• 03/29/2015 - 10:03
    Do our childish minds really think those whom we blindly empower will scurry away like cockroaches exposed by the refrigerator light and leave us be after the fall? Really? Are we serious?

OpEx

Tyler Durden's picture

Hilsen-Ramp Off In Credit And Bonds





Bond markets were slow to react to the Hilsenramp - forced by equities it seems in the short-range - but have now reversed their gains. Credit markets stopped believing about 30 minutes ago. Are equity markets, having trod water around VWAP for a while, now ready to revert back to a world absent the WSJ reporter... or primed for a melt-up into OPEX?

 
Tyler Durden's picture

The Soft Cost Curves Of Hard Assets: Where The Cash Flow Hits The Road





Given the dramatic drops in gold and oil prices over the past few trading sessions, we thought it worth examining which miners and oil producers were most 'at risk' of generating negative cash flows at current and long-term prices. Goldman Sachs looks at 40 oil producers and 25 gold mines to create a complete 'cost curve' in terms of the best indication of what it actually costs to keep operations running. It is quite apparent that ~$85 Crude and ~$1150 Gold are key to the ongoing support for these industries.

 
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Gold Rallies As Stocks Suffer Worst Day Of 2013





Following Europe's worst day in months, the US stock markets saw the biggest drop of 2013 today. For those shunning the brief period, aside from 12/28 swings, this is the worst drop in the S&P 500 futures since early November on a relatively high volume day. EUR's weakness was a major driver (just as it was on the way up) jawboned by various CEOs and leaders and pressured down to almost a 1.34 handle (down over 1% against the USD as JPY gained 0.6% against the USD). Treasury yields clattered lower - to Friday's lows - and credit markets remained much less exuberant (as stocks played catch-down). Gold was relatively bid even as the USD gained, testing up to $1675.  Homebuilders continue to slip lower and with AAPL's ongoing demise, there was no OPEX/month-end pump to save Tech and implicitly the rest of the market. HY Bond ETFs and synthetics remain weak but selling is thin in bond-land - it seems everyone knows that the cash market can't stand a herd heading for the exit all at once. VIX jumped a considerable 1.75 vols to 14.65% - its highest close of the year.

 
Tyler Durden's picture

Stocks End Green; AAPL Volume Obscene; Treasury/FX Volatility Unseen





Equities closed the day-session near the highs of the day as OPEX shenanigans were evident everywhere. Early and ugly macro data was swept under the proverbial carpet (as it is transitory Sandy effects?), the ubiquitous European-close trend reversal started us higher, and then platitudes from D.C., and a late-day Fed-Head jawbone did the rest on a day when AAPL saw its largest volume in 8 months and pinned between 520 and 530 VWAPs. Risk assets did not follow the path of most exuberance that stocks did on the day (surprise). Credit tracked with stocks today in general but remains an underperformer on the week. Oil was the week's big beta winner with the USD (despite underlying dispersion in EUR and JPY) and Treasuries rather dull. Gold sagged but by the close today the S&P 500 had recoupled with the barbarous relic on a beta basis. VIX compressed (exciting some that are incapable of comprehending a term structure) as put overlays were unwound into OPEX (and given the VWAP/volume moves it would seem AAPL saw hedges taken down and exposure reduced). Red week as stocks continue to catch down to bond's new normal.

 
Tyler Durden's picture

Pre-Open Equity Ramp As Algos Track War-Ridden Oil Higher





Each day we wake and look to the markets for guidance. Typically that guidance means - which easily-leveragable asset class can be pulled (or pushed) to move the US equity markets (in their algo-correlated manner) in which ever direction we need (up as much as possible obviously since the status quo requires it). Sometimes, it's EURUSD, other times it's PMs; today, it is oil's turn! There has been no real escalation in tensions in Israel in the last hour, no news of significance; and yet WTI has popped 1.5% and in an almost perfectly correlated manner, S&P futures have chugged along to the highs of the day to run those stops before the US day-session open. Efficient Markets... Pin Risk... OPEX...

