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One thing the ECB has been masterful at doing is pressuring European bond yields lower. How low you ask? Well, a 0.05% yield on a 10-year German bund — which is not only a record all time low but also begs the question of who in the right mind would lend the German government money for 10 years in return receiving 5bp of their principal each year as interest. You'd be surprised at how much demand there is for these zero or even negative yielding bonds!

Why? Simple. Front running the ECB's PSPP (QE). Tomorrow, 8 June, the bank will officially start purchasing non-financial EUR IG corporate bonds from the secondary market. This oaths first time in history that the ECB would be monetizing private assets under a large scale asset purchase program.

So not only are European sovereign yields plunging to record lows, way past their levels before the onset of the European Sovereign Debt Crisis, European corporate bond yields are also following suit. Now that there's always going to be a buyer of first and last resort for corporate debt, investors can care much less about the risks involved. Right?

#Forex #Stocks #Trading #Investing #Money #Europe #ECB #QE #ZIRP

Well, that just about sums it up. There's nothing equites don't like about Friday's morbidly bad May payrolls report. After the initial smash lower in risk assets, almost everything reversed abruptly as if the markets now expect the Fed to put off raising rates for the immediate future. A sigh of relieve was heaved. The dollar continues to be beaten lower, while gold and the other precious metals surge higher. Stocks are well above last week's highs and are set to attack their respective 2016 highs. Crude oil just made a new yearly high yesterday...

At this rate, no one will really believe the Fed by year's end. Talk about credibility...

#Forex #Stocks #Trading #Investing #Economy #Jobs #FOMC

Largest NFP Miss Ever Kills June Fed Hike

When we first saw the 38,000 print, we thought it was an error with our news feed. But no, the U.S. economy added only 38,000 non-farm jobs in May, the lowest since September 2010, and the biggest miss on record. It's really hard to overstate how morbidly bad May's payrolls were. It is, however, commensurately easy to kiss a June rate hike by the Fed a sweet goodbye.

Everyone was shocked. We were definitely shell shocked, because we couldn't believe just how bad the numbers were. Neither could the markets.

Flash crashes and surges sprouted the instant the first HFT algos recognized that it was really an epic disaster. Yes, here we are 5 days late to reporting on this monumental event; but you see, we have more to bring to the table, now that 3 trading days have already passed for the dust to settle.

READ ALL HERE:
http://www.businessoffinance.com/sni...-june-fed-hike

Gold, silver, and the entire precious metals complex have been great performers since last week. The latest impulse was of course fueled by Friday's disastrous payrolls report, sending both gold and silver much higher. In fact, we had preempted followers more than a month back that there could very well be some explosive upside to the precious metals and that was what we have been getting.

Price action tells us that not many big players are willing to sell into strength; always a good sign for the bulls.

#Forex #Stocks #Trading #Investing #Gold #Silver #Money #FOMC

WTI crude (and Brent) ends Wednesday at fresh 2016 highs on supply disruptions in Nigeria and inventory draws last week according to the just published weekly DoE report. Total crude stock saw a bigger than expected draw, and so did Cushing. Gasoline saw a build and misses expectations for a slight draw, while distillates posted its first build in 8 weeks of straight draws.

More importantly for the U.S. energy market, total oil production saw its first weekly increase in 18 weeks. Recall that we questioned, last week, about how long more could the persistently steady decline in production last for. We knew the answer today. Not much longer. With an increase in the total count in oil rigs as we reported last week, it seems that we might be on the edge of an inflection point at this stage. Only time will tell...

#Forex #Stocks #Trading #Investing #Economy #Oil #OPEC #Money

Speculative money has been the big short players when it comes to U.S. treasuries. As seen in this chart of the CFTC aggregate treasury futures net positioning (in 10-year equivalents), large speculators have been shorting treasuries heavily since 2015, perhaps as a directional play betting on the Fed to tighten (which we now know was very slow to happen). This positioning is near the 2010 extremes.

