Problems Are Emerging.

Well, first thing’s first.

Donald Trump sent 11 tweets by 3:00 p.m. ET, a truly impressive “covfefe” tally, that included this batshit ramble about Lisa Page and Peter Strzok:

Yes, “what a total mess.” And for Christ sake, will someone please teach him what a proper noun is or, more to the point, what a proper noun isn’t?

But this was the one that mattered:

That came amid other headlines, including these (from Barak Ravid of Israel’s Channel 10):

  • EUROPEAN, U.S. ARE SAID CLOSE TO DEAL ON IRAN: CHANNEL 10
  • DEAL AIMS TO PERSUADE TRUMP NOT TO END ACCORD
  • UNCLEAR TRUMP CAN BE PERSUADED TO MAINTAIN IRAN ACCORD

Whatever the case, oil careened lower…

WTI

…after breaching $70 for the first time since 2014 earlier on Monday:

WTI2

The dollar rose and is coming off its third consecutive week of gains:

DXY

YTD high:

Dollar

Stocks faded what was a pretty impressive rally when the Iran headlines/Trump tweet hit:

Stocks

Futs:

ES

Citi doesn’t think this is a particularly attractive entry point:

Nothing doing to speak of in Treasurys. As Bloomberg notes, 10-year yields were confined to a 2.4bp band, “among the smallest this year”. Panning out a bit for some context vis-a-vis Friday’s payrolls miss:

Yields

Emerging markets are of course still in the spotlight. We talked more about this earlier today in the context of who’s been selling.

YTD high for Brazil CDS:

BrazilCDS

It’s the same story – external concerns (read: aggressive Fed, dollar strength, rising U.S. rates) are colliding with country-specific risk. To be sure, there are folks out there pushing a bullish narrative for Brazil, but election uncertainty and the broader jitters weighing on EM are making a dent.

Commenting on the widening in CDS spreads, Credit Agricole’s Italo Lombardi blamed “a somewhat less favorable external environment, higher US rates and expectations for Fed adjustments, in addition to the whole issue of protectionism.” Obviously, Brazil is better shape than it was in 2015 when a rolling political crisis pushed things to the brink, but you can see the stress showing up in the real:

USDBRL

Another jittery day for the lira (much more on that here). CBT tried something feeble, but as you can see, the relief “rally” was shallow and short-lived:

USDTRY

Tough day for MXN, which slid past 19.50 late in the session:

USDMXN

Broadly speaking, the pressure on EM is mounting:

FX

Here’s a bit more color on this from JPMorgan:

What about currencies? What picture do we get from the available spec positions on EM currencies? We use two proxies to gauge overall EM currency positions: 1) the aggregate spec positions on the USD (Figure 8) and 2) our spec position indicator on Risky vs. Safe currencies (Chart A17). The former suggest that a previous short base in the USD is still being covered but has yet to be covered completely. The latter suggest that while “Risky” currencies including EM currencies saw a significant reduction in their positions vs “Safe” currencies, they are still far from capitulation.

USD

Archer “danger zone” clip (and if you aren’t an Archer fan and thus don’t get the reference, then you need to rectify that at your earliest convenience):

 

Finally, for your moment of zen, here’s Rudy Giuliani proving once again that he is definitely not the man for this job:

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3 thoughts on “Problems Are Emerging.

  1. I’m sorry, I did not make it past the first tweet in your column today — cannot see thru the tears of laughter! His opening sentence and mention of the most emails in the shortest period of time — I think he has surely won the prize for the most tweets in one day! But then, his closing comment of this Country has get back to business! OMG – now he is talking out loud to himself! Emails, Probers, Country, Business – what is all that about!?!?

    I also read earlier about all those 13 really angry Democrats on Mueller’s team. Someone please tell him there are a whole bunch of Republicans who are also angry. His bullshit lies and repeating his campaign rallies to keep his ignorant base supporters happy coupled with his own push for a Nobel Peace Prize are enough to make you puke.

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