the low volatility across assets, they have likely increased risk during the summer, e.g., in riskier assets such as the S&P 500 and MSCI EM, and (2) within equities, they tend to be weighted towards low vol stocks and more defensive bond proxies.”

Those types of stocks are particularly vulnerable to both ‘real rate shocks’ and also a procyclical increase in bond yields; indeed, as Exhibit 3 shows, since September such stocks have regularly underperformed the market during risk-off periods. We continue to like puts on bond proxy sectors, such as Utilities, Telecoms and Staples, in particular in Europe where implied volatility is at a discount to the market. Similarly, investors could hedge gold downside via put options, given that it is also vulnerable to higher yields – current 3-month implied volatility, at 14.2, is at the 11th percentile compared with the last 10 years (see Cross-asset Volatility Overview in Exhibit 55 below). Note: Put buyers risk losing the entire premium paid if the underlying closes above the strike price at expiration.

Summarizing GOldman’s current stance:

We remain Neutral Equities on a 3- and 12-month basis. Equities have lagged credit YTD and on a 12-month horizon forecast returns are higher for equities than for credit. We remain Overweight MSCI Asia ex Japan and continue to like HSCEI calls. We still expect ‘fat and flat’ returns for equities this year and, as a result, we stay neutral in our asset allocation. With elevated equity valuations, in part due to the very low level of rates but lack of earnings growth YTD, we believe the potential for a sustained upward trend has been limited and equities are both vulnerable to ‘growth’ and ‘rate’ shocks. Growth has been resilient YTD and the prospect of fiscal easing has raised reflation hopes. Low positioning in equities coupled with a short ‘Goldilocks’ phase (anchored rates and better growth) has supported equities during the summer. But we still think that ‘fat and flat’ remains the most likely outcome until the end of the year.

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Submitted by Daniel Drew via Dark-Bid.com,

We've all been told to BTFD. One trader even went so far as to post it on his license plate like a central bank billboard.

Now, we finally have a chart to remind us why this is truly the only strategy that matters in these "markets."

Yes, it's really as simple as it sounds. Whenever the market is down at least 1%, you buy the index with a little leverage, put on your central banker hat, and watch the money roll in.

With hedge funds struggling to perform and major funds actually shutting down, it makes you wonder just what quantitative gymnastics they're trying to pull off. All they had to do was BTFD!

And with the Fed admitting that $4 trillion in QE will be needed to offset the next crisis, it doesn't appear this strategy is going to lose its luster any time soon.

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Going into last night’s debate Trump’s candidacy had all but been declared officially dead by the mainstream media as well as many politicians in his own party.  But, with 5 little words, “because you’d be in jail“, Trump managed to shift the media cycle to the debate performance and away from his “lewd comments” made 11 years ago. 

Trump came into the debate with nothing to lose and, as such, was aggressive throughout the night with numerous sarcastic interruptions of Hillary and the moderators.  You could say that the “let Trump be Trump” strategy was back in full force and it was effective.  As The Hill pointed out, the prime exchange that drew the most reaction from viewers came when Trump promised to seek a special prosecutor, if he were elected, to probe Clinton’s use of a private email server while secretary of State.

Clinton responded to that comment by calling into question Trump’s temperament saying it’s “awfully good that someone with the temperament of Donald Trump is not in charge of the law in our country.” 

Unfortunately for Hillary, that turned out to be a huge mistake because it teed up Trump’s “because you’d be in jail” retort which is the line that most people will be talking about today.

 

Going into the debate, numerous Republican lawmakers had called for Trump to step aside as the party’s nominee after video surfaced of him making “lewd” comments about women.  Trump’s running mate, Indiana Governor Mike Pence, and campaign manager, Kellyanne Conway, even expressed they were “offended” by the video but vowed to stick with Trump.  That said, virtually everyone, regardless of political affiliation, expects to see a sharp erosion of support for Trump in the next round of opinion polls.

There had even been rumors that Kellyanne Conway would quit but she sought to squash that idea as she made the rounds in the spin room after the debate last night.  Asked whether she was staying with the campaign, a smiling Conway said, “Yes. I’m here.”

