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Overnight Sentiment: "Buy In May, And Buy Every Day"

Tyler Durden's picture




 

While it is the labor day holiday in most of the world, and as a result volumes will be more subdued than ever (meaning at least a 10 point algorithmic levitation on no volume for the S&P), let's not forget that Benny and the Inkjets are doing their best to make everyone into a professional day trader (the only "wealth effect" transmission mechanism left) so markets being open seems somewhat counterproductive. That said, futures are already up on the usual atrocious economic data out of Asia this time. First China's official manufacturing PMI slipped 0.3pt to 50.6, coming below expectations, suggesting weak momentum going into Q2. Meanwhile, Korea trade data indicated weaker momentum in exports than expected, rising 0.4% on expectations of a 2% bounce courtesy of Abenomics, and hence a lower trade surplus, while inflation defied median expectations of a rise and slowed yet further. Finally, Australia PMI was an absolute disaster printing even worse than the Chicago PMI, plunging from 44.4 to 36.7, meaning that the RBA is about to join the global "reflation effort." Given that most markets in Asia are closed today, there is no market reaction worth mentioning, aside from the fact that the yen which was logically weaker overnight then ramped up into the European open and US pre-trading as it is, after all, the primary source of "beta" for the global stock markets.

May Day has delayed the release of global PMI data until tomorrow, however the Manufacturing ISM will be released today as scheduled. If the leading Chicago PMI is any indication, it is very likely that we will see a sub-50 number, likely plunging to levels not seen since June of 2009 (45.8) - the worst in four years. If that doesn't send the S&P over 1600 we don't know what will. And just to make sure the S&P is well on its way to 1700 on onward too, the ADP Private payrolls number today should be a huge miss sending the ES limit up.

Also later today Ben Bernanke will release the latest FOMC statement however without a following press conference this time, which is even more reason to not expect the Fed to say or do anything notable, and will most likely highlight the recent weakness seen in the economy, thus cementing QE4EVA well into 2016-2017.

Finally, while some are dreading the start of "sell in May and go away" season, what most have forgotten is that never before has May been accompanied by $160 billion per month in central bank de novo liquidity (a number which will only go up- you know, for the wealth effect). Which is why our redefinition of this infamous phrase is "buy in May and buy every day."

The full bulletin summary of the few things taking place today, via Bloomberg:

  • Treasuries little changed before Fed statement, rate decision at 2pm in Washington; 10Y yields yesterday touched lowest level since Dec.  12 before reversing higher amid gains in stocks, Apple’s record $17b debt offering.
  • Fed not likely to change $85b/mo. in asset purchases, will probably put off any decision to taper buying, based on review of selected research
  • ECB rate decision and Draghi press conference tomorrow; U.S. nonfarm payrolls Friday
  • China’s manufacturing expanded at a weaker pace in April in a sign that the slowdown in the world’s second-largest economy is extending into the second quarter; crude and copper decline
  • A U.K. factory index rose more than economists forecast in April, indicating that manufacturing barely shrank
  • Central bank veterans are lining up to highlight the Achilles’ heel of Prime Minister Shinzo Abe’s economic revival plan: the world’s fastest aging society
  • Denmark’s government says it has exhausted all avenues for adding stimulus as the economy shows signs of sinking into its third recession since the global financial crisis started
  • Most European markets, China closed for May Day holiday
  • Nikkei -0.4%, FTSE +0.5%, U.S. stock-index futures gain

As stated not much going on today, but here is what is on the macro list from SocGen:

The European economic calendar will be light today with most markets shut for the May Day holiday and positions light in any case as participants trim positions ahead of tomorrow's ECB meeting. Market attention will essentially focus on UK and US manufacturing PMI and ISM: the release last week of higher-than-expected UK Q1 GDP figures (and better lending data to small businesses) has reassured GBP-based investors and encouraged our UK economists to postpone their call for more BoE QE. An increase in the UK manufacturing PMI today would reinforce such a scenario, but echoes of weaker PMI trends cannot be ruled out (weaker China data overnight and a terrible Australian print of '36.7') . A better number would be all the more GBP-positive should the ECB embark on more accommodative measures tomorrow and so the squeeze higher could have further to run. EUR/GBP-wise, the 0.8400 area remains a key support area. A dovish FOMC statement should help to underpin GBP/USD too, with a close above the 100d ma (1.5561) likely to draw fresh buying.

