CDS

Back in March, when we detailed the ongoing catastrophic deterioration in the US retail sector, manifesting itself in empty malls, mass store closures, soaring layoffs and growing bankruptcies - demonstrated most vividly by the overnight bankruptcy of Toys "R" Us, the second largest retail bankruptcy in US history after K-Mart - we said that "just like 10 years ago, when the "big short" was putting on the RMBX trade, and to a smaller extent, its cousin the CMBX, so now too some are starting to short CMBS through the CMBX, a CDS index which tracks the values of bonds backed

Global stocks backed off from all time highs, and S&P futures are unchanged ahead of the much anticipated US CPI report, which is expected to break a streak of five consecutive misses, while eyeing disappointing overnight Chinese economic data which missed across the board. European stocks and Asian markets were also modestly in the red, with the relentless global rally to new daily record highs taking a breather amid some concerns China's economy is rolling over, which weighed on commodities including base metals, which in turned dragged down mining stocks.

S&P futures are higher in early Wednesday trading, alongside Asian stocks and European bourses, both solidly in the green as the EURUSD drifts below the 1.20 "redline" while the dollar rebounds off a two and a half year low following the US "measured" response to North Korea’s missile test, which soothed jittery investors who now turn their focus to US economic data. Equity indexes in Japan, Hong Kong and South Korea also rose while 10Y US Treasuries are steady before the release of ADP employment and GDP data, both of which are expected to show an increase.

Authored by Peter Tchir via Brean Capital,

I continue to be focused on tail risk.  While I think valuations may be stretched, my bigger concern is that the real risk lies in market structure – more specifically to volatility and correlation strategies that quickly propagate through the financial markets with the aid of algorithmic trading.

Authored by Chris Whalen via The Institutional Risk Analyst,

"It is not down in any map; true places never are."

 

"Moby Dick"

Herman Melville

News reports that prosecutors have dropped their case against Bruno Iksil, the former JPMorgan (NYSE:JPM) trader many know as the “London Whale,” comes as no surprise to readers of The IRA.  Iksil, who resurfaced earlier this year, has been living in relative seclusion in France for the past few years.