New York Stock Exchange
As we noted here, October 2013 NYSE margin debt stood at a new record high of $412.5b (up from $401.2b in September) and exceeded the prior high from April of $384.4b and net investor worth dropped to a record low. However, as BofAML notes, NYSE margin debt and the S&P 500 have +0.76 correlation using a 48-month (4-year) correlation as of October 2013. This is the highest correlation in our data history back to 1964. A positive correlation means that margin debt and the S&P 500 tend to move together; which as they helpfully note means - as long as the market rises, margin debt is not a risk. Better keep BTFATHing, it's the patriotic thing to do.
Unfortunately for Bill Ackman, another leg of the "short Herbalife to the grave" thesis just broke when a Belgian Appeal Court hearing overturned its previous findings:
- *HERBALIFE 'WELCOMES' JUDGEMENT BY BELGIAN APPEAL COURT
- *HLF CITES CLAIMS THAT HLF WAS OPERATING A PYRAMID SCHEME
- *HERBALIFE SAYS COURT STATES ITS SALES MODEL IN FULL COMPLIANCE
The stock is up 5% on the news, breaking to a new record high above $75.
With the "inmates in charge of the asylum" during this holiday shortened trading week it seemed to be an apropriate opportunity to share a virtual cornucopia of topics to consider while enjoying the delicious delicacies, and subsequent tryptophan induced comas, of a traditional Thanksgiving.
- CME/CBOT/NYMEX Closed
- CME Globex -
- Equity products halted (halted between 1030CST/1630GMT and 1700CST/2300GMT);
- Interest Rate Products halted (halted between 1200CST/1800GMT and 1700CST/2300GMT);
- FX halted (halted between 1200CST/1800GMT and 1700CST/2300GMT)
- NYMEX and Comex halted (halted between 1215CST/1815GMT and 1700CST/2300GMT)
- NYSE Closed
- NYSE LIFFE Regular Close
- Eurex Regular Close
The correlation between stock prices and margin debt continues to rise (to new records of exuberant "Fed's got our backs" hope) as NYSE member margin balances surge to new record highs. Relative to the NYSE Composite, this is the most "leveraged' investors have been since the absolute peak in Feb 2000. What is more worrisome, or perhaps not, is the ongoing collapse in investor net worth - defined as total free credit in margin accounts less total margin debt - which has hit what appears to be all-time lows (i.e. there's less left than ever before) which as we noted previously raised a "red flag" with Deutsche Bank. Relative to the 'economy' margin debt has only been higher at the very peak in 2000 and 2007 and was never sustained at this level for more than 2 months. Sounds like a perfect time to BTFATH...
Is it just coincidence that Twitter is being Baumgartnered and both the NYSE (stock) and BATS (options) markets have now broken!
This is just farcical now...
Even as the Dot-Com 2.0 exasperates to new highs, it seems Twitter - the darling of the no-profit-but-lots-of-hype recent IPOs - is losing its lustre. TWTR is down 4% today to new lows post-IPO. The catalyst for this latest slump appears to be a WSJ article about "fake accounts" - whocouldanode? Of course, it wouldn't be the new normal markets without an exchange 'breaking'... The NYSE and NYSE MKT cash equities markets is working to resolve an issue with customer connectivity.
- Wonder why: JPMorgan plans to keep pay roughly flat from last year (Reuters) - maybe this: Charles Schwab Warns "We Are In A Manipulated Market"
- Democrats overturn filibuster rule, increasing Obama’s power (FT)
- Day JFK Died We Traded Through Tears as NYSE Shut (BBG)
- When even dictators snub Obama - Afghanistan rejects U.S. call for quick security deal (Reuters)
- Obama Plunges in Investor Poll as Stocks Make New Highs (BBG)
- Iran, six powers struggle to overcome snags in nuclear talks (Reuters)
- Derision for China’s ‘rejuvenation index’ (FT)
- Bottom is in: Paulson Said to Inform Clients He Won’t Add More to Gold (BBG)
- German business sentiment rebounds strongly (WSJ)
- WTO on verge of global trade pact (FT)
Farewell Mareeaah. The Money Honey who epitomized CNBC in its high flying (pardon the pun) years when it was actually a source of useful information, has just marked the nadir of the TV station which in the past five years rebranded itself stock market propaganda central, and whose viewership plunged appropriately to a 20 year low as we recently reported. As Drudge reports, Bartiromo whose contact is up, is moving to Fox Business. From Drudge: "DRUDGE has learned that Maria Bartiromo is jumping to FOX BUSINESS NETWORK with an announcement expected sometime soon. Sources close to the situation say there have been ongoing conversations throughout the Fall. The new deal calls for Bartiromo to anchor a daily market hours program on FOX BUSINESS. Insiders say there will be a role on FOXNEWS as well."