 
Tyler Durden's picture

Low Range, Medium Volume, High Anxiety





Equity indices end the day marginally red as the machines tried every trick in the book to get markets up...(levering FX carry, spiking PMs, running HYG, spiking vol) to enable more selling - especially at the close when we saw notable size blocks being traded into that ramp to try and get green. VWAP was the anchor all day for S&P 500 futures (and since the synthetics are where the liquidity is - everything else followed) as stocks trend-reversed as normal on the EU close. In general volatility and high-yield credit had a significantly weak day but into the close managed to rise a little as risk-assets broadly recoupled with equity markets to close. Despite a lot of noise and chop stocks lost a little, Treasuries gained a little (-2bps on the week!), Silver scrambled back from its flash crash (but gold didn't do as well), and the USD ended today up a remarkably unchanged 0.04% (with EUR up 0.5% and JPY down 2.2% on the week). VIX ended back above 18% as AAPL just keeps falling with its 300DMA now in play.

 
Tyler Durden's picture

A Game Of Two Halves As Equities Tumble To Risk Reality





Leveraging EUR strength (USD weakness) in the US-open-to-EU-close to ramp stocks to highs was rapidly followed by a collapse back to reality in US equities from EU-close-to-US-close. Just remarkable. Treasuries and FX markets were much less exuberant over the entire lack of news that drive the S&P up over 20 points from open to EU close and sure enough - helped by the obvious desperation of a 'failed' Yellen-threat - equities retraced it all; ending the day back near the recent lows. Stocks once again tested the bottom of Draghi's Dream and rejected it; commodities were mixed and very dispersed with Copper and Silver swinging wildly (up on the day) even as the USD ended the day practically unchanged. Tech and financials are the losers still on the week as AAPL clawed its way back to marginally green by the close with the magical $545 level now critical four days in a row.

 
Tyler Durden's picture

From One Closing Ramp To Another





Presented with little comment - for any comment would simply end in ridicule and exasperation - but it seems quite clear that more than a few algos feel the need to keep S&P 500 futures above 1400 into the month-end and OPEX. S&P futures closed at 1411.25 (+3.75 from Friday's close).

 
Tyler Durden's picture

Winners Lose As Safety Outperforms





UPDATE: CAT is sliding AH after noting higher chance of recession and cuts 2015 EPS guidance from $15-20 to $12-18 - Slide attached

Following Friday's two-year high volume levels on the NYSE - as OPEX and rebalancing dominated - today saw reversion to the dismal mean in both cash and futures market volumes. It seems sell-the-news was the meme today as builders (LEN earnings exuberance) and AAPL (less than whisper sales) sold off and broadly speaking we saw the month/quarter's winners lagging as safety and stability lead the way.

 
Tyler Durden's picture

Gold And Silver Trump US Equities In Q3 And Year-To-Date





With the combination of a strong quarter (week or two) for stocks, futures rolls (and CDS yesterday) and the OPEX / index re-weighting it seems we had a modest case of small doors, large crowds into the close today (S&P futures end 1pt above FOMC-day close). Volume picked up dramatically (NYSE highest in a year) as the Dow closed lower on a Friday for the first time in nine weeks! Treasuries outperformed - ending near the low yields of the week (having retraced all the post-QE move - down 10-15bps on the week) but Gold remained relatively bid ($1775) and Oil also rose in the last couple of days. VIX was unch but noisy thanks to OPEX (and remember it's still at a high premium to realized vol - not entirely complacent). Credit underperformed as risk-assets in general led stocks lower. On the quarter, Silver was the big winner (up ~26%) followed by Gold (up ~11%) both beating all the major US equity indices.

 
Tyler Durden's picture

Markets Gone Wild





UPDATE: Denial: *WHITE HOUSE'S CARNEY SAYS `NO CHANGE' ON OIL RESERVES

Dismissing the ridiculous ignorance of calling the market action in the last few minutes a 'fat finger', it is clear that between no/low volume, 'banging the close in the pit', futures roll and ETF interactions, Oil's OPEX, SPR release rumors, and correlated vaccuum tubes, the reactions between US equities, oil (WTI and Brent), USD (and all major crosses), and the PMs are extremely volatile. No one knows what the 'news' is but one thing is for sure, its priced in - whatever it is. We just remind those 'trading' that with QEternity, all the good news 'help' is now out there - so what's left - jawboning Oil down. Treasuries are a littel jiggy but nothing remarkable.

