Archive for the ‘Uncategorized’ Category
European Yield Curve Surges To Steepest In 29 Months After ECB Eases QE Rules
By Tyler Durden
After stating that The ECB will relax the previous QE parameters, allowing it to buy bonds with yields below the deposit floor, 5Y German yields have dropped below -40bps. The entire European bond yield curve has steepened dramatically (German 2s10s +12bps to steepest since July 2014).
5Y yields drop below the depo floor…
The long-end is dumping as the short-end is bid…
Sending the yield curve to its steepest since July 2014…
Source: European Yield Curve Surges To Steepest In 29 Months After ECB Eases QE Rules
Stocks And Volatility Indices Both Jump – Who’s Right?
By Tyler Durden
esterday saw the VIX solidly higher despite the fact that stocks rallied hard; what do similar precedents tell us?
Markets have been on a parade of peculiarity since the presidential election a month ago. Today’s rally on Wall Street was no exception. Yesterday, we noted the 3-month low in the S&P 500 Volatility Index (VIX), and the historically bullish connotations for the rest of December. Today, the VIX pulled an about-face, despite the strength in stocks. Specifically, the VIX uncharacteristically jumped 3.5% even though the S&P 500 (SPX) was up more than 1%. We thought that was odd so we looked at the historical data. It turns out that it was.
Since the VIX’s inception in 1986, today marks just 30th time in which the VIX rose at least 3.5% on a day that the S&P 500 gained at least 1%. 22 of those days occurred with the SPX within 2% of a 52-week high, as was the case today.
So, who’s right – stocks or volatility? Well, from a glance at the chart, there are a handful of glaring occurrences at cycle highs (e.g., August 1987, July 1990, March 2000). However, let’s look at the aggregate performance of the S&P 500 and the VIX following these 22 prior occurrence.
Prior precedents would suggest that the VIX is in the right here. The SPX saw median losses from 1 week to 3 months following previous occurrences, though median returns were never worse than -1.2%. The consistency of losses was the biggest offender, with almost ? of the events showing losses after a month and 1/3 after 2 months. Whatever effect this scenario had on forward performance, it seems to be a short to intermediate-term one. By the 6-month mark, median returns turned positive and began a path toward “normal” returns.
As for the VIX, the opposite occurred (predictably, as the VIX tends to move counter to stocks, today’s events notwithstanding). The VIX showed median gains from 2 days out to 3 months. Its peak median gain came at the 2-month mark at +10%. VIX gains were pretty consistent as well, with about 2/3 of the dates showing a rising VIX over all durations, 2 days to 3 months. Again, by 6 months, the VIX seemed to settle down, posting a 1% median drop.
There are a lot of positive factors going for the stock market right now, not the least of which is price action. Therefore, we don’t want to make too much of this odd data point with its limited sample size. However, to the extent that this face-off between rising stocks and a rising VIX has any influence on future performance, historical precedents suggest it may be the stock market that blinks – at least in the shorter-term.
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More from Dana Lyons, JLFMI and My401kPro.
