Momentum Chasing

"Everyone's On The Same Side Of The Boat Again" - Hedge Funds Have Never Been More "All-In"

Since February, "nothing else matters" but the $200 billion or so per month of central bank money printing and asset purchasing. Correlations across asset classes are at or near record highs (putting risk parity funds in grave danger) with global bond yields at record lows and stock prices at record highs. However, as one veteran trader exclaimed, "they all on the same side of the boat again," pointing to the record speculative long positioning in US equities and record speculative shorts in VIX... a situation, he says, "can only end in catastrophe."

"Run For Cover If You’re Short" Gartman Pleads One Day After Saying "2,025 Is A Given"

"Anybody who's short - and there are a lot of smart people who are in fact heavily short - they have to run for cover, and I think it could get ugly.  In our account here, we quite literally were grasping for almost anything we could to reverse our position. Covering… or actually greatly reducing… our short position in the derivatives market was the first course of action.... We’ve learned over the years that when such things occur it is better to “shoot first and ask questions later."

Why Silicon Valley’s “It’s Different This Time” Is Now A Broken Record

Like a broken record whenever a profit measure was asked of “Silicon Valley” (i.e., everything social or tech) as to when something would either be profitable or, begin returning investor cash with either net profits or dividends. The response was always the same “It’s different this time.” Meaning: there aren’t any now, but just you wait! Some are still waiting, and waiting, and waiting, and….

The Endless Emergency - Why It's Always ZIRP Time In The Casino

In a word, the official unemployment rate is now in what has been the macroeconomic end zone for the past 45 years. Might this suggest that the emergency is over and done? Self-evidently, the only “incoming” information that can matter between now and next Wednesday is the stock market averages.  If the Fed takes no action in September, it’s hard to imagine any economic or jobs report that wouldn’t support ZIRP or near-ZIRP in the minds of the money printers and the Wall Street gamblers they pleasure.

Why Apple Is Falling Again: Bank of America Cuts AAPL From Buy To Neutral, Lowers Price Target

Curious why after its massive drubbing yesterday, which led to the second highest volume day for AAPL stock in 2015, the phone market is down another 1.3% this morning? The reason: Wall Street's momentum chasing penguins have re-emerged, and moments ago Bank of America, right on time as in just after the stock broke its 200 DMA and entered a correction, decided to downgrade AAPL from Buy to Neutral, lowering its price target from $142 to $130.

"This Is The Largest Financial Departure From Reality In Human History"

We have lived through a credit hyper-expansion for the record books, with an unprecedented generation of excess claims to underlying real wealth. In doing so we have created the largest financial departure from reality in human history. Bubbles are not new – humanity has experienced them periodically going all the way back to antiquity – but the novel aspect of this one, apart from its scale, is its occurrence at a point when we have reached or are reaching so many limits on a global scale. The retrenchment we are about to experience as this bubble bursts is also set to be unprecedented, given that the scale of a bust is predictably proportionate to the scale of the excesses during the boom that precedes it. Deflation and depression are mutually reinforcing, meaning the downward spiral will continue for many years. China is the biggest domino about to fall, and from a great height as well, threatening to flatten everything in its path on the way down. This is the beginning of a New World Disorder…

Futures Slump As Asian Stock Bubble Calls A Timeout

Judging by the recent action in equity futures, the continuously rangebound US market since the end of QE may be entering its latest downphase, catalyzed to a big extent by the recent strength in the JPY (the EURJPY traded down to 2 year lows overnight), especially following yesterday's not one but two statements by Abe advisor Harada saying a USDJPY at 125 isn't "justified" and a 105 level would be appropriate. A level, incidentally, which would push the Nikkei lower by about 20% and crush Japanese pensions which are now mostly invested in stocks. Not helping matters was the pause in the Chinese and Hang Seng stock bubbles, with the former barely rising 0.3%, while the former actually seeing its first 1.6% decline after many days of torrid, relentless rises.

Hedge Funds Most Long The S&P500, Most Short The 10 Year In Six Months, Still Long Crude

We doubt anyone will find it one bit surprising that as Bank of America observes in its latest weekly hedge fund monitor, "S&P500 longs increase to six month high" with all equities bought. And alongside that, and confirming that the short squeeze in the Treasury market will continue indefinitely, "10-yr contracts were sold at a strong pace to increase net short positioning to largest in six months." Why? Because that imminent economic recovery which everyone has been betting on since the second half of 2013 is just not coming, seasonally adjusted low-paying temp, retail, teacher and secretary jobs notwithstanding.

Hugh Hendry: "I Believe Central Bankers Are Terrified"

"My premise hasn’t really changed since I published my paper explaining why I had become more constructive towards risk assets this time last year. That is to say, the structural deficiency of global demand continues to radicalise the central banking community. I believe they are terrified: the system is so leveraged and vulnerable to potentially systemic price reversals that the monetary authorities find themselves beholden to long only investors and obliged to support asset prices. However, I clearly confused everyone with my choice of language. What I should have said is that investors are perhaps misconstruing rising equity prices as a traditional bull market spurred on by revenue and earnings growth, and becoming fearful of a reversal, when instead the persistent upwards drift in stock markets is more a reflection of the steady erosion of the soundness of the global monetary system and therefore the rise in stock prices is something that is likely to prevail for some time."

Futures Flat With All Eyes On ECB's Mario Draghi, Who Will Promise Much And "Probably Do Nothing"

With last night's latest Japanese flash crash firmly forgotten until the next time the trapdoor trade springs open and swallows a whole lot of momentum chasing Virtu vacuum tubes, it is time to look from east to west, Frankfurt to be precise, where in 45 minutes the ECB may or may not say something of importance. As Deutsche Bank comments, "Today is the most important day since.... well the last important day as the ECB hosts its widely anticipated monthly meeting." Whilst not many expect concrete action, the success will be judged on how much Draghi hints at much more future action whilst actually probably doing nothing.

NATO Accuses Russia Of Escalating Ukraine Conflict, Demands Withdrawal Of Russian Troops From Border

"Remember when"... US futures soared by over 60 point in 5 trading days on what was the tiniest hint that Putin may be de-escalating based on a Russian media report citing the Russian security council? Well, NATO disagrees with the momentum chasing algos, and this odd spin coming out of Russia. Moments ago NATO said that Russia, while calling for de-escalation of the Ukraine conflict, had in fact been escalating it.