Price Action

Stronger Dollar Sends Futures Higher, Oil Lower, Asian Stocks To Two Month Lows

Yesterday's weak dollar headfake has ended and overnight the USD rallied, while Asian stocks dropped to the lowest level in 7 weeks and crude oil fell as speculation returned that the Federal Reserve will raise interest rates as early as next month. The pound jumped and European stocks gained thanks to a weaker EUR.

Who Is Right Between Oil And Other Commodities: One Hedge Fund's Opinion

So far in May, base metals and Oil decoupled markedly. While the Oil price kept rising and moved closer to 50$, base metals fell off a cliff and descended below March lows.  We believe that Oil is the errant outlier, helped by deep but temporary supply outages in Canada and Nigeria and all-time record speculative flows, and is more likely to catch down to other commodities going forward rather than the other way round. We look at Oil gyrations as short-term heavy volatility, within a long-term downward trend.

Futures Rise As Fed Fears Subside; Global Stocks Rebound From Six Week Lows

It will be fitting, not to mention symmetric, if stocks which yesterday closed at 7 weeks lows and red for the year, end the week the same way they started it: with a rally on no news, just more hopes that oil (which as recently as two years ago none other than Chair Yellen said said would be be "unambiguously good" if lower) will continue rising. While US markets ended yesterday's trading on a sour note, that weakness has failed to spread to the rest of the world, and global shares rebounded from a six-week low as crude and commodity prices recovered, while the yen weakened on reduced demand for haven assets.

Global Stocks Slide, S&P Set To Open Red For The Year As Hawkish Fed Ignites "Risk Off"

After yesterday's algo-driven mad dash to close the S&P green both for the day and for the year following Fed minutes that came in shocking hawkish, the selling has continued overnight, led by the commodity complex as rate hike fears have pushed oil back down some 2% from yesterday's 7 month highs, which in turn has dragged global stocks lower to a six-week low, while pushing bond yields higher across developed nations as the market suddenly reprices the probability of a June/July rate hike.

Copper Slides To Three Month Low Despite Flat Futures, Oil; Dollar Rise Continues

After two violently volatile days in which the market soared (Monday) then promptly retraced all gains (Tuesday), the overnight session has been relatively calm with futures and oil both unchanged even as the BBG dollar index rose to the highest level since April 4. This took place despite a substantial amount of macro data from both Japan, where the GDP came well above the expected 0.3%, instead printing 1.7% annualized, which pushed stocks lower as it meant the probability of more BOJ interventions or a delay of the sales tax hike both dropped. Meanwhile, in China we got proof of the ongoing housing bubble when new property prices were reproted to have soared 12.4% Y/Y in April, which in turn pushed the local stock market to two month lows amid concerns the rampant housing bubble sector could divert funds from stocks. Yes, China is trading on the "risk" one bubble will burst another bubble.

Maybe You Should "Sell In May"

Should you “sell in May and go away?”  That decision is entirely up to you. There is never certainty in the market, but the deck this summer seems much more stacked than usual against investors who are taking on excessive equity based risk - throw into the mix ongoing high-valuations, uncertainty about what actions the Federal Reserve may take, ongoing geopolitical risks, concerns over China, potential for a stronger dollar or further weakness in oil – well, you get the idea. The question you really need to answer is whether the “reward” is really worth the “risk?”

This Is Goldman's Primer On The Most Critical Crude Oil Prices

While we are not sure if the market has finally had time to actually read Goldman's oil note from Sunday night (posted here at the same time) and understand that far from bullish Goldman actually warned that the market rebalancing is taking far longer and as a result is lowering its 2017 price targets, there was one additional curious highlight in the report: Goldman's breakdown of critical prices bands for oil which actually is a useful guide for how the broader market (if devoid of momentum-chasing algo traders) would respond with oil trading in any given price interval

Futures Fizzle After Oil Fades Bounce Above $48

It has been more of the same overnight, as global stocks piggybacked on the strong US close and rose despite the lack of good (or bad) macro news, propelled higher by the two usual suspects: a higher USDJPY and a even higher oil, if mostly early on in the trading session.

Oil Driller Hedges Soar To Five Year Highs

Oil producers and merchants increased their short position in WTI by 3.8% for the week ended May 10 to the highest since September 2011. As BLoomberg writes, "oil producers are taking advantage of the rebound in crude markets to lock in protection against another slump."  Energy companies from EOG Resources Corp. to Chesapeake Energy Corp. used financial instruments such as futures, swaps and collars to guard against another fall in prices. West Texas Intermediate oil, the benchmark U.S. crude, has gained more than 75 percent since hitting a 12-year low in mid-February.

Everyone Is Still Selling: Biggest Monthly Outflow From Global Stocks Since US Downgrade

One recurring question over the past few weeks has been "who is buying" stocks in a world in which not only the smart money, but everyone else too is selling. The latest Lipper data will not provide the answer because as BofA reports, in the latest week there was another $7.4bn in outflows (the 5th straight week) driven by $4.8bn in mutual fund outflows and $2.7bn ETF outflows, leading to a $44bn equity exodus past 5 weeks, which as Michael Hartnett points out is the "largest redemption period since Aug’11", or when the US downgrade sent US stocks into a bear market tailspin.

Bloody Start To Friday The 13th For Global Markets

Global stocks have started Friday the 13th on the wrong foot, with not only Hong Kong GDP unexpectedly tumbling by 0.4%, the worst print in years while retail sales fell for a thirteenth straight month in March, the longest stretch since 1999 as the Chinese hard landing spreads to the wealthy enclave, but also following a predicted collapse in Chinese new loan creation, which will reverberate not only in China but around the globe in the coming weeks. The latest overnight drop in the Yuan hinted that should the recent USD strength continue, China will have no choice but to repeat its devaluation from last summer and winter. 

Futures Halt Selloff, Levitate Higher On Another USDJPY Spike; Oil Rises

If yesterday's selloff had a specific catalyst, namely some of the worst consumer retail earnings seen in years, it merely undid the Tuesday rally which levitated global risk with no fundamental driver, aside for a 200 pip spike in the USDJPY.  Some central bankers may even say it was a "magical" levitation. Fast forward to the overnight session when following a muted Asian session, it was once again up to the "magical" USDJPY to send stocks well into the green without any actual catalyst whatsoever, but what merely appears to have been another "magical" intervention session by the BOJ.