Equity Markets

Tyler Durden's picture

Buying Of Bonds And Stocks Continues In Event-Free Overnight Session





The complete implosion in volume and vol, not to mention bond yields continues, and appears to have spilled over into events newsflow where overnight virtually nothing happened, or at least such is the algos' complete disregard for any real time headlines that as bond yields dropped to fresh record lows in many countries and the US 10Y sliding to a 2.3% handle, confused US equity futures have recouped almost all their losses from yesterday despite a USDJPY carry trade which has once again dropped to the 101.5 level, and are set for new record highs. Perhaps they are just waiting for today's downward revision in Q1 GDP to a negative print before blasting off on their way to Jeremy Grantham's 2,200 bubble peak after which Bernanke's Frankenstein market will finally, mercifully die.

 
Tyler Durden's picture

"Euphoria"





Despite the constant clamor of money-on-the-sidelines (which Cliff Asness has summarily dismissed as being idiotic) and strength in US equity markets being 'the most unloved rally of all time', the following two charts suggest people are anything but unimpressed by it. Citi's Panic/Euphoria sentiment model has hovered in the clearly "euphoric" levels for a month and now the AAII Bull/Bear split is back near exuberant highs. Of course, as we noted yesterday, the real strength behind stocks is the incessant non-economic irrational and indiscriminate mystery buyer - corporate buybacks - that are creating their own mal-investment signaling exuberance in the always efficient stock 'markets'.

 
Tyler Durden's picture

Buy Stocks, Buy Bonds, Buy Quality, Buy Trash





It has gotten beyond ridiculous: a few short hours ago the yield on the 10 Year bond tumbled to a fresh low of 2.49% (and currently just off the lows at 2.50%), wiping out all of yesterday's "jump" on better than expected Durables and leading to renewed concerns about the terminal rate, deflation and how slow the US economy will truly grow. Amusingly, this happened just as US equity futures printed overnight highs. Doubly amusing: this also happened roughly at the same time as Spanish 10 Year yields dropped to a record low of 2.827%, or about 30 bps wider than the US (moments after Spain announced that loan creation in the country has once again resumed its downward trajectory and a tumble in retail deposits to levels not seen since 2008). Triply amusing: this also happened just about when Germany had yet another technically uncovered 30 Year Bund issuance, aka failed auction. So yes: nothing makes sense anymore which is precisely what one would expect in broken, rigged and centrally-planned markets (incidentally those scrambling to explain with events in bond world where one appears to buy bonds to hedge long equity exposure, are directed to the minute of the Japanese GPIF pension fund which announced it would buy junk-rated bonds to boost returns - good luck to Japanese pensioners).

 
Tyler Durden's picture

"Pop The Corks, She's Going Down, Boys"





"Of course, what that does imply is that when the skies finally do begin to darken, the winds could rapidly wind themselves up into an F5-scale twister. Low and declining volatility, lengthening durations, compressed spreads, high multiples, little FX movement – each feeding on the other – is it too far beyond the bounds of reason to suggest that once that virtuous cycle reaches its culmination, the torsional forces involved in its unwind could be remarkably violent?"

 
Tyler Durden's picture

Equity Melt Up Accelerates; Bonds Also Bid





The melt up is accelerating and with the momentum tailwind back, newsflow is once again irrelevant: any news that are even remotely good are trumpeted, and any bad news - such as Europe's right storm rising in the northern states, and left storm surge in the states that demand more handouts from the northern states or China sinking a Vietnamese boat, the most serious bilateral incident since 2007 - are once again (and as usual) nothing more than a catalyst for even more liquidity injections. End result: the S&P futures this morning are 5 points above Goldman's year end target of 1900 and 45 points away from its June 30, 2015 target. Can this breakneck scramble on zero volume continue until Grantham's bubble peak level of 2,200 is hit? Well of course: after all anything goes in the centrally-planned new normal.  To be sure, this is an equity only phenomenon: moments ago the Bund future hit its highest level since May 19, while the 10 Year remains unchanged at 2.53% as it continues to price in the new "deflationary" (and Japanese) normal. And as has been the case during all such divergences of late, either bonds or equities are making a horrible mistake: the question remains: who? Since all equities are doing is tracking FX pairs to the pip and have completely forgotten all about fundamentals, we have a pretty good idea what the answer is.

 

 
Capitalist Exploits's picture

Volatility is at Record Lows... How to Trade It!





We are witnessing implied volatility on all asset classes simply collapse to the lowest levels witnessed in 20 years, or at least the lowest levels achieved prior to the GFC in early 2007.

 
Tyler Durden's picture

VIX Hits 14-Month Low As Stocks Rally On Lowest Volume Of The Year





Another day, another melt-up on the lowest volume of the year and VIX collapse. The Dow and the Nasdaq almost made it back to unchanged for the year; The Dow almost made it back to unchanged for May; but as the S&P surged towards its record highs once again, "most shorted" stocks led the way with a massive squeeze (almost 4% in the last 2 days). VIX broke back below 12 once again trading at its lowest in 14 months. Equity markets decoupled notably once again from bonds. Treasury yields rose once again at the long-end (30Y +8bps on the week, 5Y -1bps) but the steepening trend stalled today. The USD rose today (+0.2% on the week) led JPY weakness. USDJPY was in charge of stocks with a correlation over 90% once again. Commodities all closed higher with WTI testing $104 again. HP's 'early' release of earnings appeared to take the shine off things into the close as VIX gapped higher back above 12 to close...

