Consensus Inc. is a survey of futures traders and futures investment newsletters. Their universe is well in excess of 100 participants. The chart below is a rolling 5-week average At 27% bullish, they are still bumping around a 13 year low. This is contrarian bullish.
Illinois spreads narrow a bit. Illinois now has a budget, the risk of being the first state to ever be downgraded to junk is off the boil. But, as the bottom panel (green) shows, the market has narrowed spreads a bit but we would argue they are still at crisis levels. This story is not over.… Continue reading Illinois Now Has A Budget, Spreads Narrow Slightly
The Bank of Japan has been far more aggressive than any other central bank in quantitative easing and buying bonds, In fact, it was the Bank of Japan that invented modern quantitative easing, As the next chart shows, this heavy hand drives away the private sector and bond market volume in Japan is near all-time… Continue reading This Is What Happens When A Central Bank Gets Too “Involved” In A Bond Market
The black market rate of Venezuela’s currency continues to collapse resulting in hyperinflation and a worsening situation in the country. Note that in the last year the black market rate went from 1,010 Bolivars to buy a dollar to 8,481 Bolivars today. A drop of 88%. At this rate of currency depreciation over the last… Continue reading The Venezuelan Boliver Continues To Collapse
With the exception of MBS, fixed-income spreads continue to narrow on the year. Investment Grade and High Yield Spreads are near their 2014 low.
Bloomberg – BofA’s Interest Income Drops Even After Fed Delivers Rate Hikes Lender reports surprise drop in quarterly net interest margin The lender, viewed as the most sensitive to rate changes among U.S. banks, reported a surprise drop in net interest income in the second quarter, after a 7 percent jump in the first three months… Continue reading Net Interest Margins Disappoint
Financial Times – Dollar sinks on failure of healthcare reform US currency hits 10-month low as hopes fade for Trump economic stimulus The dollar has been a barometer of prospects for the Trump administration’s efforts to enact pro-growth policies of tax cuts and fiscal stimulus. As the administration has become bogged down in the past… Continue reading U.S. Dollar Decline Looking Over-Extended
The Daily Reckoning – Jim Rickards: The Fed Has Hit the ‘Pause’ Button No rate hikes are coming at the July, September or November Fed FOMC meetings. The earliest rate hike might be at the December 13, 2017 FOMC meeting, but even that has a less than 50% probability as of today. I’ll update those probabilities… Continue reading The Market vs. The Fed Update
The Wall Street Journal – Greg Ip: Markets to Fed: Please Leave Us Alone “Central bankers do not trust financial markets,” says James Bianco, who runs a Chicago-based financial markets advisory firm, recently wrote to clients that they can fix every problem in the economy “except when those cretins in the financial markets go off half-cocked.” Indeed, many… Continue reading More On Central Bankers Not Trusting Capitalism
Bloomberg Business – Ben Emons: Get Used to Bond Market Tantrums For the first time in a long while, investors need to understand how a reversal in monetary polices will affect most all markets. Risk-adjusted returns for government bond index returns as measured by Sharpe ratios returns have swung sharply during periods of policy tightening… Continue reading Bond Market Tantrums
Bloomberg View – Komal Sri Kumar: How Trump Could Puncture the Equity Bubble A delay in stimulus measures and the rise in global trade tensions could deflate valuations. Donald Trump’s appeal last November was linked to two factors. Both are now putting the valuation bubble in equities at risk. The first factor was his emphasis… Continue reading Market Not Convinced The Trump Trade Is Dead