When we infuse this fact set with price action of the 10-year UST yield, an obvious but important question arises: Will yields see a bounce or breakdown from current levels? Our analysis is presented in the charts, and we'll leave this to the viewer to decide on...

#Forex #Stocks #Trading #Investing #Economy #Money #FOMC #QE

[Zoom in for ultra large image]

Things have gotten so out of hand in the fixed income space that the Bill Gross (aka the Bond King) came out yesterday with a grim warning that the "supernova" will one day blow up. In this user complex depicting the various 10-year bond yields of respective developed markets (DM), you can see just how perverse negative interest rates and the addiction to the zero lower bound has totally contaminated the global bond market.

Even after the first Fed rate hike in 9 years last December, global DM bond yields have crashed to a record low, a record that goes back 500 years. $10trn is the gross notional outstanding of all negative yielding debt securities globally. The ECB is now monetizing euro-denominated IG corporate bonds in the Eurozone, effectively transferring risk off private balance sheets and onto the ECB's. So on and so forth, we could keep going... But you get the point.

Will this trend continue? We suspect so. Not because the fundamentals are congruent, but because it's fair to say that much of the market is betting against low yields (shorting bonds), and that has historically led to a strengthening of the trend.

However, that doesn't eschew the eventual fallout from the exploding "supernova", which we really do not wish to reckon with!

#Forex #Stocks #Economy #Trading #Investing #FOMC #NIRP #QE #ECB #Europe #Euro

How have global financial assets such as stocks, bonds, commodities, and currencies performed since the Fed first hiked interest rates in December 2015? Well the chart is messy as we can see from the top part of the complex. Best performers have been the precious metals and oil (commodities were good performers all around). Credit and stocks were ok performers but mostly lackluster. Treasuries outperformed equities and corporate credit, that's a surprise. And ironically, the U.S. dollar is the laggard, actually down since the Fed hiked! Is this the best possible sign that the market doesn't believe in the Fed's decisions and is saying that Yellen and company has lost much of their little credibility? Maybe.

Also wondering how assets have performed since last Friday's absolutely disastrous payrolls? Pretty much the same behavior but on a much shorter time scale. PMs outperformed majorly with gold and silver at the week's highs (something we warned would probably happen). Oil was the star of the game topping $50 mid-week but then rolled over and is down, erasing about half of this week's gains. Treasuries were very good performers and yields fell, while stocks went nowhere and remain very confused. Not in the chart is the USD which is down massively since last week (as predicted)!

#Forex #Stocks #Trading #Investing #Money #Economy #FOMC #Gold #Oil #Friday

Cable (GBPUSD) is becoming an instrument for gamblers lately. We have said many times that we believed betting on whether the UK votes for Brexit (leave EU) or Bremain (stay in EU) is akin to gambling. Irregardless of what the various opinion polls say they have gathered, the bottom line is this: No one really knows the results until the ballots have closed. And that happens in about 2 weeks time!

No question that sentiment is quickly trending towards Brexit as many polls have reported that the "leave" camp has taken the lead over the "stay" camp, and said lead seems to be widening as each day passes; and each day that we see another politician or figure head with vested interests in the UK bremaining (sic) in the EU, exclaim that England will be much worse off should Brexit actually happen. Something called fear mongering...

As we reported, GBP futures options are trading very rich to fair value as traders bid up protection on both sides, betting that volatility will surge as we near 21 June.

In other non-related news, notice how commodities and the USD have traded in very close mirror footsteps? This might be signaling that volatility is being concentrated in commodities and currencies (one lead to the other indeed). The "death cross" that we marked out might be the death knell for the greenback for the medium term.

#Forex #Stocks #Trading #Investing #Economy #UK #EUref #Brexit #EU #Euro #Europe

Staying on the hot topic of interest rates and bond yields, we look at European banks, which mostly still remain fairly troubled on their loan books and balance sheets. While we can fairly say that most European banks (excluding Greece) are off life support from the Troika (that is the ECB, EC, and IMF), they are still heavily reliant on this generous entity to stay out of trouble.

