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An ugly way to start off what is going to be an immensely busy trading week. We have the June FOMC as the key event risk this week, and a slew of macro data releases. Not to mention the increasingly volatile events of the UK referendum will certainly inject much more craziness in the markets.

Monday morning saw bad data from Japan and China with all indicators pointing to continued weakness in the world's second and third largest economies respectively. Japan's large manufacturing companies business conditions plunged once again for the second quarter in a row and is at 2014 lows. China's IP, retail sales and FAI all came in weak, with the latter 2 missing expectations.

Stay safe!

#Forex #Stocks #Trading #Investing #Money #Economy #Brexit #EUref #China #Japan #FOMC

Japan is back at it again with more extremes. The Nikkei 225 (Japanese stocks) today fell more than 3%, largely catching up to the relative strength in the yen for much of last week, as stocks levitated and diverged away from both cash and yields (JPY & JGBs). USDJPY brokedown as Europe opened for trading Monday, and is some 120 pips off Friday's highs.

However, as negative momentum grips traders and investors with fear, we note that short interest in the TSE has reached 22-year highs, rivaling that seen during the 2008 meltdown and stock market crash. What this means is that traders and investors have hardly been more bearish Japanese stocks, despite the BoJ easing more than ever before and in the light of NIRP! We are wary of a short squeeze anytime the shorts come out this boldly.

Lastly, as we have documented at length last week, JGB yields continue to fall to new record lows, bringing down the entire curve and further putting pressure on capital to find a return. Nothing new here, as we've seen this happening for 2 years and counting...

#Forex #Stocks #Trading #Investing #Money #Economy #Brexit #EUref #China #Japan #FOMC

More weakness in the Chinese yuan as both onshore (USDCNY) and offshore (USDCNY) yuan markets have weakened against the greenback. Nothing surprising here as the markets have cursed the USD with abnormally high volatility (see the bigger than average swings in the yuan fix for evidence that even the PBoC isn't willing to stomach this increased chop).

As expected, China fixed the yuan lower by more than 200 pips against the U.S. dollar, after some pretty disconcerting economic data releases in the morning. More importantly however, China's "secret" devaluation is still ongoing fast and furiously as can be seen in the lower pane. The yuan basket is now at 2014 lows! Competitive devaluation you say?

#Forex #Stocks #Trading #Investing #Money #Economy #Brexit #EUref #China #Japan #FOMC

By now, everyone and their pet rabbit should be familiar with "Brexit", a term coined to signify the UK leaving the EU, thereby severing most trade, economic, and other significant ties with the continental bloc. And as more and more chatter, banter, and trading volumes get directed to this topic or Brexit, expect crazier moves in the pound sterling.

As the charts have shown, GBP has been tossed round by the markets like a rag doll, mostly trading in a very wide range against other crosses before finally breaking down last weak. Said breakdown was the result of new poll results showing the widening lead the "leave" camp (Brexit) has over the "stay" camp (Bremain). The latest figures are something like a 52% vote for Brexit and a 37% vote for Bremain, implying a 15-17% lead for Brexit. This is also the widest lead yet and is obviously stoking great fears that the UK might indeed vote to leave the EU when Britons take to the ballots next week.

The consequences of all this drama has been massive weakness in the pound; down some 400+ pips against the USD since last week, and down some 1000 pips against the yen over he same period. Vol premium has also risen to record highs as we've shown before, and short exposure (futures and options) has reached 3-year highs.

Again, we reiterate our unwillingness to gamble in this cesspool of punditry...

#Forex #Stocks #Trading #Investing #Money #Economy #Brexit #EUref #China #Japan #FOMC

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Is this outright insider trading? Early Monday, #Microsoft announced a $26.2bn full cash takeover of #LinkedIn at a premium of 50% to where #LKND closed on Friday. Of course this meant that LinkedIn shares would spike dramatically at the open, and sure they did. LKND closed Monday +48%. But who could have seen that coming, and who could have positioned for this event before it actually happened? Well, apparently someone did.

When we look at the stock options on LKND, we notice some abnormal activity. Specifically, focusing on the August $160 calls on the stock, we find a massive buy order being executed on Friday. This buy order was north of 500 contracts, or more than 50,000 shares of LKND worth. When the massive buy order was executed in Friday, the calls were trading at about $2.6. Friday ended without event and the weekends passed.

Then during pre-market on Monday, the acquisition was announced. When the options market opened Monday, this particular series of August $160 calls surged to above $33, where we can see (based on the time-volume stamps) whoever had bought the 500 contracts on Friday, sold those calls at a price of about $30-33.

