Well that escalated quickly...
Unfortunately there is not enough macro data for the algos to consider bad enough to be good today...
Once upon a time businesses borrowed long term money - if they borrowed at all - in order to fund plant, equipment and other long-lived productive assets. Today American businesses are borrowing like never before - to fund financial engineering maneuvers such as stock buybacks, M&A and LBOs, not the acquisition of productive assets that can actually fuel future output and productivity.
Let’s see. The Eccles Building has grown its balance sheet by 9X since the turn of the century, but real net investment in the business sector has plunged by 33%!
The trouble with the money printing madness in the Eccles Building is that it generates huge deformations, misallocations and speculative excesses in the financial markets. Eventually these bubbles splatter, as they have twice this century. The resulting carnage, needless to say, is not small. Combined financial and real estate asset markdowns totaled about $7 trillion after the dotcom bust and $15 trillion during the 2008-2009 financial crisis. The Wall Street casino is now festooned with giant deadweight losses waiting to happen. But perhaps none is more egregious than Tesla - a crony capitalist con job that has long been insolvent, and has survived only by dint of prodigious taxpayer subsidies and billions of free money from the Fed’s Wall Street casino.
While "sources" have yet to confirm anything about an extension for Greece (and some have actually denied it - Italy's Padoan "hasn't seen any plan yet"), US Treasury yields are rising (10Y back above 2.00%), and risk assets rallying in Europe and US. Greek stocks are up over 7% today (taking them up 2% on the week) but Greek bank bonds remain lower on the week (despite today's rally). US equities are sceptically rallying on the back of USDJPY momo ignition, auctioned up to pre-payrolls stops.
Who could have seen that vertical USDJPY buying panic stock momo igniting move ahead of the US retail muppeteering open?
Next week, I'm tossing up the notion that the market will run up until Mario delivers his large pepperoni pizza pie on Thursday....... Hold the Greek olives, Italian sausage and Spanish onions!
Meet Emerge Energy Services: the poster boy for the “irrational exuberance” that has become institutionalized throughout the length and breadth of the Wall Street casino. Today’s Wall Street Journal story coming just five months after last summers potboiler is therefore not simply an update on a speculation gone horribly wrong. It’s actually a template for the deluge to come.
Greek stocks are down over 8% (and were worse) back to more than 2-year lows (as banking stocks are massacred) and 3Y bond yields are back over 12% (post-bailout highs) following Samaras' 3rd failed attempt to avoid a snap-election and all the GREXIT possibilities that brings. So, what happens next?
Well that escalated quickly... again. While credit markets were not buying the dead-cat-bounce in stocks and oil this morning (Energy HY >1000bps, HYCDX >400bps), financial media was cock-a-hoop... "the bottom is in." Well we have a new bottom. WTI Crude futures have tumbled back to the scene of the manipulative algo crime last night back below $57. European stocks are under pressure and are now once again negative year-to-date and US stocks have given up all the overnight and US opening exuberance gains - now red from Friday.