Winners Lose As Safety Outperforms

Tyler Durden's picture

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.

Utilities bounced, Health care kept going, and as the NASDAAPL reverted, so the underperforming Dow Transports rose. Equity indices closed in the red - once again for a Monday - despite an effort to test back above 1450 in the S&P to see if any willing buyers remained.  

Cross asset-class correlations were high - quite systemically high - but while Treasury yields closed near their lows (down 2-5bps on the day), S&P futures ended in the middle of their range (back at VWAP). USD strength hurt commodities but Gold managed to outperform its peers (though closed -0.45% compared to USD's +0.22% move).

High yield credit underperformed and chatter of postponed and downsized deals suggests a regime shift in exuberance.  

VIX ended slightly higher, back over 14% though risk premia remained on the high side.

Somewhat remarkably - the last six days have seen the S&P drop a stupendous 0.6% - this is the biggest soix-day drop in over 5 weeks and 2nd largest in over 2 months!!!! -0.6% in 6 days!! bwuahahah...


Risk assets generally opened weaker but traded up during the day session...


but it seems like some of the month/quarter's exuberance is being unwound as NASDAAPL underperforms and Trannies outperform...


and in sectors (post-FOMC), Healthcare remains the big winner (a la QE1-Extension discussed earlier) and Utilities finally played catch-up today...


EUR weakness and JPY strength did not help carry traders provide juice to stocks (nor did TSY 2s10s30s) but the USD ended +0.2% from Friday - though well off its highs during the European session...


and while commodities were all lower on the day (USD strength), Oil spurted after the pit close and Gold limped higher during the day (with OPEX tomorrow)...


Charts: Bloomberg


Bonus Chart: CAT leaked its presentation ahead of tomorrow's investor day - noting higher recession chances while trying to sound as upbeat about China as possible - stock is dropping after-hours... as 2015 EPS from $15-20 to $12-18


and the slide...

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CPL's picture

This is the signal for retail prices to go berzerk

Comay Mierda's picture

now that bernank is doing infinite QE, bad news may actually be bad news

CPL's picture

Two wrongs making a right.


But there is more truth in three left's making a right.  Or three rights making a left.

walküre's picture

CAT slowing down doesn't come as a surprise.

This is where the rubber meets the dirt roads, open mines and gravel pits.

No amount of QE will motivate the Chinese to build more ghost towns and ghost malls.

The Greatest Depression is now officially starting. Nowhere to hide.

otto skorzeny's picture

CAT is basically a bail-out baby as alot of their sales came from Obummer's  shovel-ready stimulus that is drying up and The Bernank's cheap $ policy that forced hot $ into commodities. this POS should be in the $40s.

walküre's picture

CAT channel stuffing is probably the 2nd biggest misallocation of capital, energy and materials. Right after the container and tank ship building industries. Maybe tied for 2nd with railcars.

That stuff is built to last. Ritchie Bros. lots should be filled with used equipment. Come to think of it, I haven't received their catalogues for a while now. Wouldn't be surprised to see them walk away or keep it low for a bit. There's not enough of a market.

Kayman's picture

Go to and count the inventory.  Bernanke's cheap money keeps prices high. Cat and/or their dealers have over 2,000 used excavators in inventory.

AldousHuxley's picture

well put them in iran when the missiles hit there.

get rid of it.

camaro68ss's picture

your all trippin, all you have to do throw a brick through some windows to get this economy jump started again.

AldousHuxley's picture

american consumer has too much debt to buy that brick on credit and the cheap chinese made brick turned out to be made of styrofoam



JuicedGamma's picture

How 'bout we come slash you 68 Camaro's tires??? </sarc>

I'm a Ford guy.

russwinter's picture


Got the automatic rote 1 point post close uptick in SPOOs anyway. 

kito's picture

i get a real laugh out of "guidance" 3 years down the road..................... CATS earth excavation equipment sales will be soaring by then as every politician and banker will be building their underground safe havens before the crowds arrive with pitchforks and calls for their heads....................

