Faber News Flow

Reuters  took a trip down south and spoke with baby boomers at a retirement community in Florida, many of whom were more concerned about stock market gyrations than the Covid-19 outbreak. As of Tuesday morning, there are 4,661 confirmed cases and 83 deaths across the country. Florida has recorded 160 confirmed cases and 4 deaths. Containment windows across major metro areas by the government were likely missed last month as community spreading is underway. Social distancing has been implemented in many states to a certain degree to flatten the curve and slowdown infections, but again, the window was missed.  With the fast-spreading virus expected to strike Florida due to its aging population, Reuters interviewed more than a dozen senior citizens at a densely populated retirement community called the Villages. On everyone's mind was not the pandemic consuming the world, but rather their brokerage accounts.  Couple forced to postpone wedding amid coronavirus pandemic Republican Bruce...

Last week, in the aftermath of the historic oil price collapse, we   warned  that the long-awaited "fallen angel" day has arrived, as $140 billion in oil producer (and up to $360 if one includes the mid-stream companies) investment grade debt was on the verge of being downgraded to junk and throwing the entire high yield market in turmoil. Fast forward to today when  Bloomberg calculates  that since we published out article,  the amount of distressed debt -  a term that describes borrowings likely to default  -  in the U.S. alone has doubled to a half-trillion dollars as the collapse of oil prices and the fallout from the coronavirus shutters entire industries. While rating agencies have been slow to respond to the total collapse in cash flow generation across most US industries as long as the US economy remains paralyzed due to the spreading lock downs across the nation, markets have been far faster, and the result has been a plunge in the price of countless bonds. As a resu...

It's 'quad witch' today, Historically, quad-witch weeks have meant a collapse in vol and surge in stocks - no matter what the news. But, this week (and last) has been different, to say the least... Sell-Off to Deepen in Asia However, as Nomura's Charlie McElligott explains below,  today's option expiration may stall that chaotic volatility... at least to some extent. While volatility has been extreme across all asset-classes, in equity markets, McElligott notes we are  approaching the "nitty gritty" of today's "Serial" Options Expiration, which is set to be the largest notional on record  - and all with no CBOE floor operation. The extreme Dealer "Short Gamma" phenomenon of the past 1.5 months is in the process of CLEARING,  on account of the now-completed VIX expiry (Wed, now UX1) and today's Quad Witch Op-Ex, where our updated numbers show  potential for upwards of 39% of the aggregate $Gamma in SPX / SPY options could "d...

Back in December, someone in China made bat soup (at least according to the officially accepted narrative that doesn't get you banned on Facebook, Twitter, etc), and the rest is history: in the next three months, the global equity market has lost $24 trillion in value, more than the $22 trillion in US GDP. And here is a staggering chart from BofA putting the crash of 2020 in its historic context: in the past month,   the US stock market has crashed faster than both the Great Depression and Black Monday, and in terms of the total drawdown,  the crash of 2020 is now worse than 1929 and is fast approaching 1987. Below, courtesy of BofA CIO Michael Hartnett, are several other stunning observations on the Crash of 2020: Calls for Fed corporate bond buying, New Deal fiscal policies, new Plaza Accord to stabilize US$, closure of stock exchange coincide with week of Wall St devastation. Peak-to-trough crash in global equity market cap = $24tn  (c/o US GDP = $22tn). Monday's 12.0% drop ...