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Sentiment Healing, but Remains Spooked

October 23, 2014
Last week's drama was not the beginning of something as the pessimists and cynics would have it.  Our inclination that it was the end of something--that the pendulum had swung unreasonably far unreasonably quickly has is panning out   
Equities have trended higher.  The S&P 500 was turned back yesterday after it had retraced 61.8% of the lo…
Sentiment Healing, but Remains Spooked Sentiment Healing, but Remains Spooked Reviewed by Marc Chandler on October 23, 2014 Rating: 5
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Preliminary Thoughts about the ECB and Corporate Bonds

October 22, 2014
The targeted long-term repo operations had not even been launched when the ECB announced its intention to buy asset-backed securities and covered bonds.  It then began to buy covered bonds before the conclusion of the Asset Quality Review and bank stress tests.
This insistence on putting the proverbial cart before the horse fosters an environment t…
Preliminary Thoughts about the ECB and Corporate Bonds Preliminary Thoughts about the  ECB and Corporate Bonds Reviewed by Marc Chandler on October 22, 2014 Rating: 5
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The Ultimate Carry Trade: US Banks Buying Treasuries

October 21, 2014
The drop in US bond yields is perhaps the biggest surprise for investors this year.  The gradual decline in Federal Reserve buying, faster growth, and the prospects for a rate hike in 2015 were expected to lift bond yields.
Who would buy US Treasuries when the largest buyer was pulling back, and yields would inevitably rise? Moreover, with China…
The Ultimate Carry Trade: US Banks Buying Treasuries The Ultimate Carry Trade:  US Banks Buying Treasuries Reviewed by Marc Chandler on October 21, 2014 Rating: 5
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Great Graphic: Where is the Secular Stagnation?

October 20, 2014
This Great Graphic shows the GDP of several major economies measured in US dollars.    It was posted in the Wilson Quarterly, and draws from World Bank data.  The US economy is on a parallel but somewhat lower path than it was on through the 90s and noughts.  The US economy is creating more goods and services than ever.  
China's nominal growth…
Great Graphic: Where is the Secular Stagnation? Great Graphic: Where is the Secular Stagnation? Reviewed by Marc Chandler on October 20, 2014 Rating: 5
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Emerging Market Preview: The Week Ahead

October 20, 2014
(from my colleagues Dr.Win Thin and Ilan Solot)
Emerging market assets have started off the week mixed, with few clear signals to follow. The major currencies also appear directionless at the moment, though eurozone flash PMIs on Thursday could help put the spotlight back on weakness there.
As long as the dollar strengthening trend does not resume …
Emerging Market Preview: The Week Ahead Emerging Market Preview:  The Week Ahead Reviewed by Marc Chandler on October 20, 2014 Rating: 5
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Great Graphic: Climactic Activity?

October 20, 2014
This Great Graphic was posted in the Financial Times at the end of last week.  It is based on EPFR flow data that Bank of America Merrill Lynch distributed.  It shows a record $5.7 bln outflow from European equity mutual funds and ETFs in the week ending October 15.
The Financial Times report noted that:  "The larger US market recorded an $8.…
Great Graphic: Climactic Activity? Great Graphic:   Climactic Activity? Reviewed by Marc Chandler on October 20, 2014 Rating: 5
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Post-Taper Tantrum II: The Week Ahead

October 19, 2014
The prospects that the Federal Reserve would begin slowing its purchases sparked a market meltdown in 2013. The "taper tantrum", as it was dubbed, destabilized the capital markets. Now it is as if the markets have had a second tantrum, but this time US Treasuries rallied.  
Falling market-based measures of inflation expectations, concerns…
Post-Taper Tantrum II: The Week Ahead Post-Taper Tantrum II:  The Week Ahead Reviewed by Marc Chandler on October 19, 2014 Rating: 5
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More Thoughts about the Price Action

October 18, 2014
After wild swings at midweek (October 15), the US dollar spent the last two sessions of the week consolidating.   While we expect the Federal Reserve will not be distracted by the recent market turmoil, or the softening of some market-based measures of inflation expectations, and will announce the finishing of its asset purchases, we recognize tha…
More Thoughts about the Price Action More Thoughts about the Price Action Reviewed by Marc Chandler on October 18, 2014 Rating: 5
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Great Graphic: Saudi Arabia's Masterful Stroke

October 18, 2014
The December Brent oil futures contract settled at $86.16 before the weekend, after having fallen to a four-year low on October 16 just below $83.00. 
It has lost more than 27% since the end of June, and more than half of that has taken place this month.  Technically, the October 16 low looks to be important.  Prices reversed higher, and left a bul…
Great Graphic: Saudi Arabia's Masterful Stroke Great Graphic:  Saudi Arabia's Masterful Stroke Reviewed by Marc Chandler on October 18, 2014 Rating: 5
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