The US economic calendar will be heavier than that of Europe today with all the attention centred on the FOMC. Before that, the ADP report will give some colour ahead of Friday's NFP. Although the correlation between the two reports is not very strong on a long historical series comparison, both indicators ran out of steam last month with the ADP dropping back from 237k to 158k. Can they both edge back north this month? The gradual improvement in the labour market, subdued inflation and a slight softening in the manufacturing ISM (latest report also due today) are three messages the Fed has factored in its economic scenario and so a reaffirmation of its dovish stance can be expected this evening when the FOMC meeting concludes. Overall, we do not think the policy stance should alter significantly compared with the previous meeting, and thus impact on global financial markets should be limited. The ECB meeting (tomorrow) and the NFP (on Friday) are likely to be the main market movers over the closing stages of the week where light liquidity has the capacity of magnifying intra-day moves.

* * *

And the comprehensive overnight summary courtesy of DB's Jim Reid

Today will likely be fairly quiet as it seems like most of Asia and much of Europe are on holiday. This is delaying Global PMI day until tomorrow. We do have US ISM though (previewed below) and this morning we've already seen China's official PMI manufacturing falling slightly to 50.6 in April from 50.9 the month before. This is broadly consistent with market expectations (50.7) as the series continues to move sideways (range: 50.1-50.9 in the past 7 months). One of the few Asian markets open - the Nikkei - is a little softer (-0.2%) but credit continues to rally with the Aus iTraxx a little over 1bp tighter on the day.

Those who (like us) are in the office today will see an important day for US data. The ADP Employment report will be the first main release to hit the wires today (1.15pm London) ahead of April’s ISM manufacturing print (3pm London). The latter will be followed closely especially after the very disappointing Chicago PMI print (49.0 v 52.5 expected) yesterday. Given the recent weakness in regional activity data our economists have lowered their ISM call to 49.5 from 51.0 previously (market at 50.6). The last time the ISM dipped below 50 was in November 2012 (49.9) and before that in July 2009 (49.9), June 2009 (45.8) and May 2009 (41.7). So if Joe Lavorgna is correct then we could be looking at the poorest ISM report in nearly four years (for details see Data Flash - US: Chicago PMI is a downer; confidence is stronger dated Apr 30). The ADP report may serve as an interesting preview of Friday’s payroll. Will it be another weaker than expected report? Even ahead of this, DB has revised down the headline payrolls forecast for April by 50k to 140k.

After the data we have the FOMC meeting statement at 7pm London time. Markets will have to read between the lines as there won’t be a Bernanke press conference to follow this time. In short, DB’s Peter Hooper is not expecting much out of the statement today and the Fed will most likely pass on making any major changes in their guidance to markets. The tone will likely be slightly more dovish given the recent softening in activity and inflation data but with things not yet weak enough to warrant a change in their policy stance.

Indeed the data weakness yesterday failed to deter another record high close for the S&P 500 (+0.25%). Credit spreads also edged tighter but the focus was on Apple’s $17bn jumbo bond issue across 6 different tranches. The deal size managed to top Roche’s $16.5bn 9-part deal seen in February 2009. In Europe, equity markets were mostly softer across the board although OATs performed strongly with its 10-year yield dipping to a fresh record low of 1.7%.

Staying in Europe, Slovenia’s delayed bond offer was one of the interesting market stories yesterday. The government had initially planned to issue 5-year and 10-year US$ bonds after having received good feedback from bond investor meetings but at the end decided to delay the offering following Moody’s negative rating action. The agency downgraded Slovenia’s sovereign rating to Ba1 from Baa2 and the outlook remains Negative. Moody’s said the action reflects the state of Slovenia’s banking sector, the marked deterioration of Slovenia’s government balance sheet and uncertain funding prospects that heighten the probability that external assistance will be needed. Moody’s two notch downgrade means its rating on Slovenia is now multiple notches below S&P’s A-/Stable and Fitch’s A-/Neg.

