For those of you who remember the months following the 2008 financial crisis, one of the most viral videos out there (it has over 2 million views) was the “Peter Schiff Was Right” compilation. It consists of various clips of Mr. Schiff being prescient about the financial condition of the U.S., as talking heads on various financial shows mock him and laugh in his face. Well, the “Peter Schiff Was Right Video Part Deux” is now out. In this case, pundits laugh at Peter’s insistence that there will be no taper and that it was all a bluff (they pull off the same bluff every year). It ends in classic fashion with Bob Pisani explaining to the dwindling audience at CNBC that “no one saw it coming.” It seems we’re back to that again. The next crisis can’t be far off.
An ugly day all around...
30Y Treasury yield - biggest 4-day yield compression in 15 months
Dow Transports - biggest single-day loss in ~5 months (2nd worst in 11 months)
Nasdaq - 2nd worst day in 10 months
AAPL - worst day in 3 months (2nd worst day of 2013)
USDJPY - biggest gain in JPY in 10 weeks
WTI - biggest single-day gain in 10 months
Financials - worst day in 10 months
In no particular order: Weak (and strong) US data (good or bad news?), War, Taper (Treasuries 'special'), Debt Ceiling, German elections, New Fed Chairman, imploding developing markets and collapsing global currencies... (S&P 500's first close <100DMA in 2013) it is on... (oh and S&P 500 futures 2nd biggest volume day in 2 months)
We can't wait to hear Bob Pisani explain this one... JPY weakness continues this morning (now -2% on the week) but early in the European day (around the time of the German confidence survey), carry-traders rotated greatly into peripheral European debt and out of US Treasuries and US equities... US equities accelerated lower in the last few minutes following the Business Inventories print.
"You can't go up forever," noted Bob Pisani before piling on a series of excuses for the recent 'weakness' that quite frankly could have been used at any 1.1% drop in stocks of the last 3 years... While stocks bounced off lows today and are making the headlines for a third down day for the first time in 2 months, the real story that most are ignoring is the surge in the JPY. The USD is legging lower confusing the 'Taper' chatter but it is the JPY strength that is dominating (up 3.6% against the USD in the last 4 days (and the Nikkei futures -800 from Friday's highs). Treasuries rallied 3-4bps (and the curve flattened) as it seems the modest weakness in stocks is being met with some safe-haven demand. Despite bonds' bid, Homebuilders were battered (-4.5% on the week). Gold and silver strengthened off pre-open lows as WTI fell back to around $104. VIX spiked to 13.9% at the open but ended around 13% at the close. Back to CNBC for the close: "off the lows," but not in credit Maria...
It started moments after the release of the Federal Reserve’s latest decision on interest rates. Even though officially they announced maintaining the same policies of low rates and Quantitative Easing, it was a single word change in the official text of their press release from the prior month that sent shockwaves around the world and changed everything forever...
Equity markets were very much in a land of their own relative to broad risk asset classes all day until the FT's Harding "mo' Taper" memo hit and slammed reality back into the herding masses. Still convinced that the Fed will 'only' taper if the data confirms it, we suspect the broad market is missing the signals from broken markets and frothy levels that mean the Fed will use the modest improvements as a crutch upon which to jawbone tapering into our minds. Today's price action was - in the words of the great Bob Pisani, "just silly." A ramp out of the gate following Japan's lead which followed a Hilsenrath-inspired ramp-job from Friday combined with a beat for NAHB (and Empire Fed) sent all the high-beta into overdrive (builders +2.2%) - but nothing else was really moving (FX was relatively flat, bonds went sideways, commodities wriggled in a small range). The Harding hit and we gave back all the post-Hilsenrath gains, 330-ramped to VWAP and held it magically into the close (though the USD ended at its lows of the day, bond yields at their highs, and credit markets at their lows).