This equates to roughly 1200-1300% return in less than 2 days (less than 1 trading day actually). Whoever bought those calls on Friday, walked away with $1.2mn in profits on Monday.

This begs the question of who could have seen Microsoft announcing a takeover of LinkedIn at a 50% premium per share on Monday? Whoever that person or entity is, there is definitely some fishy insider story behind this.

Are the regulators sleeping?

Making money in the financial markets has never been harder, ever. Thanks to central banks and their degeneracy...

Soc Gen sums it up, needing no additional comment:

"The following chart plots the excess return from investing 100,000 US dollars for 20 years in a balanced portfolio consisting of 50% MSCI World, 40% global sovereign bonds, 5% cash and 5% corporate bonds. We show the gross amount and a net amount assuming investment charges and costs of 100bps. The figures are simply based on investing for 20 years at the prevailing yield.

If you invested today for 20 years the after cost excess return might be $21,800 (today’s yield on a balanced portfolio is just 199bps minus 100bps) versus $60,000 if you invested 10 years ago – and a $150,000 30 years ago. Of course inflation rates are much lower today than they were 30 years ago and trading and management costs are coming down. But you can’t escape the obvious conclusion: those with large nominal liabilities are going to have to find more money."

All you need to know about U.S. coal production in one chart... The end might be near. The prehistoric fuel is not only dirty, but is getting sidelined for better forms of energy such as natural gas and renewables. As environmental regulation catchy up to the reality of global warming, it is only a matter of time before coal is entirely removed from the power plants of the developed world.

Safe to say that coal would still be the cheapest form of power for emerging economies, and so the carbon footprint shifts from the West to the East...

Who are the instigators of war and violence? Global arms trade data says Saudi Arabia (largest arms importer, more than twice that of the first runner up India), and the U.S. (largest arms exporter, almost triple that of the first runner up Russia)...

Is the world becomes more violent despite the advent of tech, are we supposed to believe that the defense and arms industry will only continue to expand? Sadly, we can totally foresee that to be the case...

The Brexit fever has gotten so ridiculous that almost every market is swinging around it. Forget this Wednesday's FOMC statement and rate decision. The markets have decided that they wish to take cues on the leave-stay game that is the UK referendum upcoming next Thursday.

Traders have gotten so fearful (overly we would say) that 10-year German bund yields have slumped under zero to trade with negative yields for the first time in history. Yes the German curve has officially gone subzero for a decade, joining Japan.

Oh we can totally see this ending well (sarcasm meant)...

European money markets are starting to crack once again with counter party risk back at 2012 European Sovereign Debt Crisis highs despite looser euro financial conditions heralded by the ECB all-out monetary policy measures. Seen here, the Libor-OIS spread has exploded since mid 2015 on what seems to be mounting stresses on European banks (funding issues, collateral markdowns, NPLs, ect...).

Also, the demand for USD relative to EUR is back at December 2016 levels, just after the Fed made a historical rate hike after 9 years at the zero bound (USD became less in demand by foreign borrowers and dealers as the Fed started to shift dovishly once again). However, the EURUSD basis is starting to trend much lower again, going negative as USD borrowing picked up dramatically... We ask the rhetorical question if this is the market's undercover way of expressing belief that the Fed might soon hike again.

And lastly, we look at Deutsche Bank (Europe's largest bank) and do a little curve fitting against the price chart of Lehman back in 2007/8. Will history repeat itself or is this mere curve fitting? Only time will tell... For the record, DB is carving in fresh all time lows this week.

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

U.S. retail sales rose +0.5% in May, beating expectations of +0.3%. Annualized, retail sales grew 2.5%. While this is anything far from establishing escape velocity from what has clearly been stagnation in growth, retails sales still remain positive and is one of the strongest points of the American economy to date. As much as consumers are cutting back on spending and taking up new credit card debt, this is nothing much a concern.

What is more interesting is how stocks of big retailers have been diverging notably from total retail sales figures since 1Q15. What do retail stocks know about the consumer-driven economy that hasn't been reflected by official retail sales figures? Don't ask us.

#Forex #Stocks #Trading #Investing #Money #Economy #Finance #Sales #Business

Last week we documented something of change with regards to the so-called "smart money" that is the group comprised of hedge funds, institutional clients, and private clients. Said change was the first weekly net purchase of U.S. stocks by "smart money" in a record long 19 unbroken weeks of sales. While we said that the net buying was bound to happen (as sales have been slowing), we cautioned that more data was needed to establish any thesis as to what this "smart money" is up to.