Not surprisingly, the Trump video dominated the early stages of the debate with Anderson Cooper distorting Trump’s “lewd” comments as evidence that he was admitting to having previously sexually assaulted women.

Trump again expressed regret for his remarks and then pivoted to Bill Clinton’s alleged rape of multiple women, which were in attendance at the debate hall, saying “there has never been anybody in the history of politics in this nation who has been so abusive to women” and contending that Hillary Clinton “attacked those same women.”

Meanwhile, the “independent” moderators decided to debate Trump themselves as evidenced by this exchange between Martha Raddatz and Trump on Syria.

 

And, as usual, the moderators took every opportunity possible to interrupt Trump yet “shockingly” failed to intervene or press Hillary on her email scandal.

The moderators interrupted 41 times during the 90 minute debate. #debate https://t.co/277zJ3TeDa http://pic.twitter.com/sJaLJD7j4r

— FiveThirtyEight (@FiveThirtyEight) October 10, 2016

 

Even Trump took the opportunity to point out the bias during the debate.

 

As the Wall Street Journal pointed out, while Trump did seem more prepared for this debate than the last one, Clinton was still more effective at scoring points with voters on policy initiatives.  

Mrs. Clinton still was the greater master of policy detail, and she delivered her own critique of the so-called Obamacare health law and what she would do to fix the crown jewel of her party’s domestic policy achievements in recent years. She continued to hammer Mr. Trump on disparaging comments he’s made over time about immigrants, Muslims and, especially, women.

 

She delivered a sharp critique, for example, of Mr. Trump’s proposal, made earlier this year, to ban all Muslims from entering the country.

 

“How do you do that?” she asked. “We are a country founded on religious freedom and liberty. How do we do what he has advocated without causing great distress within our own county?”

But the overall voter impact from the debate was best summarized by the following tweet from a Frank Luntz focus group which showed a substantial shift toward Trump after his strong debate performance.

Focus Group: Who are you willing to vote for?

BEFORE #DEBATE
• Hillary: 8
• Trump: 9

AFTER DEBATE
• Hillary: 4
• Trump: 18

— Frank Luntz (@FrankLuntz) October 10, 2016

 

Clearly Trump fought for and won the right to fight for another day as the Republican candidate.  Now the only question is when the “un-unendorsements” will begin.

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From hype to hope to nope. Twitter shares are extending losses (down 12%) and have erased all post-deal-rumor gains…

 

Confirming what we said over the weekend… that a deal is dead.

Citing "people", Bloomberg reports that neither Google, nor Disney or Salesforce are likely to make a bid. On Friday. As confirmation that the process was unwinding, Bloomberg notes that "Twitter had planned to have a board meeting with outside advisers on a sale but canceled, one of the people said."

Why the dramatic shift in sentiment?

 

 

"At Salesforce’s investor conference this past week, several investors talked to Chief Financial Officer Mark Hawkins and other executives about how they weren’t pleased with the idea of a Twitter buyout, according to another person familiar with the matter. They made their feelings known during small huddles near the stage and other areas around the meeting room. High-profile investors also e-mailed Hawkins, who forwarded the messages to his CEO and the board."

As Citi and others explained in their warnings that the sale process would end in tears, buying Twitter would come with a series of complications. Beside the growth issue, the company has grappled with hate speech and harassment on its platform known for 140-character messages. A buyer would have to address heavy employee stock grants, while dealing with a workforce that has already faced a lot of turnover in its leadership.

What options are left for the suddenly unloved social platform?  Among the far less palatable solutions for both the company and its shareholders, are divestitures of assets not central to its business, "people familiar with the matter have said." More from Bloomberg:

 

 

If a buyer doesn’t appear, Twitter will continue to try to appeal to more users through a new strategy that emphasizes live video. The company has been entering partnerships for sports, politics and entertainment content — such as the National Football League’s Thursday night games — that it can stream alongside tweets related to the video. It may give people without Twitter accounts a new way to use the service, while allowing the company to share revenue on the video ads.

So far Twitter's attempts to aggressively grow the business have failed, while complaints from its existing user base to cater to their far more modest demands, remain unheard which is why while Twitter will likely persist as one of the best platforms for news dissemination, its stock price may continue to suffer until it drops low enough that a buyer is ultimately interested.

