The Heisenberg Report | TalkMarkets | Page 94
Contributor's Links: The Heisenberg Report
Perhaps more than any other time in the last six decades, the fate of markets is inextricably intertwined with the ebb and flow of geopolitics. From the ECB's attempts to use the central bank's balance sheet to influence political outcomes across the eurozone to Saudi Arabia's efforts ...more

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“This Is Not Sustainable”: Reversing The “Constant” Drop In Yields
The relentless hunt for yield catalyzed and perpetuated by central bank largesse has helped drive equally relentless spread compression up and down (or “down and up”?) the quality ladder.
“America First”: What Traders Will Be Watching Next Week
Markets will again zero in on the U.S. this week, and not just because of Donald Trump. The Federal Reserve meeting and nonfarm payrolls may set a clear direction for dollar and yields for the next few months.
Is The Subprime Auto Loan Bubble Bursting?
Collateral fundamentals continue to weaken in the auto loan ABS sector. Prime and subprime net loss rates are close to multi-year highs, and 65% of the loans in the collateral pool were made to borrowers with credit scores between “N/A” and 550.
Echoes Of Massive Money Market Reform
The ironic thing about “niche” markets (i.e. things that only the “pros” know about) is that they really aren’t “niche” when it comes to how they affect more widely recognized markets and how they shape the policy decisions that grab headlines.
Chart Check (Bullish Double Feature)
In addition to record low 1-month implied vol, a 10 handle VIX​, record high FX vol/equity vol ratios and a smooth S&P implied vol term structure we can now add “absurdly low put/call ratio” and depressed short interest to our list of warning signs.
A Perma-Bull Turns Bearish: “I’m Worried”
The discrepancy between FX and equity volatility is perhaps the most important indicator for markets. This ratio is near record highs across markets.
Goldman: Global Fund Managers “Concerned” With Trade Wars, Protectionism
Given the distinct possibility that global trade and commerce is about to be completely upended, it isn’t any wonder that when Goldman asked fund managers what they were concerned about, geopolitics and global trade topped the list.
Everything You Need To Know About Rates In One Paragraph
Real rates in Germany simply can’t stay this low forever. Societe Generale sums up pretty much everything you need to know.
These Are The Best And Worst Performing Currencies Since Trump Took Office
The following chart from Credit Suisse would be useful as a handy reference guide to look back on in six or so months. This is how various currencies have performed since the inauguration.
Shares Outstanding In Biggest Oil ETF Plunge To 13 Month Low
Shares outstanding of U.S. Oil Fund, biggest exchange-traded fund that tracks crude prices, fell to 253.9m on Tuesday, lowest since December 2015, data shows.
Daily Kickstart (Stocks Rise Across The Globe)
Trump’s protectionist rhetoric and the lingering effects of multiple “accidental” verbal interventions are keeping a lid on things and overnight we saw further divergence between yields and the greenback while the yen is treading water.
Warning: Currencies Will “Remain Volatile”
When you wake up one morning and futures are pointing to dramatic losses at the open because something broke overnight in FX, don’t say you weren’t warned.
Dollar Doldrums Continue Into Monday Evening As Reflation Trade Unwind Rolls On
Both Trump and members of his inner circle have variously demonstrated their willingness to talk down the “too strong” greenback.
Key Calls (Verizon May Be Too Damn Expensive)
Wells Fargo has cut Verizon to Market Perform from Outperform. The stock has risen too far since the election relative to the performance of the broad market, Wells figures.
“Time To Get Creative”: This Isn’t The Place For Joe ETF
Given where we are in the credit cycle (of course that’s always a bit of a subjective assessment) and given leverage and the general richness to fair value, I have serious concerns about stepping into this market.
Is The Record Treasury Short A Contrarian Indicator? This Scatter Plot Has The Answer
The extreme positioning in Treasuries is a reflection of reflation trade bias. If you’re short, you think the reflation narrative has legs. If you’re long, you think yields will remain low for whatever reason. But is it a contrarian indicator?
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