As omnipotent as the Troika has been in floating otherwise defunct European banks (especially those in troubled member states), it doesn't stop banks from suffering due to a rapidly flattening yield curve (which can be generalized to be affecting most of the euro money market).

The market-implied NIM, as proxied here by the bund curve, has been falling since as far as these charts go back. In fact, since the ECB introduced NIRP (O/N depo rate) back in 2014, the market has been discounting for much lower profitability across the European banking industry.

Ever since, factoring out the wild swings in European bank stocks, the trend has been bearish. Recently, bank stocks have traded mostly in a range which be believe is distributive, while the curve continues to flatten. Record lows in DM yields do not bode well for any chance of a renaissance in higher rates. The best case we see is more chop. The worst case is much lower.

Just show this chart to Mario Draghi the next time he claims that the ECB's policies have been effective for the economy (and even the markets, we dare you say!).

#Forex #Stocks #Trading #Investing #Money #Banks #ECB #Euro #NIRP #QE #Europe #Economy #Friday

We noted 1 to 2 weeks ago that U.S equities (stocks in general) have been uber sensitive to Chinese yuan performance, and that the August 2015 rout on global financial markets was probably instigated by the yuan devaluation by China.

Up till now, this correlation hasn't changed much, and due to renewed weakness in the greenback, the PBoC has been fixing the yuan (onshore USDCNY fix) lower against the "secret" trade basket of currencies and the USD. The result is increased volatility in both Asian and DM equity markets.

Which leads us to today, where the S&P 500 (U.S. stocks) is trading relatively rich to where the yuan implies it should be (notice the wide gap depicted in the red rectangle). One market has to be right, and the other wrong. As much as we'd like to be on the fence with regards to the direction risk might be headed, we tend to believe equites are indeed expensive to technicals and flows.

So watch this space in the coming days and weeks to see which's right and which's wrong.

#Stocks #Forex #Trading #China #Investing #Economy #Money

Back to macro. U.S. consumer confidence as tracked by the University of Michigan Consumer Confidence Survey Index has rebounded strongly since October 2015, and more recently from cycle lows seen in April this year. May saw a slight decline from April (which was at a 10-month high) but is still lower than a year ago. Note that the SPX is trading a little rich at this point.

Meanwhile, the same survey shows that consumer expectations for inflation have tumbled to fresh all-time lows. This is despite higher oil and gas prices, and a core CPI (heavily referenced by the Fed) of over 2%. Are Americans oblivious to the fact that spot crude prices have almost doubled since their February lows? Or are they still in a state of delusion? Perhaps neither of those; consumers are just pessimistic that they'll ever see higher inflation.

They should then prepare for a rude awakening... That's what we can say.

#Forex #Stocks #Trading #Investing #Money #Economy #Inflation #Shopping

Crude oil has been in the headlines this week after topping $51 in the middle of the week, reaching levels only seen in July last year. The blistering rally in prices has made black gold the best performing asset YTD, up almost 100% (doubled in price) since their February low.

However, as we've noted earlier on Tuesday and also last Friday, something has likely shifted in the fundamentals of the American oil market — production might have reached an interim bottom.

This is hinted by the first weekly increase in total crude production since January (the highest weekly rise since then too) as seen in the second pane of the chart. This is after 18 consecutive weeks of production declines in what we called the NEP (New Energy Paradigm). We however caveated that a single weekly rise doesn't mean anything in the grander scheme of things, unless of course we get complementary supporting data.

Which we did today when Baker Hughes reported a second increase in U.S. oil rigs; +3 rigs last week. This marks the second weekly increase in rigs. When we plot a 2-month lagged price chart of crude oil along side the rig count, it seems that the former has foretold a potential inflection point in rig count.

Combining the 2 data sets (1st weekly rise in production, and 2nd weekly rise in rigs) we might be able to say a change in fundamentals looks likely. Again, we want to see how these data sets play out in the coming weeks before forming any serious hypotheses.