 
Tyler Durden's picture

Blast From The Past: Netflix CEO, December 2010 - "Cover Your Short Position. Now"





On December 20, 2010, Netflix CEO Reed Hastings had one message to everyone who cared: "Cover Your Short Position. Now."

NFLX price then: $178.05...  NFLX price now: $55.40; Return: -71.20%. And they say CEOs know their companies best...

Thanks for the advice Reed. But we'll stick with our short. But hey, when the whole CEOing thing doesnt work for you, the ECB will surely hire you as it is in dire need of people who sound sophisticated, pretend they know what they are talking about just because they speak loud and with confidence, and write long-winded essays of windbaggery, that say nothing, and end up 100% wrong.

 
Tyler Durden's picture

The Three Charts Of The Corporate Apocalypse (Or Why Aren't Low Rates Working?)





Corporates are in relatively good financial shape and theory says should respond to high profits and cheap debt by investing more. However, while high 'profits' and low cost of debt are reasons for capex and opex to be rising more quickly than they are, these two critical drives of recovery show no signs of responding to these profit/debt incentives - and so as Citigroup notes "recovering is not booming". Top-down, compared to history, capex is low, following P/E's sentiment - especially in Europe (indicating a lack of confidence in the future). However, at the sector level this reverses: high capex has been given a low PE, while low capex has a high PE. The market is effectively encouraging companies to invest less and return more money. Longer term the consequences for economic growth, inflation and earnings growth are negative - as we trade (once again) short-term equity gain for long-term sustainable economic gain.

 
Tyler Durden's picture

Same Old Same Old As VIX Dips, EUR Rips, And Equities BTFDs





UPDATE: TXN misses and guides down:For the third quarter of 2012, TXN expects:
Revenue: $3.21 – 3.47 billion vs consensus Exp. of $3.53 billion,
Earnings per share: $0.34 – 0.42, vs consensus Exp is $0.43

VIX opened north of 20%, traded to 20.49%, and then it was decided that this level of premium over a recent calm realized vol period is too much and the front-end of the volatility market was crushed over 2 vols lower. While VIX closed up 2.3vols at 18.6%, the sell-off into Europe's close recovered handsomely on low volume leak back up to VWAP (thanks to HYG and VXX's stability) and then an afternoon push to last Monday's close before giving most of the afternoon gains back in a few mins after the cash close. The EUR dip-and-rip, the stick-save in the S&P whenever it tumbles with any kind of velocity, the fearless selling of short-dated vol, juxtaposes the general state of safe-haven seeking in Treasuries (and Swiss/German bonds) as the entire TSY curve saw record closing low yields amid a 3bps flattening at the long-end. Equity volume was meh, average trade size was meh - though as cash closed near day-session highs we saw heavy blocks selling, and ES traded between its 61.8% and 50% retracements of the March-to-June swoon. Broad risk assets did not play along with stocks this afternoon (though equities and gold recoupled) and neither did TRIN which remained very flat all day. The USD ended stronger by 0.2% (in line with EUR weakness) but SEK was the day's best major performer as AUD lagged (down 1% against the USD today). Volatility pulled plenty cheap to equities once again which remain notably more sanguine than credit and TSYs but the magic 1340 level in ES appears to be the line in the sand for now - though given a 10Y at 1.40%, do not expect NEW QE anytime soon - though Gold outperformed its peers on the day as WTI slid over 4% from Friday's close.

 
Tyler Durden's picture

The Elephant Also Rises: VIX Spikes Most In 8 Months





VIX is trading back above 20%, up over 4 vols this morning as its jump is the largest in over 8 months. This instant response to the ultra complacency we discussed last week, as 'they' take their totally dislocated foot off the neck of implied vol, has shifted the short-term volatility expectation from its calmest in almost four months to its most terrified in a month. Perhaps, just perhaps, the talking-heads who espouse this 'fear' index will finally realize its contemporaneous nature and treat it with the disdain it deserves. For now, it appears expectations of market turbulence - now that OPEX is out of the way - are reverting to more realistic levels of un-complacency.

 
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