UPDATE: *FIRST TSUNAMI WAVES REACH CHILE COAST, RADIO COOPERATIVA SAYS
At shortly after 1945ET, a massive 8.2 (revised up from 8.0) earthquake hit close to the coast of Chile:
*MAGNITUDE 8.0 QUAKE HITS OFF COAST OF CHILE, USGS REPORTS
*CHILE QUAKE MAGNITUDE REVISED UP FROM 8.0 TO 8.2 BY USGS
*FLASH: TSUNAMI WARNING ISSUED AFTER MAGNITUDE 8.0 QUAKE HITS OFF
*QUAKE CUTS ELECTRICITY SUPPLY TO MUCH OF ARICA, CHILE: TVN
The BBC reports the quake was shallow (which means it felt more powerful) and the tsunami wave's arrival is imminent. Copper prices are jumping on the news as the region is an active mining area.
Japanese data (double) miss, check! Chinese data miss, check! US data miss, check! Investor trust in US equity at record lows, check! All-time record highs for US equities - you betcha! Stocks broadly pumped and dumped once again today but the start-of-the-month exuberance over April's seasonality was enough to leave gains that accelerated into the close as the long-bond sold off and short-end rallied (biggest 2-day steepening in 5 months). USDJPY was in charge for much of the day but when it went limp in the last hour, it was VIX-clubbing time (to 10-week lows ahead of the ECB and NFP?) Oil prices slumped intraday (back below $100) as gold slipped but copper and silver flatlined. Wondering what fueled today's panic buying spree? "Most shorted" stocks tripled the market's performance on the day...
For those used to smooth, undisturbed, Fed-assisted, no-risk-all-return, sailing, both the month of March and the entire first quarter were quite the wake up call.
Among the key overnight events was the February Euro area unemployment report, which was unchanged at 11.9%, lower than the 12% median estimate; in Italy it rose to a record 13% while in Germany the locally defined jobless rate for March stayed at the lowest in at least two decades Euro zone PMI held at 53 in February, unchanged from January and matching median estimate in a Bloomberg survey HSBC/Markit’s China PMI fell to 48 in March, the lowest reading since July, from 48.5 in February; a separate PMI from the government, with a larger sample size, was at 50.3 from 50.2 the previous month NATO foreign ministers meet today to discuss their next steps after Putin began withdrawing forces stationed on Ukraine’s border Gazprom raised prices for Ukraine 44% after a discount deal expired, heaping financial pressure on the government in Kiev as it negotiates international bailouts.
The stock market really was rigged... “It’s 2009,” Katsuyama says. “This had been happening to me for almost two years. There’s no way I’m the first guy to have figured this out. So what happened to everyone else?” The question seemed to answer itself: Anyone who understood the problem was making money off it...
Value stocks handily outperformed Growth stocks by the end of Q1 but the window-dressing pump of the last 2 days rescued all but the blue-chip Dow from ending the quarter in the red. This is the worst quarterly performance for stocks since 2012. Despite disconnects all over the place today, stocks managed to hold onto gains today. Thanks to some dovosh comments by Yellen (that apparently "some time" is interpreted as more than 6 months), bonds and stocks ripped today leaving long-bonds best quarter since Q2 2012. Gold is the best performing asset of the quarter and HY bonds worst as the USD ended unchanged.
After ramping in overnight trading, following the spike in Japanese stocks following another batch of disappointing economic data out of the land of the rising sun and setting Abenomics which sent the USDJPY, and its derivative Nikkei225 surging, US equity futures have pared some of the gains in what now appears a daily phenomenon. Keep in mind, the pattern over the past 6 consecutive days has been to ramp stocks into the US open, followed by a determined fade all the way into the close, led by "growthy" stocks and what appears to be an ongoing unwind of a hedge fund basket by one or more entities. Could the entire market be pushed lower because one fund is unwinding (or liquidiating)? Normally we would say no, but with liquidity as non-existant as it is right now, nothing would surprise us any more.