Our caution was apparently heeded as BofAML reported today, that "smart money" not only flipped to become net sellers of American equities for the previous week (1 week lag in reporting of course), but was the most aggressive in selling since the first week of April and ranked in 3rd place for the latest weekly outflow since the start of the 19-week long selling streak back in late January.

As for the individual breakdown, hedge funds are now technically net buyers of stocks on a 4-week rolling basis, but only marginally so. Institutional and private clients remain firm net sellers on the same basis.

It will seem by now that the tendency of "smart money" will still be to sell stocks on a weekly basis as the broader market is trapped in a whirlpool and going around in circles...

More details from BofAML's report:

Last week, during which the S&P 500 was down 0.2%, clients returned to selling US stocks, following a week of net buying. Previously, clients had sold stocks for 19 consecutive weeks, the longest selling streak in our data history. Net sales of $3.8bn last week were the largest since mid-April, with selling led by institutional clients (the biggest sellers during the majority of the selling streak). Private clients were also net sellers; this group has sold stocks for the last eighteen consecutive weeks, though in lesser magnitude vs. institutional clients. Meanwhile, hedge funds were net buyers last week after selling stocks in the prior two weeks. Small, mid and large caps all saw outflows. Buybacks by our corporate clients picked up slightly last week, but still remain weak, with the four-week average tracking its lowest since January 2015.

Selling last week was broad-based, as single stocks across all ten sectors saw net sales. Only ETFs saw net buying, as they have for the past five weeks. Net sales were the most sizeable in Health Care—which has seen among the largest and most consistent sales this year amid uncertainty over the US election and a positioning unwind—and Financials, which was the worst-performing sector last week as expectations for the next rate hike were further pushed out. Year-to-date, clients have been cumulative net sellers of single stocks in all sectors except Telecom.

Institutional clients were the biggest net buyers last week, consistent with trends for most of this year. Private clients were also net sellers, while hedge funds were small net buyers. All three size segments saw outflows. Corporate buybacks accelerated slightly, but remain weak.

Rolling four-week average trends by sector:

• Net buying: Telecom since late April; ETFs since late May.

• Net selling: Tech since late Jan.; Industrials since mid-Feb.; Materials and Health Care since mid-March; Consumer Discretionary since late March, Utilities since early April; Energy since mid-May; Financials since late May.

• Notable changes in trends: Consumer Staples saw a reversal to net buying after having seen net selling since early Feb.

Rolling four-week average trends by client type:

• Hedge funds are now net buyers of US stocks on a 4-week average basis, after having been net sellers since early Feb.

• Institutional clients have been net sellers on a 4-week average basis since early Feb.

• Private clients have been net sellers of US stocks on a 4-week average basis since early January.
The four-week average trend for buybacks by corporate clients suggests a bigger slowdown in buybacks than what we have seen the last few years at this time.

#Forex #Stocks #Trading #Investing #Money #Economy #Finance #Banks

Technical analysis of the S&P 500 index by BofAML:

The S&P 500 tested resistance at the November and May 2015 peaks of 2116-2135 last week but closed near the week’s lows to form a bearish reversal (shooting star) on the weekly candle chart. This pattern could provide an overhang, similar to the late April and early November bearish weekly candles, especilaly worrisome as S&P breaks below near-term key resistance at 2085-2077 this morning.

The big weekly supports come in at 2033-2025 and 1950, which are ahead of the 1820-1810 lows.

The near-term key for S&P 500 bulls is holding 2085-2077, and the 50-day moving-average.

Trade carefully on this one...

#Forex #Stocks #Trading #Investing #Money #Economy #Finance

[Zoom in to see ultra large image]

We've compiled pretty much the most comprehensive illustration on the UK Brexit opinion polls across the English country. There are many pollsters involved in garnering viewpoints on Brexit so it bears prudence to view data widely.

One thing is for sure across all data sources — Brexit is gaining ground and is taking a clear lead ver the once predominant "stay" camp.

Another thing is apparently clear — Since Obama's visit to the UK a few months back (the American President encouraged voters not to vote for Brexit), sentiment has shifted in favor for the "leave" camp. Was Obama the vixen? Well, the data doesn't lie.

