Afternoon trading is beginning to see weakness in the major US stock indexes (SPY +0.3%) as the US dollar rises (+0.2%), crude prices tumble (-2.1%) and gold stabilizes after falling more than 10 points (-0.3%). Indicators Neutral in no-mans land.
Here is the current market situation from CNN Money
North and South American markets are mixed. The S&P 500 is higher by 0.32%, while the IPC is leading the Bovespa lower. They are down 0.18% and 0.13% respectively.
(Reuters) - AT&T Inc Chief Executive Randall Stephenson on Monday told investors he expects the planned $85.4 billion acquisition of Time Warner Inc to receive regulatory clearances as investors showed skepticism by pushing shares of both companies lower.
(Reuters) - Chinese aviation and shipping conglomerate HNA Group said on Monday it would buy about 25 percent of hotel operator and manager Hilton Worldwide Holdings Inc from biggest shareholder Blackstone Group LP for $6.5 billion.
NEW YORK (Reuters) - Oil prices fell on Monday after Iraq said it wanted to be exempt from an OPEC production cut, though prices drew some support from a rally in Wall Street shares and a draw in crude inventories at the U.S. storage hub of Cushing, Oklahoma.
BRUSSELS (Reuters) - The European Union's hopes of signing a landmark free trade deal with Canada this week appeared to evaporate on Monday as the Belgian federal government failed to win the consent of French-speaking regional authorities.
(Reuters) - Toronto-Dominion Bank and TD Ameritrade are buying Scottrade Financial Services for $4 billion in a deal that will combine two of the biggest U.S. discount brokerages, the companies said on Monday.
(Reuters) - The Financial Services Information Sharing and Analysis Center (FS-ISAC), an influential U.S. financial industry group, said on Monday it had formed a unit to enhance collaboration among its members and the U.S. government as a way to help reduce cyber security threats to the financial system.
As we reported earlier today, according to Bloomberg, Internet-connected CCTV cameras made by a Chinese firm, Hangzhou Xiongmai Technology were infected with malware that allowed hackers to takeover "tens of millions" of devices and launch the distributed denial-of-service (DDoS) attacks which brought the internet across much of the US, and especially on the east coast, to a virtual crawl for hours on Friday.
As Bloomberg first reported, and many others confirmed, the company itself admitted its culpability, with the security camera maker saying "its products were used to launch a cyber-attack that severed internet access for millions of users, highlighting the threat posed by the global proliferation of connected devices. The attackers hijacked CCTV cameras made by Hangzhou Xiongmai Technology Co. using malware known as Mirai, the company said in an e-mailed statement. While Xiongmai didn't say how many of its products had been infiltrated, all cameras made before September 2015 were potentially vulnerable."
However, just a few hours later, the company appears to have changed its tune.
As IP Video Market reports, "the Chinese video surveillance manufacturer, Xiongmai, whose equipment numerous sources blame for driving massive Internet attacks over the past month has fired back, defending itself against allegations. Moreover, they have involved the Chinese government's Ministry of Justice threatening legal action against those defaming them."
Having warned all the way since 2009 that HFTs not only accelerate but are ultimately responsible for flash crash events like the countless example seen in global capital markets, from US stocks in May 2010, to ETFs in August 2015, to the FX, most recently the sterling's instaplunge last month, we were content to read that another prominent institution validated our concerns - which have been repeatedly ignored by the SEC which has been unfortunately captured by the HFT lobby - when the Bundesbank today released a report in which it warned that high-frequency trading firms "tend to aggravate financial-market swings and contribute to "flash crash" events."
"In a calm market environment, HFT market participants contribute a significant amount of liquidity," the Bundesbank said. "However, during highly volatile market phases, the research shows that HFT market makers in both Bund and DAX futures markets temporarily reduce liquidity. HFT actors are especially active in times of strong market fluctuations and can therefore contribute to trend-enhancing price developments."
"Taken together, the different behaviors of active and passive high-frequency trading firms indicate a heightened risk of periods of short-term excessive volatility, which could encourage market upheavals as far as flash events," the Bundesbank wrote.
In its study, the Bundesbank examined trading in some of the most liquid German stock and bond futures contracts, in which high-frequency firms accounted for about 44% of trades. The Bundesbank divided high-frequency firms into two broad types: those that trade actively on news, and those that act as market-makers, or intermediaries between buyers and sellers of assets.
As the WSJ explains, the German central bank found that the first type of traders were parti ...
Implied volatilities - the market's best guess at short-term-future uncertainty - collapsed last week across every asset class from FX to equity. For now, as Bloomberg's Richard Breslow notes, markets seem comfortably calm amid the real storm of macro, micro, and geopolitical risks, but many of the same 'calm' markets are at critical technical levels putting them all "in play."
Also sprach Draghi: an ECB meeting for all and none, but as Bloomberg's Richard Breslow explains, the bottom line is that he said little, promised less and the markets survived just fine. There was little clamoring for, nor palpable financial condition stress requiring, immediate action -- and he obliged. He bought himself full optionality for December at no cost. Under the circumstances, it gives an interesting twist to the moniker Super Mario.
So in this brief window of opportunity, asset prices will be able to sort themselves out without some new central bank push. It's worth watching where the natural forces of markets take things. And what technical levels hold or give way.
There was no announcement of a QE extension. Lots of people warned that could lead to bond mayhem. Result? A bull flattener led by core Europe. Periphery yields shrugged the whole thing off. Spain's 50-year offering went off without a hitch.
Earlier this week, bund yields "spiked" to the 200-day moving average, before falling back. Watch this level (currently 9.4bps). There's either a core scarcity issue or there isn't. Do we really nee ...
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