U.S. stock future indexes are down a half percentage point this morning with signs that a green to at least flat session will end this weeks turmoil. Oil is headed for its third straight week of decline while the dollar is steady in the low 99's.
Markets are expected to open lower as investors contemplate market stability in the wake of the Fed's rate hike.
Here is the current market situation from CNN Money
European markets are broadly lower today with shares in France off the most. The CAC 40 is down 1.25% while Germany's DAX is off 1.10% and London's FTSE 100 is lower by 0.48%.
TORONTO (Reuters) - BlackBerry Ltd reported a smaller-than-expected fiscal third-quarter loss on Friday and its first quarter-to-quarter revenue gain in over two years, indicating turnaround efforts may be gaining traction.
(Reuters) - The U.S. Federal Reserve will raise interest rates again in the next three months, according to two-thirds of economists polled by Reuters, although many say rates won't rise as quickly next year as policymakers have suggested.
NEW YORK (Reuters) - Martin Shkreli, the boyish pharmaceutical entrepreneur who caused a public uproar after he drastically raised the price of a life-saving prescription drug, was arrested on Thursday for engaging in what U.S. prosecutors said was a Ponzi-like scheme at his former hedge fund and a pharmaceutical company he previously headed.
LONDON (Reuters) - Oil prices edged higher on Friday as investors closed positions ahead of the end of the year though crude was still heading for a third weekly loss in a row, its longest losing streak in four months.
LONDON (Reuters) - Investors turned cautious on Friday about what a stronger dollar and weak commodity prices could mean for the world economy, as a clutch of central banks moved to cushion the impact of the first U.S. rate rise in nearly a decade.
HONG KONG (Reuters) - UK bank Standard Chartered (StanChart) could be acquired by a white knight as its recovery could prove to be "challenging", according to broker CLSA, which upgraded shares of the Asia-focused lender on that possibility.
LONDON (Reuters) - The dollar sank as much as half a percent against a basket of major currencies on Friday, hurt by a resurgence of the yen after the Bank of Japan opted for tweaks rather than an outright expansion of its monthly asset purchase target.
For a brief few minutes, overnight saw exactly the reaction that central planners had hoped for when The Bank Of Japan announced it would buy 'moar' stock ETFs and extend bond duration buying ad nauseum. However, within just 15 minutes something happened that we haven't seen since the world embarked on this experimental nightmare. Despite the front-ran promises to buy Japanese stocks "whatever it takes" traders sold... and sold large.
After a 500 point "business as usual" spike, Nikkeie 225 crashes over 1000 points as traders recognized The BoJ's desperation...
As Bloomberg reports,
The new program is in addition to the 3 trillion yen the bank already spends on ETFs each year, the BOJ said on Friday. The BOJ also said it would extend the average maturity of holdings of Japanese government bonds to seven to 12 years, and increase the amount of individual Japanese real estate investment trusts it can own. The Topix index sank 1.8 percent to 1,537.10 at the close in Tokyo, reversing a gain of as much as 2 percent.
"At 300 billion yen, it's on the scale of margin of error. The impact to the stock market will not be big," said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd. "If it's this small, some investors will think this is the best they can do. Kuroda himself says he never does anything half-baked, but frankly speaking this is half-baked."
One week ago, and again last night, we previewed today's main event: an immensely important quad-witching expiration, the year's last, one which as JPM's head quant calculated will be the "largest option expiry in many years. There are $1.1 trillion of S&P 500 options expiring on Friday morning. $670Bn of these are puts, of which $215Bn are struck relatively close below the market level, between 1900 and 2050."
What is most important, is that the "pin risk", or price toward which underlying prices may gravitate if HFTs are unleashed to trigger option stop hunts, is well below current S&P levels: as JPM notes, "clients are net long these puts and will likely hold onto them through the event and until expiry. At the time of the Fed announcement, these put options will essentially look like a massive stop loss order under the market."
What does this mean? Considering that the bulk of the puts have been layered by the program traders themselves, including CTA trend-followers and various momentum strategist (which work in up markets as well as down), and since the vol surface of today's market is well-known to everyone in advance, there is a very high probability the implied "stop loss" level will be triggered.
Not helping matters will be the dramatic lack of market depth (thank you HFTs and regulators) and overall lack of liquidity, which means even small orders can snowball into dramatic market moves. "While equity volumes look robust, market depth has declined by more than 60% over the last 2 years. With market depth so low, the market does not have capacity to absorb large shocks. This was best illustrated during the Au ...
Week 49 of 2015 shows same week total rail traffic (from same week one year ago) declined according to the Association of American Railroads (AAR) traffic data. Intermodal traffic returned to contraction year-over-year, which accounts for approximately half of movements and weekly railcar counts continued deeply in contraction.
Rates of motor-vehicle licensure are already plummeting among young Americans, and self-driving cars will only accelerate the trend. In short, America's much-sung-about love affair with the automobile has grown cold.
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