Hedgetard55's picture

We will need to use the bunker busters we have in inventory to blast those bankster rats out of their holes.

J 457's picture

LEN at $38, DHI at $22, KBH at $15, RYL at $32.  The homebuilders are the most bloated group in the bunch.  Soon we will see a week long 20-25% drop back to reality. The 60x forward PE gave it away.   

kevinearick's picture

Krugman/god bless their hearts; they keep trying.

otto skorzeny's picture

homebuilder stock prices are mind-bottling. FHA is underwriting the no-down payment loans.

CPL's picture

With nearly every country on the planet.

pursueliberty's picture

FHA is 3.5% down with a retarded PMI of around 1.25, and upfront pmi of 1.75% on a 30 year, which everyone is doing anyway.  I don't think my wife has had a 15 year in her last 20 transactions on a owner occupied.  I'm actually not sure anyone who is buying does a 15 year.


What is really going on is USDA rural development loans, which is a true 0 down loan.  If her properties aren't selling to a investor or aren't above $250k, odds are they are doing a USDA loan with the seller paying all closing.  She sold a house a couple months ago and the buyers honest to god had less than $500 and were about to buy a $120k house.  There is also a USDA direct loan where are government picks up a portion of the payment to get qualified low earners into homes.  These are the worse or worst, but fortunately most of the poorer working class have credit too bad to get approved.  I actually only know of two of these in the last couple years.

Housing in my area is doing pretty good, but it it weren't for USDA loans I can tell you that aside from cash buyers/wealthy/investors it would be completely dead. 

Remington IV's picture

They should be shorted , for a quick 50% gain by month end

slaughterer's picture

It seems they are trying to trick the Dow Theory investors with a pump on the railroads today--after some poor rail guidance last week, that sure seems paradoxical.  The market almost seems at this point to be like a full-out Matrix-type lie.  I do not even know how daytraders make a living here, let alone Grahamian dinosaurs like Buffet et. al.  

walküre's picture

Even buying equity of distressed "quality" companies will need a market to be sold to. That cherry on top "warrants" cannot be sold either unless there's a market filled with buyers.

Buffet exited stocks and went into cash or so he says. I guess the buy&hold pattern has become a thing of the past. Do you know if they can leverage their equity position somehow? Otherwise how do they protect their losses when the music stops and everyone starts bolting for the doors? Volume is dismal and markets are a crap shoot for everyone including the big boyz. They are holding and they're quiet.

kaa1016's picture

Looks like the long GOOG short AAPL pair trade I put on Friday via options was a good idea. I just didn't think GOOG would be up this much. Commodity related stocks have been getting hit since the QE3 announcement as well. I hope ANR and MCP keep dropping.

J 457's picture

ANR should touch high 5's again, and MCP high 9's.  But both are good long term buys.

ekm's picture

That's how Pyramid Scheme works.

Fresh new entrants are needed to keep up with the payouts for the current members.

The gov has ordered the Fed to become the Sucker in Chief of Primary Dealers and buy all their shit.

Primary Dealers on the other hand, are forced to keep buying S&P with part of the money they get from the Fed since the old suckers are retiring and need money for drugs. The ones who were supposed to be the new suckers, are living in the basements of the houses of the previous suckers.


Primary Dealers have no other option but to keep buying S&P until the weakest link collapses. I'd say Morgan Stanley is weakest link. Wait. Just wait.


e92335i08's picture


With them buying 40bil a month Primary dealers wil just keep the S&P bid just like we seen when they implemented LTRO and the S&P took 1 step back and 2 forward and just inching its way higher. I guess you cant fight these idiot money printing central banks, I'm happy with my gold futures postions long from 1640. 

This will collapse as they keep printing money and global inflation rises and the real economy continues deterioaites.


Welcome to Financial Repression and coming soon rapid inflation!

kevinearick's picture

No rest for the less wicked, as ben starts pulling on the other side of the string as well.

roncomatic dice after slice.

Heyoka Bianco's picture

and Trannies outperform

There's an open market on ladyboys on Wall Street? I thought that was part of the 'Shadow Banking' sector.

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