"It wan't raining when Noah built the ark."
China will be a net buyer, and a net importer of physical gold for years to come. In and of itself that won’t necessarily cause a sharp rally in gold prices anytime soon, but gold acquisition from the Chinese state and her citizens, as well as emerging market central banks the world over will continue to provide support for the physical gold market. Those that have sold gold in the past few days (and there have been plenty in the ETF and futures markets) as a result of the “disappointing” number out of China may have just caused the capitulation event that typically marks the bottom of any bear market.
Well that escalated quickly...
While Amazon is up 17%, the Nasdaq party is being spoiled by the 17% collapse in Biogen following its aggressive guidance cut. As we noted previously, Biogen is the 4th most profitable biotech company and this 'scare' is weighing heavy on Janet Yellen's favorite short industry as the entire Biotech index is sliding.
Despite the glad-handing over Amazon's results, the rest of the world appears less than impressed with the state of the status quo. Bond yields continue to plummet with 30Y yields at 2.95% - its lowest since the start of June. Gold saw a double-flash-crash overnight but is bouncing back for now - back above the key $1080 level. The Dow and S&P have given up gains and are back in the red and even Nasdaq is fading fast as Biogen and Amazon battle it out to affect the index...
After yesterday's latest drop in stocks driven by "old economy" companies such as CAT, which sent the Dow Jones back to red for the year and the S&P fractionally unchanged, today has been a glaring example of the "new" vs "old" economy contrast, with futures propped up thanks to strong tech company earnings after the close, chief among which Amazon, which gained $40 billion in after hours trading and has now surpassed Walmart as the largest US retailer. As a result Brent crude is little changed near 2-wk low after disappointing Chinese manufacturing data fueled demand concerns, adding to bearish sentiment in an oversupplied mkt. WTI up ~26c, trimming losses after yday falling to lowest since March 31 to close in bear mkt. Both Brent and WTI are set for 4th consecutive week of declines; this is the longest losing streak for Brent since Jan., for WTI since March.
The real reason why retail investors weren't impacted by the NYSE's halt is a hard truth... to retail investors, the NYSE is always dark
Where Do Retail Investor Orders Go? The simple answer: to the highest contracted bidder. Stock "wholesalers" or internalizers like Citadel or Knight pay retail brokers lots of cash to execute retail trades, essentially creating a "third market". Why? Because in a high frequency trading world, where stock prices have never been more fuzzy to the end user, but crystal clear to those that spend enormous sums on colocation and PhD employees, it's never been easier to print money (not unlike Bernie Madoff's scheme in the 90's). But that is the subject of a much, much longer story. Someone should write a book.
We’ve spent the past few days in this space noting the recent thinning of the stock market advance. That is, despite the major averages continuing to hover near their 52-week highs, the internals are becoming uglier by the day. The main takeaway from this trend is that, should the relatively few areas of the market that are keeping it afloat begin to weaken, there will be precious little support left to prevent a significant correction. Indeed, we are beginning to see signs of deterioration now even among the stronger areas of the market.
A slow week devoid of virtually any macro news - last night the biggest weekly geopolitical event concluded as expected, when Greece voted to pass the bailout bill which "the government does not believe in" just so the ECB's ELA support for Greek depositors can continue - is slowly coming to a close, as is the busiest week of the second quarter earnings season which so far has been largely disappointing despite aggressive consensus estimate cuts, especially for some of the marquee names, and unlike Q1 when a quarterly drop in EPS was avoided in the last minute, this time we won't be so lucky, and the only question is on what side of -3.5% Y/Y change in EPS will the quarter end.
When we noted the stock market’s weak internals yesterday, we weren’t sure if things could get any worse – and by how much – with the major averages still able to hold near 52-week highs. Well, the answers were “yes” and “a lot”... yesterday, July 20, 2015, was the thinnest new high on record in the U.S. stock market.
Apple is expected to be the largest contributor to earnings growth for the Information Technology sector for Q2 2015. The blended earnings growth rate (combines actual results for companies that have reported and estimated results for companies yet to report) for the Information Technology sector is 0.2%. Exclude Apple, and the sector would report a year-over-year decline in earnings of 6.0%.
With ugliness in AAPL and MSFT, Nasdaq has gapped almost 2% lower at the open - its biggest drop since January... So what else would one expect but an algo-driven buying panic at the cash open...
While this week has been, and continues to be, devoid of macro updates, yesterday's flurry of mostly disappointing earnings releases both before and after the open, including some of the biggest DJIA companies as well as the current and previously biggest and most important companies in the world, AAPL and MSFT, both of which came crashing down following earnings and forecasts that were well short of market expectations, came as a jolt to a market that was artificially priced by central bank liquidity and HFT momo algos beyond perfection. Add to that yesterday's downward revision to historical industrial production which confirmed the US economy is a step away from recession, as well as last night's Crude API inventory build which is once again pressuring WTI lower and on the verge of a 49 handle, and perhaps the biggest question is why are futures not much lower.
Apple Plunges Despite EPS Beat On iPhone Sales Miss, Drop In China Sales, Weak Guidance And Strong Dollar WarningSubmitted by Tyler Durden on 07/21/2015 16:48 -0400
The company which was carrying the fate of not only the Dow Jones and the S&P 500 on its shoulders had taken the stairs up, and just took the elevator down.