According to a Bloomberg article, the said 5-year and 10-year debt were initially being offered in the region of 5% and 6.12% respectively, according to Bloomberg. Staying in the region, yesterday was a mixed day for European data with the most recent retail sales and unemployment numbers in Germany as well as Euro area CPI all coming below expectations. Spain’s economy contracted 0.5% in Q1 as expected although on a positive note Italian unemployment surprisingly fell in March while French consumer spending also rose much stronger than expected. That said all these are perhaps seen as a side show for now as all eyes will be what the ECB does tomorrow and Draghi’s performance at the post-meeting press event.

 

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Wed, 05/01/2013 - 07:03 | 3517078 GetZeeGold
GetZeeGold's picture

 

 

You don't have to buy....but I double dog dare you to short it.

Wed, 05/01/2013 - 07:23 | 3517101 stocktivity
stocktivity's picture

It's all Bullshit!

Wed, 05/01/2013 - 07:27 | 3517105 negative rates
negative rates's picture

I prefer mine to be served up as bullcrapitalism.

Wed, 05/01/2013 - 07:49 | 3517136 disabledvet
disabledvet's picture

if your banks are lever 10,000 to 1...how levered do you think the shorts are...

Wed, 05/01/2013 - 07:05 | 3517079 buzzsaw99
buzzsaw99's picture

Tomorrow will be just like today only more so.

Wed, 05/01/2013 - 07:18 | 3517097 Gene8696
Gene8696's picture

Same, same... But different...

Wed, 05/01/2013 - 07:29 | 3517107 negative rates
negative rates's picture

I like the one that says, I am worse off today than I was yesterday, but that's okay, cause i'm better off today than I will be tomorrow. 

Wed, 05/01/2013 - 07:10 | 3517082 Baader
Baader's picture

Gold, silver and oil all getting pummelled, but stocks rising. Who woulda thought!

Wed, 05/01/2013 - 07:22 | 3517100 GetZeeGold
GetZeeGold's picture

 

 

Perhaps the greatest transfer of real wealth the world has ever seen. All payed for by our future generations.....just how many generations that will be is still not clear.

Wed, 05/01/2013 - 07:32 | 3517113 negative rates
negative rates's picture

It only takes one to make things go right.

Wed, 05/01/2013 - 07:44 | 3517125 GetZeeGold
GetZeeGold's picture

 

 

If we can just make it until this generation of home schooled kids graduate.

 

The NEA is churning out walking zombies.

Wed, 05/01/2013 - 07:12 | 3517084 bullionbaron
bullionbaron's picture

If anyone is buying Silver on May 1st, you have the opportunity to win some free Silver by uploading a photo on Bullion Gallery: http://bulliongallery.com/news/27/Prizes_for_May_1st_Silver_Purchase_?vi...

Wed, 05/01/2013 - 08:31 | 3517208 Cobra
Cobra's picture

I'm buying in May! Fistful of silver & a little piece of gold!

Wed, 05/01/2013 - 07:14 | 3517090 The Second Rule
The Second Rule's picture

Makes you wonder how long this has been going on. 1932. Markets begin to rise. Steadily. Without looking back on the crash of '29. Yet the Great Depression grew increasingly worse until 1937 (thereabouts). Are we seeing the same insanity repeating itself? I think so.

Wed, 05/01/2013 - 07:42 | 3517126 g speed
g speed's picture

yes        

investments in "money valued" products today is much like a market in the type of weather we are having today but not specifying the location. Betting on sunshine today will work if you get to pick the location--like the "houses" do currently-- or "Tulips are up till the're down"

Wed, 05/01/2013 - 07:23 | 3517091 firstdivision
firstdivision's picture

Today should begin the rollover, same May differnt year.  Any rise are just the prop desks pumping it while dumping it to retail.  Additionally, there is nothing except supply stalling to support the current NG prices.  Supply is only curtailing due to the cost of carry is too rich, with no upside at the moment.   I've heard excuses that it'll triple in 3 years, but I don't buy it.  RTO's have excess capacity as it is, and any NG units that come online now will be too expensive to run.  Additionally, many companies have negotiated their coal contracts and are getting really good rates.  What'll get interesting are uranium prices with NERC approving the modular designed, smaller capacity, nukes.

