Futures Levitate Following Worst Chinese Mfg PMI In One Year, Brent At 2015 Highs; Bund Slide ContinuesSubmitted by Tyler Durden on 05/04/2015 06:45 -0400
The best news for stocks is twofold: volumes continue to be lethargic with both the UK (May Day bank holiday) and Japan closed until Thursday (Golden Week), while the bulk of the S&P500 has now exited the stock buyback quiet period. As such, ignore record equity outflows - all the matters is that corporate CFOs, flush with brand news bond issuance cash, will tell their favorite Wall Street trading desk to buy stocks at just the right inflection point sending the market surging just as shorts once again test the downtrend and the 50 DMA.
Holidays in Europe and Asia left things quiet overnight after some traders used the last day of April to frontrun the old "sell in May and go away" market adage. Market closures also kept the Chinese day trading hordes from using a tiny beat on the official manufacturing PMI print as an excuse to pile more money into the country's equity mania, while Japanese shares ended mostly unchanged as investors fret over when the BoJ will deliver the next shot of monetary heroin. In the US we'll get a look at ISM manufacturing and the latest read on consumer confidence as we head into the weekend.
The biggest overnight story was neither out of China, where despite the ridiculous surge in new account openings and margin debt the SHCOMP dipped 08%, or out of Japan, where the Nikkei dropped 2.7%, the biggest drop in months, after the BOJ disappointed some by not monetizing more than 100% of net issuance and keeping QE unchanged, but Europe where for the second day in a row there was a furious selloff of Bunds at the open of trading, which briefly sent the yield on the 10Y to 0.38% (it was 0.6% two weeks ago), in turn sending the EURUSD soaring by almost 200 pips to a two month high of 1.1250, and weighing on US equity futures, before retracing some of the losses.
An inauspicious start to China's local government debt swap initiative has the PBoC scrambling to determine the best way to facilitate the successful issuance of new municipal securities as several provinces have reportedly canceled or delayed offerings. Now, the question is whether Chinese LTROs will be enough, or whether outright QE will ultimately be the only option.
Following yesterday's early MNI rumor that a Chinese QE is being "considered" and which sent the Shanghai Composite surging 3% and led to an initial boost in US stock futures, overnight the PBOC scrambled to once again deny such speculation. Of course, going full "cold Turkey" on Chinese stimulus would be too much for the market to handle, so in a piece by the WSJ also released overnight, the author said the PBOC would pivot from outright QE to mere LTRO, which is also not new and was reported over a week ago here in "China Floats QE Trial Balloon, PBoC May Launch LTROs." In any event, for now at least, Asian stocks are not happy despite Apple's latest blockbuster results, and neither is Europe, with the Stoxx 600 down 1%, and even the E-mini is hugging 2100 unable to levitate on any imminent central bank intervention.
The lines have been drawn in many police departments: it’s us vs. them. Trust in many departments has been utterly shattered within some communities because the police hold themselves to a different standard than they do the populace. But the recent cases of police brutality are simply a symptom of a much larger problem. Society in the US is breaking down, civility has been lost, and the country is rapidly becoming uncivilized. This extends within and across all of the most important institutions.
Since Jeb Hensareling is opening a criminal probe into the Fed for leaking material, non-public information because Congress is “committed to holding the Federal Reserve accountable for its actions and omissions, and to ensuring transparency in its operations”, it is also time to finally hold none other than former Treasury Secretary and then-Fed Vice Chairman Tim Geithner criminally accountable for his actions.
Closing out another whirlwind week, which has seen the biggest S&P 500 intraday plunge and surge in months, futures are taking a breath (if not so much the Nikkei which closed over 19,000 for the first time since 2000 - one wonders how many direct equity interventions it took the BOJ to achieve that artificial "price discovery"). In lieu of any notable macro news, the most significant update hit less than an hour ago when Goldman piled on the EUR pressure, when it released a note in which it further revised down its EURUSD forecast.
While the dollar strength this morning, which has pushed it to a fresh 13 year high and has accelerated the EURUSD plunge to under 1.06 - a drop of over 300 pips since the start of the week - has been a recap of yesterday's trading action, the main difference is that unlike yesterday, the USDJPY has managed to find a strong bid in the overnight session, pushing not only the Nikkei up by 0.4%, but also lifting US equity futures as the entire global marketplace is now merely a sandbox in which the central banks try to crush their currencies as fast as possible.
"In September, the Dallas County Commissioners Court nearly approved a contract of its own with Securus that would have explicitly eliminated all in-person visits at the Lew Sterrett Jail in favor of video visitation."
It turns out that the next best thing to Greek contagion in this bizarro, centrally-planned world is... anti-contagion.
As had been leaked in advance, earlier today Jeroen Dijsselbloem first reported that Greece had submitted a request to euro-area creditors to extend the availability of bailout funds for six months, i.e., an extension to the "Master Financial Assistance Facility Agreement" not an extension to the Greek "bailout programme" aka the Memorandum per se, which has been the sticking point in all Greek government public addresses in recent days. Greece further asked for best use of flexibility in "current arrangement", which supposedly means an unconditional extension with Greece given the liberty to determine what happens in the next 6 months without Troika intervention. But was it a bailout extension or just a loan extension? GREECE DENIES HAS REQUESTED EXTENSION OF 'BAILOUT'-OFFICIAL: MNI
In short, confusion reigns once more.
Last week, German equities soared to record highs with the Dax surpassing 11K, not only on the imminent arrival of the ECB's Q€ which provides a risk-less bid to all asset classes, but on news that a second Ukraine ceasefire had been achieved in Minsk. Well, just like the first Minsk "ceasefire", one can promptly forget the just as "successful" second one, because overnight, after a several week siege, the Ukraine town of Debaltseve finally fell to rebel forces with "troops of Ukraine’s Armed Forces laying down arms en masse,” according to Donetsk rebel official Maxim Leschenko says, cited by Tass news service.
A couple of days ago a Café member sent me some of the latest commentary by Martin Armstrong of Armstrong Economics, formally of Princeton Economics International. As you will read, he continues his rant against "the gold promoters," a rant that seemed more than vaguely familiar.
What an understatement!