As a partial result of this, and most certainly a result of technicals, oil prices have bounced lower after peaking at $51 mid week, back to unchanged since last Friday's payrolls mega shocker.

#Forex #Stocks #Trading #Investing #Economy #Oil #OPEC #Money

Largest NFP Miss Ever Kills June Fed Hike

When we first saw the 38,000 print, we thought it was an error with our news feed. But no, the U.S. economy added only 38,000 non-farm jobs in May, the lowest since September 2010, and the biggest miss on record. It's really hard to overstate how morbidly bad May's payrolls were. It is, however, commensurately easy to kiss a June rate hike by the Fed a sweet goodbye.

Everyone was shocked. We were definitely shell shocked, because we couldn't believe just how bad the numbers were. Neither could the markets.

Flash crashes and surges sprouted the instant the first HFT algos recognized that it was really an epic disaster. Yes, here we are 5 days late to reporting on this monumental event; but you see, we have more to bring to the table, now that 3 trading days have already passed for the dust to settle.

READ ALL HERE:
http://www.businessoffinance.com/sni...-june-fed-hike

Online Scammers...Beware!

Do you shop online regularly? The advent of mobile technology means we can now shop on our mobile device - no need for a clunky computer.

Here at Business Of Finance, we regularly cover topics and interests beyond the world of trading, investing, economics and finance. We believe in approaching the world with a wide and varied view. Specialization is for insects!

In this article, one of our subscribers, Tim (not his real name) nearly got scammed by a very persistent, but ultimately failed scammer. If you shop online, this is something you do not want to miss. Check this out!

READ HERE: http://www.businessoffinance.com/lif...udster-exposed

Greece, The Nation That Spooked The Markets in 2015

In case you forgot how of an elephant in the room Greece was last year! The land of Achilles pretty much sent markets swirling about with turmoil and sharp volatility and was the talk of the markets for a very long while.

Greece, the sick prodigal child that should have never joined the European Monentary Union, has gone through quite a rough patch in recent years. We could banter all day about its graying history through the yellow lenses of austerity, or we could just let pictures do the talking.

Looking back, it has not been as picturesque as it is artistic.

READ MORE: http://www.businessoffinance.com/lif...-the-economist

Sleep Better Today!

Modern technology has made our lives easier and more inter-connected. We now have smartphones and tablets that basically function as pocket-sized computers. The advent of Internet and software technologies, such as social media, online shopping, video-sharing and mobile applications have made smartphones a desirable, and almost mandatory commodity in present society.

Find out how to sleep better today, for a better life!

http://www.businessoffinance.com/lif...ing-your-sleep

We Told You Didn't We? Dollar Crashes Most Since 2011

We did it. Our public call was once again vindicated by Mr. Market itself. No amount of shenanigans and hot talk rivals being right on a market call, and of course profiting from our correct call. We were right both on direction and timing. It doesn't get much better than this.

We're not boasting, we're merely proving the point that with a well thought out process correctly applied in the financial markets, most systems will almost surely work in the long run. Many traders fail to grasp this because they lack the patience, or worse still, approach this entirely wrongly.

READ MORE:
http://www.businessoffinance.com/sni...ost-since-2011

Did You Just Short Oil At The Bottom? (March 10 2016)

Old but gold news!

We hope you didn't.

Because WTI and Brent are up some 42% and 48% from their January lows, respectively.

We can only imagine the multitudes of traders shorting crude all the way up from $25 to the current $40 on Brent. It must have been painful, utterly jaw grindingly painful. We feel for you, because we were once part of group. A

group which had collectively been betrayed by those oh-so-smart pundits calling for $20 oil, pundits with absolutely no track record, casually appearing on financial TV advising everyone and their pet dogs to short oil because the "fundamentals have never been more bearish".

READ MORE:
http://www.businessoffinance.com/sni...-at-the-bottom

Hope everyone had a great weekend!

The new trading week is beginning soon - are you ready yet?

Cheers!