While the market turmoil (stocks down a few percentage points from all-time record highs) is being pinned on various factors (from North Korea, Trump, & Cohn to terrible retailer earnings and J-Hole anxiety), we suspect the real cause of market uncertainty is starting to peak through - the looming debt ceiling crisis that has now become too big and too imminent to ignore.
Having staked his reputation one week ago that the "bull market has come to an end", the jury is still out on Dennis Gartman's latest forecast, although one thing is becoming clear - the period of record low volatility has come to an abrupt end and the question is whether it now reverts (much) higher, or resumes its drift lower on more vol-selling and expectations that central banks will keep it all under control. And while we wait and see which way risk inflects, in his latest overnight note, the "world-renowned commodity guru" is out with an even more bombastic prognostication: "
The global risk-off mood accelerated overnight on Trump "stability concerns", coupled with fallout from the Spain terrorist attack and lingering North Korea tensions, even if the VIX is off its latest highs, trading just above 15. Investors fled into German and U.S. Treasury bonds and bought gold for the third day in a row, as the appeal of such top-notch assets grew further due to a deadly attack that killed at least 13 people in Barcelona.
European stocks are offering the biggest discount on record relative to U.S. peers, according to one metric.
Members of the Stoxx Europe 600 Index are trading at 1.8 times the value of their assets, almost half that of S&P 500 Index constituents, the largest gap since Bloomberg started tracking the data in 2002.
Federal Reserve officials are finally waking up to the fact that there’s something wrong with their inflation models. It only took them five years.
As Bloomberg points out, the minutes from the Fed’s July policy meeting, released yesterday, included a debate about whether the models that help the central bank set its inflation target are no longer functioning properly.
“Federal Reserve officials are looking under the hood of their most basic inflation models and starting to ask if something is wrong.