Frontrunning: December 8
By Tyler Durden
- Draghi Expected to Lay Out Plans for More ECB Stimulus (WSJ)
- Bonds Fall as Investors Turn Wary on ECB Stimulus; Euro Gains (BBG)
- European Stock Traders Look to Draghi to Break Santa Curse (BBG)
- Trump to nominate Pruitt to lead U.S. environmental agency (Reuters)
- Trump’s choice of China envoy a positive sign for ties, Xinhua says (Reuters)
- Syrian Rebels Pin Hopes on Trump (WSJ)
- Trump Pick of EPA Foe to Lead Agency May Spark Senate Fight (BBG)
- Russia Sells Stake in Oil Giant Rosneft to Glencore, Qatar (WSJ)
- The Return of Glencore’s Dealmaking King (Bloomberg)
- Italian bank Intesa to help fund Rosneft deal for Glencore and Qatar (Reuters)
- Sovereign-Wealth Funds Buy Stake in U.K. Gas Business (WSJ)
- Monte Paschi Seeks ECB Reprieve as It Tries to Escape Bailout (BBG)
- Vietnam dredging on South China Sea reef (Reuters)
- Deutsche Bank May Have Rigged Index in Paschi Deal, Audit Shows (BBG)
- Eyeing upswing, more U.S. oilfield service firms restructure (Reuters)
- Michael Jordan Scores China Legal Victory for His Chinese Name (BBG)
- How Trump’s Web of Businesses Obscures Potential Conflicts (WSJ)
- Facebook’s Investors Criticize Marc Andreessen for Conflict of Interest (BBG)
- Merkel Sticks to Middle Ground in Risky Pitch for German Votes (BBG)
- China’s Banks Are Hiding More Than $2 Trillion in Loans (WSJ)
- Facebook’s Investors Criticize Marc Andreessen for Conflict of Interest (BBG)
Overnight Media Digest
WSJ
– U.S. stocks posted their biggest rally since the election, sending major indexes to fresh records as investors increasingly conclude President-elect Donald Trump will be good for business and the economy. http://on.wsj.com/2h8mFLj
– The CEOs of AT&T Inc and Time Warner Inc on Wednesday defended their proposed $85 billion merger to lawmakers, trying to navigate a tricky political landscape in which President-elect Donald Trump has expressed hostility to the deal. http://on.wsj.com/2hjV7yR
– President-elect Donald Trump on Wednesday chose Oklahoma Attorney General Scott Pruitt to lead the Environmental Protection Agency, according to a transition official, turning to a climate-change skeptic and sharp critic of the agency to take its helm. http://on.wsj.com/2gbVAae
– Rampant use of an accounting sleight of hand means Chinese banks don’t have to set aside capital to cover potential losses, sowing fears of a crisis. http://on.wsj.com/2hkJhV0
– President-elect Donald Trump turned to a third retired military officer to help him run the country when he takes office in January, a move that represents an unusual level of military influence in the executive branch. http://on.wsj.com/2hlLn7r
– Passage of legislation aimed at speeding up Food and Drug Administration approvals, combined with an incoming president who has pledged to “cut red tape” at the agency, is expected to usher in a new, more industry-friendly era of drug and device regulation. http://on.wsj.com/2h7fbbb
– Syrian rebels on Wednesday proposed a civilian evacuation and negotiations over the future of Aleppo, a stark admission the opposition is all but defeated in a divided city seen as a bellwether in the country’s nearly six-year …read more
Source: Frontrunning: December 8
Trump rally powers on; ECB decision; Russia’s Rosneft deal
Here’s what you need to know about the markets before you start your business day. …read more
Source: Trump rally powers on; ECB decision; Russia’s Rosneft deal
Assange Releases Full 19-Page Testimony In Alleged Swedish "Rape Case" – "I Am Entirely Innocent"
By Tyler Durden
WikiLeaks founder Julian Assange has once again defied Swedish authorities by releasing his full 19-page testimony that was previously turned over to investigators last month. Among other things, the testimony includes several text messages, being revealed for the first time, from his accuser which he claims serve to prove his innocence.
Of course, Assange has maintained that the rape allegations, for which no official charges have been filed, are simply a cover for a larger legal case from the United States. In his statement, Assange asserts that sex with the woman, identified only as SW, whom he met while giving a speech in Stockholm, was “clearly consensual sex between adults.” He further asserts that the woman was an overzealous fan who did not intend to accuse him of rape, but was later goaded to market her story for publicity after police had acted.
In a preamble to his full statement, Assange asserts that he is “entirely innocent” and, despite being urged by Swedish authorities to keep the details of the investigation secret, he felt it was important for the “people to know the truth about how abusive this process has been.” Per The Hill:
“I want people to know the truth about how abusive this process has been,” Assange wrote in a preamble to his statement, which was published by the Australian Broadcasting Corporation.