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The week ahead turns attention squarely towards the US, with the market’s reaction to the second presidential debate on Sunday the key focus during the Columbus Day US session. The other main event will be the September FOMC Minutes, following US data and an employment report that has left many banks comfortable with a December Fed hike. The minutes are likely to reveal a heated debate about the appropriate course of policy, revealing a discussion about the costs and benefits of keeping rates at the current low levels, highlighting the growing divergence of views within the committee.

Key data by region:

In the US focus will be on the market’s reaction to the second presidential debate, FOMC Minutes but also retail sales, import and producer prices and Michigan sentiment. We also hear from various Fed speakers throughout the week, and Chair Yellen gives a keynote speech on Friday.

In the Eurozone, we have a quiet data calendar with IP data and the German ZEW coming up. We do hear from a slew of ECB speakers, with focus on President Draghi over the weekend, especially given the increased taper talk.

In the UK, housing data, construction output and BOE speakers including Governor Carney coming up, while political noise around Brexit and Article 50 likely continues.

In Australia, we receive business and consumer sentiment surveys, housing finance and the RBA’s Financial Stability Review.

In Japan, current account and trade balance, machine orders and PPI on tap.

In Canada, housing starts the only release of note in a quiet week.

Broken down by day:

It’s a quiet start to the week today with just Germany trade data, France business sentiment and the Euro area Sentix investor confidence reading due this morning. There’s no data due in the US with it being Columbus Day. US equity markets are open but bond markets are shut.

Tuesday kicks off in Germany where the October ZEW survey will be released. In the US the NFIB small business optimism reading and labour market conditions index are due out.

We kick off in Japan on Wednesday with the latest machine orders data. Over in Europe we’ll get the final revised September inflation report in France along with the August industrial production print for the Euro area. Over in the US the JOLTS report for August is the sole data release while the September FOMC minutes will then be released in the evening.

Thursday kicks off with the September trade data for China. In Europe we’ll then get the final September inflation report in Germany, while in the US session we’ll get initial jobless claims and the import price index.

It’s a busier end to the week on Friday. In China the CPI and PPI prints for September will be closely watched. In Europe we’ll then get UK construction output and Euro area trade data, while the BoE will also release its latest credit conditions and bank liabilities surveys. Over in the US it’s all eyes on the September retail sales data, while PPI, business inventories and finally the first estimate of the University of Michigan consumer sentiment survey for October will be out.

* * *

Away from the data, the Fedspeakers during the week include Evans and Kashkari on Tuesday, Dudley and George on Wednesday, Harker on Thursday and Kashkari, Rosengren and Fed Chair Yellen on Friday. The latter is due to speak in Boston on the topic of ‘macroeconomic research after the crisis’. Over at the ECB we’ll hear from ECB officials including Visco, Mersch and Coeure this week. Of course the other big focus is on the unofficial commencement of earnings season in the US. Alcoa report prior to the open tomorrow while JP Morgan, Citigroup and Wells Fargo headline the banks reporting on Friday.

Main events over the week summarized:

 

And a focus on just the US courtesy of Goldman Sachs.

Monday, October 10

• Columbus Day holiday observed. SIFMA recommends bond markets remain closed.  
• 09:30 PM Chicago Fed President Evans (FOMC non-voter) speaks: Federal Reserve Bank of Chicago President Charles Evans will give a speech on the economy and policy at an event held by the Australian Business Economists in Sydney, Australia. Last week, President Evans said that he would be fine with the Fed raising rates once this year, adding that the most important issue “is not when the next moves takes place but it’s stating more clearly what the move after that would be based upon.”

Tuesday, October 11

• 06:00 AM NFIB small business optimism index, September (consensus 95.0, last 94.4)
• 10:00 AM Labor market conditions index, September (last -0.7)
• 11:00 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Federal Reserve Bank of Minneapolis President Neel Kashkari will speak at a town hall forum on ending “Too Big to Fail” and the role of the Federal Reserve in Arden Hill, Minnesota. Media Q&A is not expected.

