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Which Market is Right?

SurlyTrader's picture




 

I find it rather entertaining when different markets are relaying very different messages.  The 10 year treasury yield ended 2013 with a yield of about 3%.  Today it is at 2.58%.  The Russell 2000 Growth ETF (IWO) is down 11.19% from its early March peak:

Russell and 10Y vs SPY
Is the S&P 500 right while the Russell and 10 Year are wrong?

Do you notice which market is oblivious?  Maybe the S&P 500 (SPY) playing near its all time highs?  Another troubling but related matter: is Vol forever gone?  The VIX has been flirting with the lows of all time:

VIX is Sleeping
VIX has been sleeping for months

The problem is that you start to get that uneasy feeling.  Credit spreads grind tighter while new issue deals are oversubscribed.  Equity volatility remains subdued and the S&P 500 refuses to have any sort of price correction.  You just start wondering if a lack of volatility really forecasts a bright future.  Is the volatility low because everything is fine or is volatility low because "buy on any dip" and leverage up while the money is cheap are the current investment mantras?  Does the latter forecast a massive unwind while everyone runs for the door?

Speaking of leverage, Margin Debt might have something to do with that.  Notice where the peaks occurred?

Margin Debt
Did that balance just peak? What does that mean?
 

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Wed, 05/07/2014 - 10:14 | 4735747 what's that smell
what's that smell's picture

the article's title should be: "which RIGGED market is right?"

machines rigging markets are never right or wrong...they're rigging, baby.

what does right or wrong got to do with it?

Wed, 05/07/2014 - 10:11 | 4735733 elwind45
elwind45's picture

Alot of new money going into the thirty year right at the bottom of earnings growth or the vix is being moved around from selling and not buying puts? The idea that rates will skyrocket has been and will continue to eat into investment capital at a increasily alarming rate? Any further 10 dollar rips in gold should be used to sell not buy gold? Stocks are going a lot higher!

Wed, 05/07/2014 - 09:16 | 4735511 saveUSsavers
saveUSsavers's picture

NYSE margin debt recently (I think March or maybe April) dropped by $20 bil, 1st drop in 8 months.

Wed, 05/07/2014 - 09:14 | 4735504 MFL8240
MFL8240's picture

What markest is right?  Depends on the day and what lies are uttered by the clowns we have in charge!  Unreal that these markest are still affected by misleading projections and a Federal Reserve who has gottene everything wrong!

Wed, 05/07/2014 - 09:07 | 4735488 SheepDog-One
SheepDog-One's picture

One or the other has to be right, stawks or bawnds? LOL sure.

Wed, 05/07/2014 - 10:01 | 4735682 BeetleBailey
BeetleBailey's picture

..then thar's that barrrrrrrrrrbarous relic....and don't fergit the MOOOLA markits....

fucking shit show....

Wed, 05/07/2014 - 08:11 | 4735340 CHX
CHX's picture

<<< Step aside with a healthy position in auag and some cash to watch the shyte show

<<< all is good, just BTFD and/or BTFATH

Wed, 05/07/2014 - 07:32 | 4735288 AdvancingTime
AdvancingTime's picture

The area we should pay more attention to is how the different sectors of the economy dependent on discretionary spending fared. I contend a shift is occurring within the ranks of shoppers and consumers that is causing the little economic growth occurring to be the "wrong kind of growth" and not healthy over the long term.

Recent job numbers create a false illusion that mask over what is really happening as incomes grind to a halt and inflation nibbles at the buying power of the average American. In my opinion the wrong people are buying the wrong things. Auto sales, student loans, and healthcare spending have become key drivers in this economy. Below I reconcile the recent job numbers and why spending trends signal danger ahead.

http://brucewilds.blogspot.com/2014/05/reconciling-april-jobs-report-wit...

Wed, 05/07/2014 - 08:21 | 4735356 medium giraffe
medium giraffe's picture

No shit.  With the lack of consumer demand, household belt tightening and a mountain of debt obligations, falling GDP will only help to speed up the snowball.  If Mom & Pop understand financial frugality, what the hell is wrong with all of the PhDs and 'smarter than thou' economists?  Blinded by greed and baseless optimism, they won't even have the wit to recognise their own failings in this mess.  Just because we wear socks doesn't mean we escape darwinism.  There's no curing stupid.

Wed, 05/07/2014 - 06:51 | 4735246 Comte d'herblay
Comte d&#039;herblay's picture

Sell in May.....etc, etc. etc.......

Wed, 05/07/2014 - 05:41 | 4735205 new game
new game's picture

just another day at the zirp park-it is all fucked up, man, fucking fucked up my man! just go away if you are smart.

cheap credit is the key to this market, leveraged positions that will whooosh like now when it happens...

those peaks and valley tell me all about the tranparent volatility-vix is disguised by leverage...

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