 
Tyler Durden's picture

Risk-On Euphoria From China Manufacturing Fizzles After Latest Round Of Disappointing European Data





The key news overnight were global manufacturing PMIs which can be summarized as follows: Japan contraction; China contraction, but less than expected (as reported before); and most recently, Europe which expanded but dropped and missed, at 52.5, down from 53.4 and below the consensus estimate of 53.2. The weakness was fully driven by France which has moved back into a contraction phase in both manufacturing and services, which were 49.3 and 49.2, down from 51.2 and 50.4, respectively (although with the recent surge in train station remodelling, the mfg aspect may soon be boosted). The market soaked up the Chinese numbers with fervor, sending the algo-controlled USDJPY into a buying frenzy which in turn pushed up US equity futures, only to see a gradual fade of the Chinese euphoria when the European data hit.

 
Tyler Durden's picture

27 Huge Red Flags For The U.S. Economy





If you believe that the U.S. economy is heading in the right direction, you really need to read this article. As we look toward the second half of 2014, there are economic red flags all over the place.

 
Tyler Durden's picture

Nikkei 14,000 Holds, Shanghai 2,000 Holds, But USDJPY 101 Breaks Bad





Another right of perfectly round number supports: while the Shanghai Composite once again dipped below 2000 overnight to as low as 1991 only to close modestly higher, and the Nikkei followed suit, also sliding below the psychological support level of 14,000 to an intraday low of 13,964 only to close just above 14,000 if in the red, it was the USDJPY that has suffered the most technical pain when shortly after 2:30 am eastern time, the USDJPY dropped by nearly 40 pips, hours after the BOJ indicated that not only is it happy with where in the QE process it stands, but hinted there may well be no more QE, and certainly nothing imminent . In the process, the USDJPY fully smashed the 200 DMA, with the next key parallel support being the 200DMA in the EURJPY at 138.08 (which was at 138.34 last). When that too gives way, it is a straight line to double digits in the USDJPY, and the countdown to the end of the Abe regime begins in earnest.

 
Tyler Durden's picture

Fed President Says It Is Fed's Fault Markets Ignore Fundamentals





Equity markets are not happy about the Fed's Charles Plosser's economic exuberance ("3% growth no matter the weather" which is 20% above consensus of 2.5%) and his 'good-news-bad-news' monetary policy hawkishness ("may need to raise rates sooner rather than later"). But perhaps the most crucial part of his speech this morning was what the headlines notably left out. Plosser admonished his global central bank brethren: "if central banks do not limit their interventionist strategies and focus on returning to more normal policymaking aimed at promoting price stability and long-term growth, then they will simply encourage the financial markets to ignore fundamentals and to focus instead on the next actions of the central bank." Simply put, he warned, "central bankers have become too sensitive and desirous of managing prices in the financial world.."

 
Tyler Durden's picture

Futures Taking Their Time Before The "Turbo Tuesday" Ramp





Not much going on tonight, except for the non-coupy martial law announcement in Thailand where the government is said to still be in charge of everything except for martial law decisions taken by the army of course, which in turn is in charge of everything else apparently including the central bank which intervened so extensively in the market, the Baht was barely changed at one point. There was also news of explosions and clashes in Benghazi but as everyone knows, what difference does Libya make at this, or any other, point. Additionally overnight there were reports that the cities of Slavyansk and Kramatorsk in east Ukraine were being shelled by the Ukraine army but that too barely registered as bullish for the USDJPY (which in now traditional fashion ramped during the US day session then sold off during Asia hours).

 
Tyler Durden's picture

How Fractional Reserves And Inflation Cause Economic Inequality





The economic system in which we live today is a crony capitalist system or, we might say, a system of money socialism. And that’s Piketty’s greatest error: to blame capitalism for the negative effects of crony capitalism and money socialism. But perhaps it is no error. Perhaps, he only wants to be loved by politicians and the IMF. I think they love him already, though.

 
Tyler Durden's picture

"Exceptional" - USA Is Number 1 In... Gambling Losses





Last week we highlighted just how "rigged" the casino really is (real casinos - as opposed to the equity markets) and while that was shocking, the USA can be proud of another exceptionalism... As The Economist notes, at $119 billion in 2013, the United States was the biggest gambling loser in the world. However, on a per capita basis, Australia and Singapore top the list.

 
Tyler Durden's picture

US Equity Markets Open To "Buying Panic" As Bonds Shrug





What are they so excited about? Bonds ain't buying it? JPY ain't buying it? It's not Tuesday... or maybe the machines smelled some stops that needed bleeding avove overnight highs...

 
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