Wed, 05/01/2013 - 07:30 | 3517114 The Second Rule
The Second Rule's picture

Rollover. Even if you've seen it it's worth watching again: http://www.youtube.com/watch?v=4pv3dDMTMuk

Wed, 05/01/2013 - 08:04 | 3517172 disabledvet
disabledvet's picture

very interesting how he drops the cigarette. "the tower of terror is the media" and that's your tell about what's being created. some would laugh back then "all they're making are TV shows ha, ha not some scary thing." only now do we understand though. i would stay long internet security industries...simply put "no too high a price on life itself"...lots of good names out there. pick your price points well.

Wed, 05/01/2013 - 08:15 | 3517198 Quinvarius
Quinvarius's picture

The movie condenses timelines.  In reality, this process drags out, like it is now.  Talking heads, the general public, and government types need to be hit on the head with sledgehammer before they will prepare or recognize reality.  They will go quietly into the night.  Reality is won by the chess players willing to wait weeks for the next move, and able to capitalize on their opponents delays and mistakes.

It goes without saying, you either have gold or you don't.  The paper price heading into the endgame is not relevant.  One day the game just ends.  

Wed, 05/01/2013 - 07:16 | 3517093 100pcDredge
100pcDredge's picture

Every day? Why? http://assets.nydailynews.com/polopoly_fs/1.1203857!/img/httpImage/image.jpg_gen/derivatives/landscape_635/article-twinkie2-1117.jpg I mean, come on... enough is enough, right?

Wed, 05/01/2013 - 07:17 | 3517095 q99x2
q99x2's picture

That's a lot of stuff that could effect something back in the days of free markets. Things used to be so uncertain back then.

Wed, 05/01/2013 - 07:20 | 3517096 DormRoom
DormRoom's picture
“The Lottery, with its weekly pay-out of enormous prizes, was the one public event to which the proles paid serious attention. It was probable that there were some millions of proles for whom the Lottery was the principal if not the only reason for remaining alive. It was their delight, their folly, their anodyne, their intellectual stimulant. Where the Lottery was concerned, even people who could barely read and write seemed capable of intricate calculations and staggering feats of memory. There was a whole tribe of men who made their living simply by selling systems, forecasts, and lucky amulets. Winston had nothing to do with the Lottery, which was managed by the Ministry of Plenty, but he was aware (indeed everyone in the party was aware) that the prizes were largely imaginary. Only small sums were actually paid out, the winners of the big prizes being nonexistent persons. "

--Orwell, 1984

 

The lottery IS the stock market.

The Central Bank has become the Ministry of Plenty.

 

Wed, 05/01/2013 - 08:23 | 3517214 Overflow-admin
Overflow-admin's picture

And the Ministery of Economy the Ministery of Expenses

Wed, 05/01/2013 - 11:13 | 3517931 e-recep
e-recep's picture

this is the description of today's sports bets.

Wed, 05/01/2013 - 07:21 | 3517098 DavidC
DavidC's picture

Last month's ADP dropped back from 237k to 158k.

So, if we get 159k, because it's a beat (depsite still being 78k down from two months ago) the markets will F-L-Y!!

Complete and utter mess.

DavidC

Wed, 05/01/2013 - 07:52 | 3517137 HD
HD's picture

I checked out Steve Keen (his blog) as you suggested. It's unfortunate shills like Krugman are celebrated and economists like Keen are drowned out.

Wed, 05/01/2013 - 08:06 | 3517183 disabledvet
disabledvet's picture

forecasting's a tough business. "sometimes you can't be afraid of just being lucky." the question then of course becomes "and then what." hmmm..."and then what indeed...

Wed, 05/01/2013 - 07:26 | 3517103 The_Small_Lebowski
Wed, 05/01/2013 - 07:27 | 3517104 Silverhog
Silverhog's picture

 May will be the usual balloon pumping. Prop desk Zombies don't look at watches or calendar.