'Growth' continues to underperform 'Value' as once again today's early gains - used by many to indicate that the worst is over - were decimated rather quickly especially in the Biotechs (new cycle lows) and momos (NFLX & FB ugly). KING's failed IPO persists (-4% today) and now down over 17% from its IPO day highs. The S&P held miraculously above the red-line year-to-date but Nasdaq, and Russell joined the Dow in negative territory as growth is now underperforming for the year. The USD index ended the week unchanged (with weakness in JPY offset by strength in AUD and CAD) but the JPY-carry trade decoupled from stocks in the late-day today rather ominously. Bonds flattened on the week (30y -6bps, 5Y +3.5bps) with some profit-taking on flatteners today. 'Growth' commodities rallied with oil and copper up 2 and 3% respectively as PMs dropped 3% as Emerging Markets had their best week in almost 7 months.
Presented with little comment aside to ask... sustainable? Every string will be pulled today to ensure that the S&P 500 closes in the green for Q1, this is just the beginning salvo...
Over the past month, we have explained in detail not only how the Chinese credit collapse and massive carry unwind will look like in theory, but shown various instances how, in practice, the world's greatest debt bubble is starting to burst. One thing we have not commented on was how actual trade pathways - far more critical to offshore counterparts than merely credit tremors within the mainland - would be impacted once the nascent liquidity crisis spread. Today, we find the answer courtesy of the WSJ which reports that for the first time in the current Chinese liquidity crunch, Chinese importers, for now just those of soybeans and rubber but soon most other products, "are backing out of deals, adding to a wide range of evidence showing rising financial stress in the world's second-biggest economy."
The major US equity indices all pushed into negative YTD territory today in yet another pump-dump-and-small-ramp deja vu day. Early strength gave way quicker today as Biotechs bounced off an early dump (but closed back below their 100DMA for 2nd day - first time in 18 months), momo names were crushed (down 10-14% post-FOMC), Citi was banged over 5% (on extremely heavy volume post CCAR), and the NASDAQ tested down (and bounced off) its 100DMA. Treasuries were mixed once again with bear-flattening the dominant theme. The USD ended the day unch on the week with EUR weakness offset by CAD and GBP strength. AUDJPY was in chgarge of stocks most of the day-session. Copper and oil improved as gold and silver slipped more (though bounced at the close). Late-day JPY pump, VIX dump rescued the S&P back to +0.03% return for 2014.
For the 5th day in a row, US equities have levitated in the pre-open and faded away quickly soon after. Today is different though in 2 ways: the pump was de minimus and the dump is early. It seems the initial claims good news is indeed bad news for stock investors. Treasuries continue to bear flatten once again as 30Y is rallying and 5Y selling off further; gold is steady at around $1300 and the USD is rallying modestly. Copper and oil prices are rising. European stocks are also faltering with DAX giving up all its early gains.
After tumbling overnight to just around 101.80, the USDJPY managed to stage a remarkable levitating comeback, rising all the way to 102.3, which in turn succeeded in closing the Nikkei 225 at the highs, up 1% after tumbling in early trade. The Shanghai Composite was not quite as lucky and as fear continue to weigh about a collapse in China's credit pipeline, the SHCOMP was down more than 0.8% while the PBOC withdreww even more net liquidity via repos than it did last week, at CNY 98 billion vs CNY 48 billion. That said, this morning will be the fifth consecutive overnight levitation in futures, which likely will once more surge right into the US market open to intraday highs, at which point slowy at first, then rapidly, fade again as the pattern has seemingly been set into algo random access memory. Which in a market devoid of human traders is all that matters.
With copper, iron-ore, soybeans, and nickel all tough to carry when you need liquidity from your commodity-financing deals; it appears the Chinese people have turned to more spectaculr methods of moving 'wealth'. As The South China Morning Post reports, just week after a man was stopped at the China-Hong-Kong border with 4 kilograms of gold in his shoes, customs officers caught a man smuggling more than 7000 diamonds in plastic bags in his underwear. The tell, officers noticed he was walking in a pculair manner.
30Y yields are now over 10bps below post-Yellen spike highs as growth-hope-driven US equities were monkey-hammered in another pump-and-dump deja vu day - with one difference - no late-day bounce to provide solace for the bulls. The Nasdaq and Russell 2000 are down over 3.5% from Yellen; Biotechs broke to new lows (down over 14% and below the 100DMA); momo names were slammed (FB) as King IPO's and lost over 15% on the day. The Nasdaq and Russell have joined the Dow in the red year-to-date, S&P and Trannies barely positive. The USD lost ground on the day after early strength. Gold, silver, and copper fell notably. VIX jumped from 2-month lows to back over 15%. USDJPY was sin charge all day - and broke below the key 102 level into the close.