Archive - Oct 20, 2015 - Story

While stocks surge ingloriously on the back of a credibility-less Fed (and hope that PBOC, ECB, BoJ will unleash QE-moar), S&P 500 forward earnings expectations are down 15 days in a row - that is the longest losing streak since the financial crisis. In fact, S&P 500 earnings expectations are down over 2% year-over-year. The last time earnings growth expectation swung from positive to this negative was August 2008.

Anecdotal evidence from press reports, survey data and positioning data all agree on one point: very few people believe that the recent rally could actually be for real. With a pullback underway, we now have a chance to judge its nature – this should soon tell us if the recent rally was just another fluke or if it retains the potential to become a more sustained advance.

Stocks of “vice” industries like alcohol and tobacco are showing leadership – that hasn’t always been good news for the market.

While this morning's dead cat bounce pressed WTI Crude up to almost $47 (Dec contract), it has been an almost non-stop downswing since China reported GDP. This morning's chaos in the T-Bills market appears to have spooked algos out of risk-on positions and broken WTI Crude back to a $45 handle...

Less than two weeks ago, when previewing the upcoming debt ceiling battle which is shaping up to be far more contentiously than most expected, we said to "keep an eye on T-Bill yields for the turning point when the market decides this situation is becoming serious." And while things turned "serious" yesterday, moments ago the bond market officially entered into "panic" territory.

For the biggest, and most criminal, cover up by a Japanese government in recent history, the irradiated chickens are coming home to roost and earlier today Japan finally acknowledged the first "possible casualty" from radiation at the wrecked Fukushima nuclear power plant, a worker who was diagnosed with cancer after the crisis broke out in 2011.

“In an as-yet unreleased statement circulated to the BBC, myself and others, the UN Office on Drugs and Crime (UNODC), which has shaped much of global drug policy for decades, call on governments around the world to decriminalise drug use and possession for personal consumption for all drugs.”

Just as we noted last night, when IBM's dismal earnings were unleashed upon a frantic market, there was only one thing that could save stocks.. USDJPY 120!!

But it seems the "juice" has run out...

Presented with no comment...

With less than 2 weeks left until the "debt ceiling accident" that Jack lew has warned about, T-Bills (maturing beyond Nov 3rd) are being dumped wholesale. Oct 29th Bills are trading -1bps but Nov 12th Bills are up 6bps at 12bps, the 1-month WI is at 16bps. Of course, equity markets will be the last to notice and algos appear to be seeing this as a panic-buying-opportunity.

After yesterday's 110% gain, one could have been forgiven for thinking some profit-taking was in order... or a pause. Nope... WTW is up another 30% today as the 57% short interest is about to be Volkswagen'd...

The second tech bubble, one which has seen nearly 200 tech "unicorns" rising out of the ZIRP ashes in the past few years and promptly attaining valuations of over $1 billion, is bursting. WSJ reports that investment bankers cautioned Dropbox that the San Francisco company might be unable to go public at its latest private round "valuation" of $10 billion.

"In the West, they talk about ‘moderate opposition,’ but we so far haven’t seen any in Syria. Any person who takes up arms and fights the legal authorities, how moderate can he be?"

It's been quite a wild ride for The Dow over the last 24 hours. Panic-buying into last night's cash close was eviscerated by IBM. Then, following reports of a 15% cut in components orders according to the China Times, AAPL has lost ground, also weighing the Dow down.

Have no fear America, because General Nagata is about to take a "senior" counterterrorism position which means the country will be protected from extremism by the kind of "creative thinking" that sent 60 undertrained fighters into the most dangerous place on earth "ill-prepared for an enemy attack" with "no support from the local population" and "poor intelligence about their foes."