Wednesday, October 12

• 09:40 AM Kansas City Fed President George (FOMC voter) speaks: Federal Reserve Bank of Kansas City President Esther George will give a speech at the Federal Reserve Bank of Chicago’s Annual Payments Symposium. Last week, President George, who dissented at the September FOMC meeting, remarked that the September jobs report was encouraging and suggestive of continued momentum.
• 10:00 AM JOLTS job openings, August (consensus 5,800, last 5,871): The JOLTS measure of job openings rose to a new high in July. Consensus expects job openings to edge down in August.
• 10:00 AM New York Fed President Dudley (FOMC voter) speaks: Federal Reserve Bank of New York President William Dudley will speak at a fireside chat with the Business Council of New York State in Albany. Last week, President Dudley remarked that monetary policy remains accommodative and he suggested that more effective communication would help the Fed meet its inflation objective.
• 02:00 PM Monthly budget statement, September (consensus $29.3bn, last -$107.1bn): Consensus expects the federal budget balance to rise to $29.3bn in September.
• 02:00 PM Minutes from the September 20-21 FOMC meeting: The September FOMC meeting statement described risks to the economic outlook as “roughly balanced.” In the minutes, we will be watching for any indications about the committee’s sense of urgency regarding rate increases in the near term.

Thursday, October 13

• 08:30 AM Initial jobless claims, week ended October 8 (GS 255k, consensus 253k, last 249k): Continuing jobless claims, week ended October 1 (last 2,058k):  We expect initial jobless claims to edge up to 255k after claims declined to the lowest level since April last week. The fall in claims last week was relatively widespread across states, with the largest drops in California (-3.1k) and Georgia (-1.9k).
• 12:15 PM Philadelphia Fed President Harker (FOMC non-voter) speaks: Federal Reserve Bank of Philadelphia President Patrick Harker will give a speech on the economic outlook to the World Affairs Council of Philadelphia. Audience and media Q&A is expected.
• 09:30 PM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Federal Reserve Bank of Minneapolis President Neel Kashkari will speak at a town hall forum on ending “Too Big to Fail” and the role of the Federal Reserve in Missoula, Montana. Media Q&A is not expected.

Friday, October 14

• 08:30 AM Retail sales, September (GS +0.7%, consensus +0.6%, last -0.3%); Retail sales ex-auto, September (GS +0.4%, consensus +0.5%, last -0.1%); Retail sales ex-auto & gas, September (GS +0.3%, consensus +0.3%, last -0.1%); Core retail sales, September (GS +0.4%, consensus +0.3%, last -0.1%): We expect headline retail sales to rise 0.7% after gasoline prices rose and auto sales strengthened in September. Core retail sales are likely to increase by 0.4% after a softer-than-expected August report as the retail components of service sector surveys looked strong September.
• 08:30 AM PPI final demand, September (GS +0.3%, consensus +0.2%, last flat); PPI ex-food and energy, September (GS +0.2%, consensus +0.1%, last +0.1%); PPI ex-food, energy, and trade, September (GS flat, consensus +0.1%, last +0.3%): We expect PPI ex-food, energy, and trade to be flat and for headline PPI to increase by 0.3%. Last month, producer prices were softer than anticipated, led by weakness in durable consumer goods and private capital equipment prices.
• 08:30 AM Boston Fed President Rosengren (FOMC voter) speaks: Federal Reserve Bank of Boston President Eric Rosengren will give opening remarks at the Boston Fed’s 60th annual economic conference, “The Elusive “Great” Recovery: Causes and Implications for Future Business Cycle Dynamics.”
• 10:00 AM University of Michigan consumer sentiment, October preliminary (GS 92.5, consensus 92.0, last 91.2): We expect the University of Michigan consumer sentiment index to rise to 92.5 in the October preliminary estimate, following a 1.2pt increase in the final September report. The measure remains in the middle of its range over the past year.
• 10:00 AM Business inventories, August (consensus +0.1%, last flat): Consensus expects a 0.1% increase in inventory levels in August.
• 01:30 PM Fed Chair Yellen (FOMC voter) speaks: Federal Reserve Chair Janet Yellen will give the keynote address at the Boston Fed’s 60th annual economic conference, “The Elusive “Great” Recovery: Causes and Implications for Future Business Cycle Dynamics.”

Source: DB, GS, BofA

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