Wed, 05/01/2013 - 07:32 | 3517109 Chief Falling Knife
Chief Falling Knife's picture

Hey Tylers,  You guys gonna do a write-up of the latest NYSE Margin Debt/Credit Balance numbers?  March had the second highest NYSE margin debt... ever. 

NYSE Credit Balance is more negative than during the top in 2007, while the average daily volume in the NYSE is roughly half of what it was in June-July 2007. 

The only other time the Credit Balance was this negative was in 2000 at the height of the bubble.

Wed, 05/01/2013 - 08:11 | 3517187 disabledvet
disabledvet's picture

again "we're dealing with trillions now." margin debt numbers must be upgraded accordingly. "pay issues" might be an interesting subject however...perhaps a pay raise for the Governor or something?

Wed, 05/01/2013 - 07:30 | 3517115 Chuck Walla
Chuck Walla's picture

Geez, when will Obama finally pick out a war he likes? Got to get this world moving!  Ah, but it's May Day, Obama's other birthday to celebrate first.

FORWARD SOVIET!

Wed, 05/01/2013 - 07:37 | 3517120 GetZeeGold
GetZeeGold's picture

 

 

May Day.....is a pretty big freakin deal for us useful idiots!

http://www.youtube.com/watch?v=bHnd9Lst4hs

Wed, 05/01/2013 - 07:45 | 3517127 The Second Rule
The Second Rule's picture

Interestingly, the homonym Mayday, the international call sign of distress, comes from the French venez m'aider, which means "Come help me."

Wed, 05/01/2013 - 07:50 | 3517132 disabledvet
disabledvet's picture

you can produce liquidity by selling short...the question is...FOR WHOM? (insert MEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEME here.)

Wed, 05/01/2013 - 07:52 | 3517143 Downtoolong
Downtoolong's picture

I'm now starting to believe the Wealth Effect Transmission Mechanism does exist. What they neglected to tell us is that it's really about transferring more wealth to the already rich from everyone else.

Wed, 05/01/2013 - 08:14 | 3517193 disabledvet
disabledvet's picture

indeed. "this is the value of a good economist." his aim is to create wealth "for the Nation"...which can only be done if the people are "created whole" as well. tis madness to try really. yet look..."all that money being made." this site indeed has a Golden Heart but unfortunately that system is broken as well.

Wed, 05/01/2013 - 08:05 | 3517175 sbenard
sbenard's picture

Reality is irrelevant. We have PRINTED prosperity now!

But watch out for the brick wall dead ahead!

Wed, 05/01/2013 - 08:07 | 3517177 mdtrader
mdtrader's picture

"Buy In May, And Buy Every Day"

Finally Tyler understands the stock market lol.

 

Wed, 05/01/2013 - 08:37 | 3517242 polo007
polo007's picture

http://www.cbc.ca/news/world/story/2013/04/26/f-rfa-macdonald-power-shift-savers.html

Quietly, without much public fuss or discussion, a new ruling class has risen in the richer nations.
 
These men and women are unelected and tend to shun the publicity hogged by the politicians with whom they co-exist.
 
They are the world's central bankers. Every six weeks or so, they gather in Basel, Switzerland, for secret discussions and, to an extent at least, they act in concert.
 
The decisions that emerge from those meetings affect the entire world. And yet the broad public has a dim understanding, if any, of the job they do.
 
In fact, these individuals now wield at least as much influence over the lives of ordinary citizens as prime ministers and presidents.

The tool they have used to change the world so profoundly is one they alone possess: creating money out of thin air.
 
There is an economic term for this: quantitative easing. More colloquially, it's called printing money.
 
Since the great economic meltdown in 2008, these central bankers have probably saved the world's economy from collapse, and dragged it into the unknown at the same time.
 
The amounts they have created are so vast as to be almost incomprehensible — trillions of dollars in pounds and euros, among other currencies.
 