- What can possibly go wrong: Tepco Successfully Removes First Nuclear Fuel Rods at Fukushima (BBG)
- Japan's Banks Find It Hard to Lend Easy Money (WSJ)
- U.S. Military Eyes Cut to Pay, Benefits (WSJ)
- Airbus to Boeing Cash In on Desert Outpost Made Field of Dreams (BBG); Dubai Air Show: Boeing leads order books race (BBG)
- Sony sells 1 million PlayStation 4 units in first 24 hours (Reuters)
- Russian Tycoon Prokhorov to Buy Kerimov's Uralkali Stake (WSJ)
- Google Opening Showrooms to Show Off Gadgets for Holidays (BBG)
- Need. Moar. Prop. Trading: Federal Reserve considering a delay to Volcker rule (FT)
- Raghuram Rajan plans ‘dramatic remaking’ of India’s banking system (FT)
- SAC Capital's Steinberg faces insider trading trial (Reuters)
Just a lucky coincidence?
The overnight global scramble to buy stocks, any stocks, anywhere, continued, with the Nikkei soaring higher by 2% as the USDJPY rose firmly over 100, to levels not seen since May as the previously reported speculation that more QE from the BOJ is just around the corner takes a firm hold. Sentiment that the liquidity bonanza would accelerate around the world (with possibly more QE from the ECB) was undented by news of a surge in Chinese short-term money market rates or the Moody's one-notch downgrade of four TBTF banks on Federal support review. The release of more market-friendly promises from China only added fuel to the fire and as a result S&P futures are now just shy of 1800, a level which will almost certainly be taken out today as the multiple expansion ramp continues unabated. At this point absolutely nobody is even remotely considering standing in front of the centrally-planned liquidity juggernaut that has made "market" down days a thing of the past.
We have seen a confluence of events that suggests we may be reaching the terminal point of the financial markets merry-go-round – that point just before the ride stops suddenly and unexpectedly and the passengers are thrown from their seats. Having waited with increasing concern to see what might transpire from the gridlocked US political system, the market was rewarded with a few more months’ grace before the next agonising debate about raising the US debt ceiling. There was widespread relief, if not outright jubilation. Stock markets rose, in some cases to all-time highs. But let there be no misunderstanding on this point: the US administration is hopelessly bankrupt. (As are those of the UK, most of western Europe, and Japan.) The market preferred to sit tight on the ride, for the time being.
Congratulations to our new managing directors, http://t.co/gqrsGKrKvY
— Goldman Sachs (@GoldmanSachs) November 13, 2013
"Frustrated" Liquidity Addicts Demand Moar From BOJ As Nikkei Rally Stalls, Abenomics Founders And "Hope Fades"Submitted by Tyler Durden on 11/13/2013 10:25 -0400
While the only topic of discussion for "sophisticated" investors everywhere is when (and if) the Fed will ever dare to reduce its monthly flow injection into US markets from $85 billion to a paltry $75 billion, everyone has forgotten that across the Pacific, for the past seven months the BOJ has been calmly injecting another $75 billion each and every month into the market, with no risk of this liquidity boost ever being tapered (since the broad 2% inflation target relies on ever broader wage increases that will never come). However, much to Japan's chagrin, in the current insta-globally fungible capital markets, over the past five months the bulk of this liquidity has found its way to the US stock bubble, leaving the Nikkei in the dust. As a result, the local Japanese liquidity junkies have started to loudly complain once again, and now the FT reports that "as excitement over the world’s second-biggest stock market has faded, some are now crying out for another jump-start." In other words: the BOJ must do "moar" to push the Nikkei bubble even higher following its rangebound trade since May which, worst of all, is now the primary reason why "hope is fading."