The US markets closed flat off their session highs after sea-sawing through the afternoon session. The Spooz made a run for the 'golden ring' (2085) and failed at 2088, sliding back down below the 2085 resistance. Crude and the US dollar remained mostly unaffected from the SP500's run-up and subsequent decline, but there is always tomorrow.
(Reuters) - The U.S. Federal Reserve will raise interest rates twice this year, most likely in June, but the probability has faded on signs of a weak start to the year, inflation that is still tame and a brittle global backdrop, a Reuters poll showed.
(Reuters) - Troubles in the U.S. oil industry amplified profit pressures on Wells Fargo & Co and Bank of America Corp on Thursday as rising bad loans added to a tough climate for trading bonds and currencies, along with persistently low interest rates.
(Reuters) - BlackRock Inc said on Thursday it will cut 400 jobs and take a $76 million restructuring charge after posting a 20 percent drop in first-quarter profit amid a dramatic reversal in financial markets.
NEW YORK (Reuters) - New York City's largest public pension is exiting all hedge fund investments in the latest sign that the $4 trillion public pension sector is losing patience with these often secretive portfolios at a time of poor performance and high fees.
(Reuters) - Wells Fargo & Co's quarterly profit fell 7 percent as the No. 3 U.S. bank by assets set aside more than $1 billion to cover bad loans, saying its energy portfolio remained under "significant stress."
COLORADO SPRINGS, Colo. (Reuters) - United Launch Alliance plans to cut up to 875 jobs, or about one-quarter of its workforce, before the end of 2017 to better compete against rivals bankrolled by billionaire entrepreneurs including Elon Musk and Jeff Bezos, ULA's chief executive said on Thursday.
Banks have been lobbying intensively against Brexit. Among those leading the charge is Goldman Sachs. For three years, the bank's executives have publicly warned about the downsides of leaving the EU... and now we know why (hint - it's not concern for the common man).
As The Wall Street Journal reports, about a decade ago, Goldman launched project "Armada," a plan for a hulking European headquarters on the site of an old telephone exchange in London.
Unbundling this kind of structure will be expensive and time-consuming, lawyers and bankers say. Goldman is mapping out which jobs might be hit by a loss of this passport, or the right to sell services across the EU, while scoping out European countries where it has existing banking licenses and infrastructure that could quickly be scaled up, according to a person familiar with the matter. Goldman also has a banking license in Germany, for instance.
In the event that this passport was lost, derivative and currency trading with EU counterparts would likely be hit hard. A large portion of euro currency and securities trading takes place through London, outside the eurozone. In the event of Brexit, EU authorities may well press for the trading of euro securities to be cleared within the trading bloc, bankers say.
Today, Goldman services Middle Eastern and African customers in London too. Some 90% of its 6,000 staff based in Europe are in London. Europe, the Middle East and Africa accounted for 27% of Goldman's $33.8 billion of net revenue in 2015.
It has been a while since we had an update from JPM's "quant guru" Marko Kolanovic on key market support and resistance levels from the perspective of option gamma and key systematic strategies including CTAs, risk parity and volatility targeting, so we were looking forward to reading his latest report which came out earlier today. In it he reviews the latest flows and concludes that the suppressed realized vol regime we have enjoyed for the past two months may be about to shift, perhaps as soon as the coming Friday's option expiration.
From JPM's Marko Kolanovic
S&P 500 Cycles of Systematic Leverage
S&P 500 index options hedging usually adds to market volatility given the convexity of put options held long by clients. However, due to the market rally and clients' option activity, these dynamics changed in March. The imbalance of options (gamma) turned significantly towards calls (over the past month, the average gamma imbalance was ~$12bn towards calls), causing hedging flows to suppress S&P 500 realized volatility. The collapse in realized volatility invited inflows from Vol Targeting and Risk Parity funds. Hedging of call options (usually sold by clients) and rolling of put options higher (usually held long by clients) also caused equity outflows of ~$50-$100bn. These outflows to some extent countered the inflows from other systematic strategies such as CTAs and Risk Parity. This was a likely reason why the market could not break out despite price momentum briefly turning positive last week.
As options are rolled this week, and following option expiry on Friday, most of the call gamma imbalance will roll off (~$10bn). This could add to market realized volatility (the market will be able to move 'more freely'). The gamma imbalance tilts towards put options significantly around ~2000 level and could result in market acceleration on the down ...
Submitted by David Stockman via Contra Corner blog,
If you don't think the current central bank driven economic and financial bubble is going to end badly, recall a crucial historical fact. To wit, the worldwide race of central banks to the zero bound and NIRP and their $10 trillion bond-buying spree during the last seven years was the brain child of Ben S Bernanke.
He's the one who falsely insisted that Great Depression 2.0 was just around the corner in September 2008. Along with Goldman's plenipotentiary at the US Treasury, Hank Paulson, it was Bernanke who stampeded the entirety of Washington into tossing out the window the whole rule book of sound money, fiscal rectitude and free market discipline.
In fact, there was no extraordinary crisis. The Lehman failure essentially triggered a self-contained leverage and liquidity bust in the canyons of Wall Street, and it would have burned out there had the Fed allowed money market interest rates to do their work. That is, to rise sufficiently to force into liquidation the gambling houses like Lehman, Goldman and Morgan Stanley that had loaded their balance sheets with trillions of illiquid or long-duration assets and funded them with cheap overnight money.
There would have been no significant spillover effect. The notions that the financial system was imploding into a black hole and that ATMs would have gone dark and money market funds failed are complete urban legends. They were concocted by Wall Street to panic Washington into massive intervention to save their stocks and partnership shares.
Crude clubbed into and through the NYMEX close...ahead of tonight's China GDP
And as JPMorgan's trading desk notes, March brought the heaviest net covering seen by the Prime Brokerage in several years. Activity was skewed towards single names but ETF activity also was strong. All sectors experienced net covering, with Energy and Consumer, Cyclicals in the lead.
And the huge squeeze of the last 2 days has ended today...
With VIX and USDJPY used to desperately keep S&P green
Still plenty of time left in the day yet for a late-day buying panic.
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