At the end of 2012, the balance sheets of the world's largest central banks, those of the G20 nations and the eurozone, including Sweden and Switzerland, totalled $17.4 trillion US, according to Bank of Canada calculations from publicly available data.

What's their legacy?

When the record of the 2008 global financial catastrophe is fully written — that story remains a work in progress — the world's central bankers will emerge either as heroes, or as the people who administered a cure that turned out to be as bad as the disease.
 
Three of them in particular will go down in history: Ben Bernanke of the U.S. Federal Reserve, Mario Draghi of the European Central Bank, and Canada's own Mark Carney, soon to be the governor of the Bank of England.
 
That is nearly a quarter of global GDP, and slightly more than double the $8.5 trillion these same institutions were holding at the end of 2007, before the financial crisis hit.

Stock markets have risen on this tide of cheap money. So has real estate. So, arguably, has everything else.

Wed, 05/01/2013 - 08:46 | 3517268 polo007
polo007's picture

http://www.cbc.ca/news/world/story/2013/04/29/f-rfa-macdonald-power-shift-growth.html

Mark Grant sits on the aft deck of his yacht in South Florida's spring sun, ostentatiously relishing his wealth as only an American does, and dispensing advice. He's made his money, and he likes to wear it.

Grant's personality is as big as his mansion and as flashy as his collection of exotic cars — he actually calls himself "The Wizard," a tribute to his own financial acumen.

While we are talking, his cellphone rings intermittently, and the callers are usually serious moneymen. Bill Gross of Pimco, the world's largest bond agency, is a friend; his praise adorns the dust jacket of Grant's recent book.

Inevitably, the callers are seeking investment advice.

A nearly 40-year Wall Street veteran, Grant is currently the managing director of a Texas-based investment bank and the author of a daily must-read investment commentary called Out of the Box.

His advice these days to tycoons and small investors alike is simple and direct. For heaven's sake, seek safety. Preserve your capital. "Keep what you have."

To Grant, the central banks' money printing has distorted the financial universe beyond any sensible dimensions.

The Federal Reserve alone is churning out $85 billion a month, or just over a $1 trillion a year. The combined balance sheets (which reflect created money) for the European Central Bank and the 17 individual banks of the eurozone stand at $3.45 trillion.

Wed, 05/01/2013 - 08:49 | 3517285 polo007
polo007's picture

http://www.cbc.ca/player/News/World/ID/2382392338/

The National | Apr 29, 2013 | 20:46

The Monarchs of Money

The world's central banks have printed unimaginable amounts of money in recent years. Neil Macdonald explores what this means for the global economy and for your financial well-being.

Wed, 05/01/2013 - 08:59 | 3517312 polo007
polo007's picture

http://www.cbc.ca/news/world/story/2013/04/30/f-rfa-macdonald-monarchs-money-secrecy.html

Hiding the bad news

What these bankers do with this new money they print is buy government debt, or shore up failing banks or teetering national economies or industries like housing or insurance, part of the policy they call quantitative easing.

They say, and many respectable experts support them, that quantitative easing has saved entire economies from imploding.

They also say — high priest-like — that they must keep the details of their discussions secret because their words could be misinterpreted, and entire markets could move on a misunderstanding.

And they stress they are operating entirely within the mandates given them by elected governments.

That's as may be.

It's also true the central bankers did not ask for the immense power they now exercise.

It was thrust upon them because the private sector made enormous, stupid, ruinous blunders, and because elected politicians were too terrified to make all the deeply unpopular decisions, like whether to let more banks fail, that had to be made when the financial meltdown started feeding on itself.

Politicians, given the chance, kick the can down the road; central bankers act.

But because of their mandate to maintain economic stability, they like to hide the bad news, or obscure it with vague euphemisms.

Wed, 05/01/2013 - 09:24 | 3517413 Tic tock
Tic tock's picture

Just how does 'supporting' the Banks instill 'confidence' in the Financial System?

Wed, 05/01/2013 - 11:12 | 3517924 moneybots
moneybots's picture

Except it is never different this time.

 

Liquidity isn't changing the fact that the economy is sliding toward recession.

Companies that miss are getting hammered, liquidity or no liquidity.

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