“Furthermore, in the past the prosecution has fed partial information to tabloids that politically oppose me,” he added. “It is better that my statement, which I am happy with, and which makes it obvious to all that I am innocent, sees the light in full.”
“I am entirely innocent,” he claimed.
Assange releases full testimony in Swedish ‘sex case’: https://t.co/gifUGH5o2w
PDF: https://t.co/q3Pzze6b1l
HTML: https://t.co/UvmGW97cYm— WikiLeaks (@wikileaks) December 7, 2016
Meanwhile, new text messages sent by Assange’s accuser, if proven accurate, do seem to indicate that the police. and not the woman in question, were the ones to have pushed for charges.
New SMS records show Assange was framed by police in 1st sex case: https://t.co/MqwZAvH0va and in 2nd case: https://t.co/OPCFRveUqM pic.twitter.com/SdI7rY0Cdp
— WikiLeaks (@wikileaks) December 7, 2016
If true, of course, this statement only serves to raise new questions surrounding the mysterious circumstances under which Assange has been subjected to, in his words, “unlawful, politicized detention” and “cruel, inhuman and degrading treatment.”
You have subjected me to six years of unlawful, politicized detention without charge in prison, under house arrest and four and a half years at this embassy. You should have asked me this question six years ago. Your actions in refusing to take my statement for the last six years have been found to be unlawful by the UN Working Group on Arbitrary Detention and by the Swedish Court of Appeal. You have been found to have subjected me to cruel, inhuman and degrading treatment. You have denied me effective legal epresentation in this process. Despite this, I feel compelled to …read more
Source: Assange Releases Full 19-Page Testimony In Alleged Swedish "Rape Case" – "I Am Entirely Innocent"
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Saudi Journalist Banned From Media After Criticizing Trump
By Tyler Durden
Submitted by MiddleEastEye.net via TheAntiMedia.org,
Saudi authorities banned journalist Jamal Khashoggi from writing in newspapers, appearing on TV and attending conferences, the Alkhalij Aljadid reported in Arabic.
This came after Khashoggi’s remarks during a presentation he made at a Washington think-tank on 10 November in which he was critical of Donald Trump’s ascension to the US presidency.
Two weeks ago, an official Saudi source was cited by the Saudi News Agency as saying that Khashoggi did not represent the Kingdom of Saudi Arabia in his interviews or statements.
#Saudi regime journalist, Jamal Khashoggi banned by the government from speaking for criticizing Donald Trump https://t.co/BijTT9T4J2
— Jim Early (@mkearley2008) November 26, 2016
“The author Jamal Khashoggi does not represent the government of Saudi Arabia or its positions at any level, and … his opinions only represent his personal views not that of the Kingdom of Saudi Arabia,” said a ministry source quoted by the Saudi Press Agency.
The official Saudi position on Trump’s election was perhaps more accurately reflected by a former Saudi diplomat in mid-November who told the Washington Post: “Certainly, we are not expecting Mr Trump to be worse than Mr Obama was,” said Abdullah al-Shamri. Most members of the royal family, he said, “are happy with the result. We are closer to Republicans psychologically.”
Khashoggi’s remarks last month at the Washington Institute, the Breaking Energy website reported, indicated that in his view Trump’s Middle East stances were often contradictory, especially regarding Iran. While Trump is vocally anti-Iranian, he supports President Bashar al-Assad in the Syrian conflict, which ultimately bolsters Iranian regional control and rightfully makes Saudi Arabia nervous, Khashoggi was reported as saying.
Khashoggi said that Saudi Arabia should be ready for some surprises, and ought to create an alliance of Sunni countries to serve as a bulwark against a potentially anti-Sunni Trump, according to Breaking Energy.
In a Washington Post article on potential changes in the Middle East in light of Trump’s victory, Khashoggi described hopes for a broader regional reconciliation as “wishful thinking,” at odds with Trump’s apparent determination to ally more closely with Russia. He was quoted as saying: “When his advisers show him the map, will he realize supporting Putin means supporting the Iranian agenda? And this is what Saudi Arabia is concerned about, to stop Iranian hegemony.”
