OPEN What Moves Rates Webcast Replay In our latest conference call, Jim Bianco and Ben Breitholtz look at What Moves Rates. The webcast replay, mp3 replay, handout and transcript of the Q&A can be found here.
Bloomberg – Record Days for VXX as Trump-Kim Standoff Sends VIX Surging VXX is overtaking SPY. VXX, or the iPath S&P 500 VIX Short-Term Futures ETN, saw more than 253 million shares change hands on Thursday and 121 million on Wednesday. That’s two consecutive record days, with volume double that of SPDR S&P 500 ETF Trust —… Continue reading Volatility Shorts Not a Contagion Ready to Spread
Bloomberg – One View of S&P 500 Retreat Is It’s Stocks Catching Up With Junk Bears say equities need to close the gap with high-yield bonds But history isn’t showing a particularly wide divergence. Chart-happy Wall Street was hypnotized Thursday by a diagram purporting to show the bond market sending terror alerts into stocks. It’s an overlay… Continue reading Health Care Sector – Risk Taking Pays Off, Warning Signs for Biotech
Summary Unimpressive inflation in the U.S. is counteracting perceived economic gains. A rebound in market stress would favor a flight-to-quality move in U.S. Treasuries with the ultra long-end of the yield curve expected to steepen. We use alternative data (natural language processing) to show U.S. 30-year bond futures should outperform their more distant brethren. Comment… Continue reading Risk-off Favors Steepening at Ultra Long-end of U.S. Treasury Curve
The Financial Times – The credit crisis did not lead to deleveraging The financial crisis that began to wash over the world 10 years ago was the result of an enormous accumulation of debt in rich countries — the bulk of which was owed by households and financial institutions. It was the realisation that many… Continue reading Post-Crisis Deleveraging
The Wall Street Journal – Risks of Fiscal Mishap Rise as Debt and Budget Deadlines Loom The risks of a budget crisis or fiscal mishap in Washington are rising, which could weigh on financial markets in the weeks ahead. Forecasters in The Wall Street Journal’s monthly survey of economists see on average a 22% chance… Continue reading Economists Offer Their Odds On Government Shutdown
The Economist – Buttonwood: Investors are not great at predicting politics Wishful thinking may lead them astray It may be that, when it comes to politics, wishful thinking plays a large part for investors. Brexit creates risks for financial companies that are based in London, so it was tempting for those involved to think that it… Continue reading Markets Are Not A Good Predictor Of Politics
MoneyBeat (WSJ Blog) – A Bond Market Mystery: Why Are EU Banks Buying U.K. Debt? After the U.K’s vote to leave the European Union last year, some analysts worried about whether foreign investors would continue to hold British government debt. But some foreigners haven’t just held on–they’ve been buying, building up a considerably larger long position… Continue reading UK Subsidiaries In Europe Stick With UK Debt
The Financial Times – Gillian Tett: The next crash risk is hiding in plain sight This is changing market flows in potentially unpredictable ways that investors and regulators do not entirely understand, and spawning some esoteric products. This year, for example, investors have rushed into an obscure “Inverse Vix” ETF that benefits from low volatility.… Continue reading Trying To Find The Culprit For The Next Crash Before It Happens
LPL Financial – Welcome To The Calmest Three Weeks In History Here’s to another record for 2017, as the past 15 trading days have officially marked the calmest stretch in the history of the S&P 500 Index. Per Ryan Detrick, Senior Market Strategist, “As amazing as this is to say, the S&P 500 hasn’t closed more… Continue reading Where’s The Volatility?
The Economist – Still crazy after falling yields: Chasing higher yields, investors pile into risky countries Iraq, Greece, Argentina and others tap the enthusiasm for high-yielding sovereign debt WHERE can you find a 7% interest rate on a sovereign dollar-bond? You would have to take a time-machine to the mid-1990s to find such a yield on… Continue reading Frontier Sovereign Bonds
Bloomberg View – Mohamed A. El-Erian: There’s Still Too Much Risk in the Financial System For 10 years, central banks have done what they could to keep markets stable. Governments can’t say the same. Admittedly, there’s lower systemic risk overall. There is little, if any, explicit call on guarantees backed by taxpayer funding for non-banks. The… Continue reading Systemic Risk