As we noted early on, by the time the cash markets opened this morning, the narrative of compliant Kuroda and drug-peddling Draghi had been painted as worth more than a yellowing Yellen's hawkish comments. And so it was that stocks, despite weak macro data this morning in the US - bad news is great news - surged as cash markets opened and tagged S&P 2,000 for the first time ever. However, once Europe closed, that exuberance faded in stocks. Treasuries rallied (30Y closed -2bps) with the front-end weakening very modestly. USD strength (on notable EUR weakness) sent oil and precious metals modestly lower on the day but Copper had a good day (+0.6%). Today was the lowest S&P futures (non-holiday) trading of the year as the Nasdaq rose for the 9th day in a row.
Are people dumber than they used to be? Were previous generations mentally sharper than us? You may have suspected that people are getting stupider for quite some time, but now we actually have scientific evidence that this is the case.
With all of England on edge because the ISIS executioner of James Foley, known as "Jihadi John" sported a British accent, and who may or may not have been identified as Abdel-Majed Bary, although UK government sources have not yet officially revealed his identity, one person has decided it is time to not waste yet another crisis. The person: London mayor Boris Johnson who as the Guardian reports, has called for the presumption of innocence to be reversed in cases where Britons travel to Iraq or Syria and said he wants the jihadist who beheaded an American journalist to be killed in a bomb attack. If Johnson's proposal for a "swift and minor" law change passes, any Brit traveling to Iraq or Syria will automatically be branded a terrorist and suffer the appropriate consequences.
Last week we were intrigued when the Ukraine Central Bank announced its FX market intervention plans not via 'trader sources" or Bloomberg but through its Facebook account (which later failed as the Hryvnia pushed on to record lows). Today, we hear perhaps even more important news - that Ukraine President Poroshenko has dissolved parliament. This was not entirely surprising news given recent political breakdowns but his chosen medium to disseminate this crucial (and potentiall detsabilizing) news... his Twitter account.
That 4% market correction was quick and virtually painless. Not missing a beat after the market briefly tested 1900, the dip buyers came roaring back - gunning for the 2000 marker on the S&P 500, confident that longs were not selling and that shorts had long ago been obliterated. Needless to say, bubblevision had its banners ready to crawl triumphantly across the screen. When the algos finally did print the magic 2000 number, it represented a 200% gain from the March 2009 lows. And to complete the symmetry, the S&P 500 thereby clocked in at exactly 20X LTM reported earnings based on consistent historical pension accounting. The bulls said not to worry because the market is still “cheap” - like it always is, until it isn’t. To be sure, the Fed is a serial bubble machine. But even it cannot defy economic gravity indefinitely.
The consensus among market watchers last September was that, with U.S. interest rates so low and the U.S. Federal Reserve (the Fed) about to withdraw stimulus, interest rates would trend higher. However, Guggenheim's Scott Minerd took a different view, writing in a commentary that “10-year rates may be heading back to 2.25 percent or lower.”
Mt Gox may be long gone in the annals of bankruptcy, but its founder refuses to go gentle into that insolvent night. And, as CoinDesk reports, the disgraced former CEO of the one-time premier bitcoin trading platform has decided to give it a second try by launching new web hosting service called Forever.net and is registered under both Karpeles’ name and that of Tibanne, the parent company of Mt Gox.
As Iran continues to negotiate with world powers over its controversial (but purely for peaceful purposes, of course) nuclear program - with hard-liners demanding more concessions from the West - The Telegraph reports that a brief video, which aired on the Arabic-language Al-Alam TV, shows what the channel says are parts of an Israeli drone, scattered in an unidentified desert area. Text accompanying the footage says the drone was downed on Saturday and identifies it as a Hermes 450, a known Israeli model. The Iranian TV station also says the model is dubbed "Spy Goddess." However, as The Telegraph adds, there were no visible Israeli markings in the footage and Israel's military has declined comment on the matter... and Iran will sue Israel legally over its alleged violation of Iran's air space.
The avuncular Art Cashin, UBS' venerable man on the floor of the NYSE has seen it all... and is not impressed by the lack of volume. On what he notes is historically a very light trading week with a mild upward bias - note, the 1929 high was made the day after Labor Day - Cashin has 12 simple words for the exuberant trader this week...
With Philly Fed surging to record highs (along with stocks) but Services PMI dropping "as the recovery fades," it was left to Dallas Fed to split the buy good news or buy bad news dilemma this morning. It was bad news - from 2012 highs, Dallas Fed plunged to 7.1 (against 12.7 expectations) for the biggest miss in 16 months. Production fell, capital expenditure and employment subindices all fell and New Orders collapsed at the fastest rate since April 2013 (to 2014 lows). Even hope faded as the outlook index dropped.
It's Monday; which means its time to ramp up the war rhetoric once again as another weekend goes by without 'escalation'. Ukraine's military spokesman Lysenko, or as he is better known as Lie-senko for those who actually ask for some evidence of anything that he claims, says, suggests or otherwise talks about, is reporting,via Bloomberg, that:
- UKRAINE SAYS TWO TANKS THAT ENTERED FROM RUSSIA WERE DESTROYED
- LYSENKO SAYS UKRAINE CAPTURED CREW MEMBERS OF DESTROYED TANKS
- UKRAINE SEIZED SOME VEHICLES THAT ENTERED FROM RUSSIA: LYSENKO
- LYSENKO SAYS COLUMN OF REBEL VEHICLES DESTROYED IN KRASNODON
- LYSENKO: UKRAINE INFLICTED SEVERE LOSSES ON REBELS IN KRASNODON
One wonders if the captured Russian crew had Langley, VA crew cuts? Unfortunately no one had their iPhone or camera-on-a-sticks to record the action as "proof." but we are sure that won't matter. Cure NATO's comments. Now, how will the market react to this 'proven invasion'? Actually scratch that: more escalation is simply a catalyst for even more pent-up de-escalation in the future...
Following last week's housing starts data, everyone was expecting a new home sales number that was even better than the consensus 430K. Instead, the July print of 412K was not only the 5th miss in the last 6 prints, but also the lowest number since March's 403K. The biggest drop took place in the Northeast where the sequential plunge was some 31% to just 18K new houses, and a whopping 44% from a year ago. There were declines in the Midwest which dropped 8.8% and in the West, which dropped 15.2%, while the only increase was recorded in the South which rose 8.1%. In fact, of all regions, only the South posted an increase from July 2013, surging by 33%, with new home sales in all other regions dropping.