#Forex #Stocks #Trading #Investing #Money #Economy #Finance #Euro #ECB #Europe #QE #NIRP #UK #Brexit #EUref #EU

The highly awaited June FOMC statement, interest rate decision, and press conference where Chair Yellen is now less than 24 hours away.

As of last check, Fed Funds futures are implying a 0% probability that tomorrow's meeting concludes with rate hike. In fact, the dimensions have gotten so twisted that markets are actually discounting a 2% probability of a RATE CUT tomorrow. So yes, there is now a higher chance the Fed cuts than hikes tomorrow!

Beyond that, rate hike odds for most of the remaining FOMC meetings in 2016 has slumped (especially that of July). With zero expectations that the Fed hikes in tomorrow's June meeting, attention will certainly shift to what Yellen will utter during her presser following the statement release.

Markets are safely betting that the disastrous May payrolls report released 2 weeks ago would be significant enough to put a "live" FOMC on hold until we see consistent and solid improvements in macro.

Enjoy the crappy ride for the rest of June!

#Forex #Stocks #Trading #Investing #Money #Economy #Finance #FOMC #NIRP #QE #Jobs #NFP

Crude prices fall sharply after an unexpected build of API inventory across the board. All components largely missed expectations of a modest draw and surprised to the upside, and is a big and abrupt flip from the last few weeks of draws. Specially so for gasoline and distillates...

WTI has lost $47 on the print and is dragging risk lower.

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

Fed & BoJ To Troll Markets This Week

There's never been a central bank more thuggish than the Fed. First, it delayed hiking rates by more than 11 months, only doing so once in December by a tiny 25bp. Remember the vicious cycle of "promising to hike, only to scare markets into a drawdown, refusing to hike, therefore talking markets into a rally" we have been taught by the Fed to abide by?

Yup, that's exactly what Yellen and company have really been enjoying doing for the last 6 months and counting, showing no intentions of quitting this addictive habit.

We've been documenting this since the nonsense started many months back. With each passing FOMC meeting (already 4 have passed this year), and with every twist and turn of the macro economic grade book, the markets have rallied and tanked in a vomit-including clusterf***, in the process trolling traders and screwing investors' portfolios.

READ MORE: http://www.businessoffinance.com/sni...kets-this-week

What do record low yields, rising global financial stress levels say about everything? A hint would be "all isn't well". Record low Japanese, German, and Swiss yields indicate distrust in central bankers' ability to keep the asset inflation cycle going. The demand for both cash and safety means value is being created out of nowhere, or rather, signifies a massive transfer of intangible wealth across the sector in of financial assets.

If we took rising financial stress levels as a plain vanilla signal, then most central banks of major developed markets are doing the correct thing by steeping on the easing pedal; and the Fed will be committing a fatal mistake by tightening.

Here's what Deutsche Bank's Chief Credit Strategist Jim Reid has to say (ironically as DB shares plunge to fresh all-time lows):

"The Moon landing, JFK's assassination, John Lennon's shooting, maybe even the Red Wedding episode from Game of Thrones. In years to come will they also be asking you where you were at the time you heard the news that 10 year Bund yields turned negative for the first time? For me it was in an airport in Vienna! Although there has been a creeping inevitability on this for several days now this landmark remains a truly remarkable event. If one wanted a simple indicator to reflect a broken financial system then this would be a strong candidate. In today's PDF we show 10 year Bund yields back to the early 1800s to put this move in some perspective. It's incredible when you think that the central bank responsible for the inflation rate in Germany has a target of (just below) 2% per year. Let us stress that until Governments/central banks change policy, yields are likely stay at ultra low levels due to secular stagnation type themes and the overwhelming amount of QE hoovering up bonds. However it still reflects a broken financial system."

#Forex #Stocks #Trading #Investing #Money #Economy #Finance #Banks #NIRP #QE

Industrials are the bane of the U.S. economy. Softness in industrial production, lagging industrial stocks, slowdown in various industrial coincident I flavors all point to this fact. May saw IP fall by -1.4% YoY and -0.4% MoM, both missing expectations. This is the longest consecutive streak of annualized contractions since the last Great Recession in 2009z the last time we saw such a long period of contraction, the American economy fell into a recession. What makes this time different?

Also, May's rise in the Empire Fed is providing little respite to the overall picture as the action there lacks any sort of consistency, and has largely been disregarded by market participants.

On a separate note, we're interested to see how far and long the broader market can trend higher (or sidewards in this case) while IP continues to fall.

#Forex #Stocks #Trading #Investing #Money #Economy #Business #Recession