Archive - Jun 2014

AAPL stock began to tumble quickly but was saved miraculously... as that buying ramp began, the Bloomberg data feed exploded with SEC Short Sale Rule 201 headlines and has been puking them since 1429ET... the NASDAQ has just admitted it has a problem...

White House Purchases Google Key Words to Slam Putin

From 1235ET to 1255ET today, the SIP (the data feed that the general public relies on for its trade reporting) went dark for a number of symbols (including SPY - the massively liquid S&P 500 ETF). Luckily - for the High Frequency Traders - the Direct Feed kept on getting data and as the detailed charts from Nanex below show, the machines and their keepers continued to trade with asymmetric information... un-rigged?

We know there is one indiscriminate non-economic buyer in the US equity markets - the entirely ignorant of valuation concerns, funded with record high leverage, corporate buyback machine. But who is selling to them? Once again, as BofAML notes, institutional clients are net sellers of US equities since Mid-April (and are cumulative net sellers year-to-date). So do you chase the non-economic float-shrinkers... or the large professional investors? As stocks soared last week, professional investors were dumping huge amounts of stock into the strength as retail/private clients bought with both hands and feet.

US equities dipped after the initial ISM data (and construction spending miss) as did USDJPY but soon after things began to levitate in their new normal manner as bad news is clearly pent-up good news in the future. By the time the ISM admitted its error - the US equity markets had recovered back to unchanged from 10ET's initial print. But what was really moving - since in our new normal world, a shift in the butterfly's wings of US ISM (seasonally adjusted) causing a hurricane (or Tsunami) in stock markets across the world, Japan's Nikkei 225 swung from low to high by over 150 points as the carry-trading algo monkeys reacted to every conflicting headline (and broke BATS).

Holy rigged number manipulations Batman:

• ISM ISSUES SECOND CORRECTION TO MAY FACTORY INDEX - NOW 55.4

Absolutely speechless. Not even the Chinese department of data bullshit is so clueless.

While the ISM, clearly unhappy with the bond buying following its first data release and whatever angry phone calls it received promptly after releasing the real data, revised its data to even more fudged and made up on the fly numbers, perhaps it would be a good idea to at least update its website at the same time as it confirms it has borrowed the goalseek.xls model from the Chinese department of truth.

One can't make this up. Remember when the ISM' Holcombe explicitly said moments ago in its 10 am release that "The May PMI registered 53.2 percent, a decrease of 1.7 percentage points from April's reading of 54.9 percent" Turns out he lied, and moments after the ISM released its data, it "realized" it had used a wrong seasonal adjustment factor. Wait: one applies seasonal adjustments to survey data? Like for example when you responded "no" to whether orders are picking up, you really meant "yes" when adjusted for the seasons. We can only imagine that the ISM received a very unpleasasnt phone call.

• ISM CORRECTS MAY FACTORY INDEX TO 56 AFTER ADJUSTMENT ERROR
• ISM INITIALLY REPORTED U.S. MAY FACTORY GAUGE FELL TO 53.2
• S&P 500 ERASES LOSS AFTER ISM CORRECTS FACTORY DATA

In other words, blame the complete data revision on the warmer weather.

"The investigators believed it was hard to wiretap Icahn without him finding out because he owned a stake in a telecommunications company through which surveillance might have to be conducted, the Wall Street Journal reported, citing one of its sources."

Destroy the market's ability to price assets, risk and credit, and you take away the essential information participants need to make rational, informed decisions. By crushing the market's ability to generate accurate pricing information to save the Status Quo from necessary repricing and reforms, the Fed and the Federal government have generated enormously destructive unintended consequences that will not respond to additional politically expedient fixes. All the other central planning fixes around the world share the same fatal flaw.

The weather-bounce is over. After 3 months of bounce-back from January's plunge, ISM Manufacturing dropped to 53.2, significantly missing expectations. Across the board the sub-indices were disappointing with rising prices paid (lower margins), falling new orders, falling employment, and falling production. Once again the "meteoroconomists" have outdone themselves as this print was below the lowest estimate (and at the total opposite of Joe Lavorgna's highest of all expectations at 57.0)

But... the pent-up demand? The post-weather spend-a-thon? US Construction spending rose a mere 0.2% MoM - missing the 0.7% expectations by the most since March 2013. Aside from January's plunge, this is the lowest growth in spending since August of last year.

The headline Market PMI data beat expectations and jumped to 3-month highs with the production output sub-index at its highest since Feb 2011. However, this exuberant production sees no change in employment and a drop in new orders. Perhaps even more worrisome is the margin crushing concerns of a soaring input price index and dropping output price index. Of course, economists note that "this is not simply a weather-related rebound. Companies are reporting that their customers and feeling more confident, restocking, expanding and investing," in all but jobs and new orders... it seems.