Tale Of Two Markets (Again)

Tyler Durden's picture

The US equity market continues to boldly go where no other market is willing to go (Dow outperforming EuroStoxx by 850bps this year). European stocks and bonds (+30-45bps) are down notably on the week (and year in some cases); Treasury yields are 4-6bps lower on the week; the USD is up 0.6% (as EUR bleeds a little lower into tomorrow's ECB); and Gold is up 0.6% (oddly with the USD) on the week; but US equities are unchanged with Staples and Industrials holding gains on the week. Today saw credit markets and treasuries pushing notably risk-off as stocks oscillated around unch on the week - pushing to the day's highs into the close on the back of yet another vol-selling ramp. Equity volume was average and trade size was lower than average as cash S&P and Dow managed small gains and Nasdaq a small loss as AAPL gave back its 'buyback rumor' gains.

 

Treasuries and Credit notably more risk-off vs Stocks and Vol...

 

leaving the S&P 500 unch for the week...

 

though breadth was weak once again...

 

but the USD is up for the week...

 

and Gold is up on the week...

 

and Treasury yields down for the week...

 

as stocks certainly seem on their own from shortly after the European close once again today... as Capital Context (@CapitalContext) LLC's ETF SPY Arb model (left) indicates, today saw US equities notably more exuberant than the rest of the market capital structure and while CONTEXT (right) was more correlated - overall, risk-assets are less excited than US equities in general. The tactical asset allocation model remains market-neutral (based on credit's divergence).

 

This inexorable rise in stocks to start the year is not unusual - though this is now the best in years...

AND the most disconnected from other asset classes...(HY notably divergent from previous years)

 

Source: Bloomberg and Capital Context

 

Bonus Chart: We've seen this disconnect before...

 

Bonus Bonus Chart: In case you had any question as to this market's schizophrenia... a favorable ruling (via Flagstaff vs AGO) helped the ongoing MBIA vs BAC court battle smashed MBI's share price up over 15% - but BofA's also rose!! Teflon market...