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The Day The Tape(r) Died?
This morning's illiquidty explosion in pre-open equity, commodity, and bond futures markets suggest the so-called 'tape' is indeed broken; but just over a month ago, the 'taper' word broke the relationship between bonds and stocks. For the previous five months, both Treasuries and credit spreads had rallied in almost perfect tandem with stocks as the 'flow' from the Fed (and Japan) floated all clean-shirty US assets. And then, with the mention of one little word, Bernanke and his team sent the bond market scurrying (it wasn't growth concerns as we noted here as spreads rose) but left stocks only bruised. Today, it appears, the world has taken a breath and flip-flopped once again - a better-than-expected payrolls print (which suggests we are closer to a Taper) is now bullish for stocks and bearish for bonds (but as we noted before this cannot last since the cost of credit increasing bites into EPS estimates as the credit cycle turns). With the FOMC meeting in less than two weeks, it seems if you truly do not believe in the Taper you buy bonds (Treasuries or high-yield credit if you are brave) not stocks... if not, you know what to do...
As we have noted previously - we do not think the "Taper" chatter is anything to do with macro data (which has been ugly aside from today's slightly better than expected payrolls print) but is in fact entirely due to the Fed's concern at markets having gone too far too fast and needing to walk us back from the irrationally-exuberant ledge...
Both 'safe' and 'capital-structure-sensitive' bond markets have shifted since the "Taper" word...
Treasuries...
and Corporate Credit...
and credit's move may be both flow and fundamental-based...
Via Citi:
One of the most sacrosanct of fundamental relationships for credit investors has lost its divine right of late. Corporate net leverage has been steadily on the rise as spreads have been on the decline, to the point where a significant gap has opened up
For many, the leverage disconnect is particularly alarming even if most agree it’s been a predictable byproduct of quantitative easing. After all, when QE1 and QE2 concluded, credit and other risky assets underwent a significant correction. Might not history repeat for a third time, especially when faced with the prospect of fundamental deterioration in balance sheets? It’s certainly a possibility investors should bear in mind.
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Long gold, short s&p. Great day to add to both positions.
It's all Bullshit!!!!
How about "the day of the dead"
Bye bye Miss American pie
Drove my Chevy to the levy but the levy was dry
Them good ol' boys drinkin' whisky and rye
Singing this will be the day that I die
End of taper = Bullearish
Tape Worms?
And we were singing…
Bye bye dynamic economy
Dumped my money and my IRA into moar equity
Drove my ‘lectric car to the bar but had no money to get high
While Ben Bernanke and the boys were blowing bubbles to the sky
Singing: when will be the day that this dies?
(Hooooo haa haaa!)
When will be the day that this dies?
'No 'taper', now good news is good news therefore the Fed WON'T taper? It could only make sense at this point to an algo-bot, and by next week all correlations will be flip-flopped again probably. What else to expect in a totaly hand-held financial world of today? Something actually making sense?
OT, but I'm hoping to see this posted soon here on ZH! I think it would make for some lively conversation. Cheers
CNBC notes 'mysterious' gold dump just ahead of employment report
http://news.goldseek.com/GATA/1370628701.php
the 3 oclock hour ramp started a bit early today.
i hope the market has a flash crash like at 358 so it cant recover its gains in time. thatd be priceless
I believe in Goldilocks. It'll keep the FED in the game forevah!!!
Buy stocks, sell options, neutral bonds, accumulate gold.
Whatta, is your avatar 'Sisyphus' GIF trying to build something, or short the markets? Either way, seems a bit of frustration may be setting in soon . . .
deleted fatfinger, lousy internet connection double post.