In a masterclass of what is 'really' going on in the world (as opposed to what we are told/spoon-fed on a daily basis), Grant Williams (of Things That Make You Go Hhhmm infamy) provides a must-watch presentation. Starting from the premise (unusual in this day and age) that the laws of mathematics are inviolable ("if it makes no sense, it is nonsense"), the Aussie investment manager sets out his own set of philosophical 'problems' that the world of 'markets' seems incapable of grasping. In a chart-filled extravaganza, Williams ranges from "Problem 1: If the global economy is stalling, Europe is in recession, China is slowing and growth is seemingly impossible to generate, what are equity markets doing at all-time highs?" to "Problem 7: The Gold Price and The Price of Gold are mutually exclusive" leaving the participant questioning everything Bob Pisani would have us believe warning in conclusion that gold is critical and "beware suppressed volatility."
Cyprus Now Set To Vote Against Bailout, Ruling Party To Abstain Guaranteeing Failure To Ratify "Bail-In"Submitted by Tyler Durden on 03/19/2013 10:56 -0500
It appears that Cyprus is now ready to escalate, following news now coming fast and furious, that the Parliament will go ahead and vote after all, but not in a good way as even the Cypriot ruling party, formerly the only party willing to vote Yes on the Bail-In, would abstain according to Dow Jones, which means there is no support at all in the Cypriot parliament for the deposit haircut proposal.
We can only pray that Bob Pisani explains what happens next because neither we, nor anyone else, has any idea what comes now.
"Whether its cash, gold, or digital-data bits, we all know that money makes the world go round; but what that money is worth depends on trust." In this fascinating documentary, National Geographic Channel takes you inside the heart of the money machine to places that you're not allowed to bring a camera (unless you're a blind-folded Bob Pisani)... straight into some of the world's largest vaults. America's Money Vault follows 55 million dollars worth of gold as it makes its way down into the most valuable gold vault in the world. Hidden deep under the streets of New York City, hundreds of billion dollars in gold bars - the wealth of nations - are tucked away in a bunker that is anchored to the bedrock of Manhattan Island itself. Following this introduction, tomorrow, we will reveal much more on the world's biggest vault.
While UBS' Art Cashin sees the 'uptrend' in stocks as largely in tact, though warns of the start of what appears to be a stalling formation, there is another 'bigger' potential crash on his mind. Having survived the Mayan apocalypse, and a Papal resignation, our home planet is due for a record setting space encounter on Friday (Feb. 15) of this week... which means it is now too late to even send Bruce Willis (or better yet, Bob Pisani) into space for an Armageddon sequel. We are told to keep calm and carry on - Bernanke-like "there is nothing to worry about", but no known asteroid has traveled this close to earth in recorded history. Let's hope the slide rule guys have it nailed - or the grand central planner.
Over the past few weeks, virtually all of the empty chatterboxes on financial comedy TV have been repeating ad infinitum just how much cheaper the market now is compared to its prior peak in 2007 because, get this, it trades at "only" a 15x multiple compared to the 18x or so reached at its peak in 2007. By doing so these same hollow pundits simply confirm just how painfully clueless their cheerleading is, as the market, or what's left of it in the "new Bernanke centrally-planned abnormal", never trades on current earnings but always future discounted EPS, or in other words, forward P/E, or any other valuation, multiples. And it is when one looks at the future on an apples to apples basis, that the market now is more expensive than it was back in 2007!
Six years ago today, with the S&P 500 around 1460 - having risen 20% without a correction for seven months - a handful of Wall Street's best and brightest joined CNBC's Larry Kudlow and Bob Pisani to discuss the Goldilocks economy, why the bears are wrong, and where the market is going next. Sometimes, we just need a reminder to snap us out of that recency bias... for example, Bob Pisani: "We have got a global rally going on... and the important thing is... there's a floor to the market - every time, for the last seven months, they sell the market down for 2 days, it comes right back... When you are in a global expansion like this, to sell...is foolish."
The S&P 500 P/E ratio is testing 15x - its highest in 19 months. This takes the stock market's valuation back to its highest since the debt-ceiling debacle and USAAA downgrade (as if nothing ever happened). Since that time, expectations for GDP growth in 2013 has plunged from 3.2% to a measly 2.0%. The 'Market of Dreams' economy continues as Bernanke's "If you BTFD, we will recover" is the only mantra left. Was it only August 2007 that Bob Pisani was reminding us all that: "improved policies on the part of those steering the economy are the likely reason we have avoided recessions."