Dow Surges Despite Weak Data, European Crisis, And Military Coup
Uncertainty over global oil supply chain amid a 'tanks on the street' and a coup in Egypt, no worries. Portugal increasingly prone to testing Draghi's OMT 'promise' as Cabinet collapses, don't sweat it. US growth implications terrible given trade balance and ISM services, all good. It appears to us like US equity market algos were not told that today is a half-day as they progressed with the BTFD ramp in the first half after some serious declines early on.
While the S&P 500 only made it back to unchanged (+1), the Dow gained over 50 points and never looked back from the open of the day-session as bad (ISM) is clearly good (and jobs were mediocre enough not to make a difference). The NASDAQ remains the outperformer post-FOMC (-0.9%) while the rest are -2.25% or so -
even as QE-darlings Materials and Homebuilders remain -5.6% post-FOMC. Discretionary names once again got back to unchanged.
Credit markets tracked stocks in general today amid illiquidity but Treasury yields continued their JGB-like high-volatility swings with a 8.5bps range to close at the high-yields of the day at 2.5% (for 10Y).
Oh, and it seems military coups are great for stocks - EGPT +4.2% today (+10% in last 2 days).
Bonus Chart: The big question is, will Shinzo Abe launch a new 4th arrow in his strategic plan - The Military Coup - given its seemingkly excellent results in creating a wealth effect...
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