The Post went on to say that perhaps the biggest losers in the Middle East will be ordinary people who have been agitating for more democracy in the region. “For us, Trump’s election feels like a winter wind,” said Ahmed Saleh, an engineer who joined in the 2011 uprising in Egypt. “How can you hope for freedom when the most powerful man in the world doesn’t believe in our democracy?”
Khashoggi is a well-established Saudi writer and journalist. He has extensive political and media experience and held the position of editor in chief of a number of Saudi newspapers, including the Arab Times and Al-Watan.
Khashoggi has not commented on these reports, although Saudi sources close to …read more
Source: Saudi Journalist Banned From Media After Criticizing Trump
The Collapse Of ‘Real’ Media Credibility (In 3 Simple Images)
By Tyler Durden
Two words – “nailed it”
What a difference 4 months makes… From Meltdown to Total Meltdown to Man Of The Year…
h/t @insidegame
As FoxNews notes however, while President-elect Donald Trump was named Time magazine’s Person of the Year on Wednesday, the honor basically ended there.
While describing Trump as the real change-maker of 2016, the magazine also ragged on the Republican president-elect as a “huckster” and “demagogue” while reserving its most glowing praise for runner-up Hillary Clinton — whom the edition breathlessly described as “an American Moses.”
In describing Trump, Time’s article almost exclusively used backhanded compliments. For instance, while the piece said he “did what no American politician had attempted in a generation,” it added that he “magnified the divisions of the present, inspiring new levels of anger and fear within his country.”
…
The article on Hillary Clinton is much different. Subtitled “The winner of the popular vote leaves a complicated legacy,” the tone is worlds away from the fulminating darkness that permeates the Trump piece.
The opening paragraph reads more like the prologue of St. John’s Gospel than an essay on a presidential runner-up, saying of Clinton: “she became a symbol in a fight that was about much more than symbolism.”
“She’s the woman who was almost President, she is what might have been and what will yet be.”
“Like an American Moses, she was an imperfect prophet, leading women to the edge of the Promised Land. Now it’s up to another woman to enter it.”
The big question is, will TIME name Putin ‘Man of the Year’ in 2017?
Source: The Collapse Of ‘Real’ Media Credibility (In 3 Simple Images)
Yuan Strengthens After Rebound In China Exports, Trade Balance Disappoints
By Tyler Durden
It appears that devaluing your currency against by over 10% in a year against your major trading partners does have some affect (albeit delayed). China Exports (in Yuan terms) grew at 5.9% in November (the fastest growth since March) (well ahead of the expected 1% decline). Imports, however, also soared (by 13%) in Yuan terms. However, in USD terms, Imports rose by the most since Sept 2014 (and exports managed a small rise) as China's trade surplus slipped and missed expectations. Offshore Yuan is strengthening modestly on the print.
A 10%-plus devaluation…
And in Yuan terms, China Exports are surging…
And in USD terms, Exports also managed a small improvement (as imports soared)…
Big jumps in exports to US (+6.9% YoY), Taiwan (+6.5%), and Germany (+5.1% YoY) but exports to Russia soared 26.1% and Brazil by 36.9%.
China import growth was centered on Japan (+17.2%) and Australia (+13.7%), but UK's massive 37.6% surge was the standout.
As Bloomberg notes, Exports stabilizing suggests demand remains intact for now as the world’s largest exporter faces potential headwinds and policy uncertainty as Donald Trump prepares to take office Jan 20.
Exports are getting a lift from “likely improvement in global demand,” Song Yu, the Beijing-based chief China economist at Beijing Gao Hua Securities Co., the mainland joint-venture partner of Goldman Sachs Group Inc., wrote in a recent note.
China's trade balance continues to trend lower however…
And the immediate reaction is a modest strengthening in offshore Yuan…
Source: Yuan Strengthens After Rebound In China Exports, Trade Balance Disappoints
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