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Stocks Slump With High Yield Credit Worst In 3 Weeks
USDJPY remains in charge of US equities this morning as hope sprang eternal for a few moments when the NASDAQ managed to go green for 2014 shortly after the open. However, the weakness in USDJPY began around Draghi's speech and stocks in the US inevitably caught down to the carry unwinds. Short-dated Treasuries continue to bleed higher in yield and the 5s30s curve is now its flattest in 4 months (and 2s30s 2-month flats) Credit markets have been waving a red flag for a few days and high-yield and investment-grade credit risk is now back at its widest since Dec 20th. VIX is leaking modestly higher as it seems managers prefer to 'sell' than 'hedge' as the realization of the Fed's QE-costs-and-benefits statement sink in.
NASDAQ briefly declared victory...
The "JPY 500" continues to trade down...
Credit markets continue to press wider...
and Treasuries continues to bear-flatten...
(h/t @Not_Jim_Cramer)
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say it ain't so.......crash already @%#^&
If it crashes on January 14th we owe that guy a beer.
Neh its just some more consolidation before we explode dramatically higher. Markets don't go down like this, there is no excess high, every high and low has been substantially higher than the last and the VIX has been going straight down all year.
How do we know that 1840 on the S&P wasn't an excess high? ?Did a bell ring? What tells you when it's an "excess high"?
that we closed strong into the end of that day and the high happened in the post market, a market has never topped out in the pre or post market ever in history. We will print higher than 1840 this year, probably tomorrow when whatever the number is that they release is determined five milliseconds before they officially release it to be uber bullish and they take them up to 1850 within seconds.
Must....print....moar!
Oh Noes! Get to work Mr. Yellen!
And that Yellen, what a hitter!
(hat tip to you Francis)
pods
Yeah I'd hit her, with a bat!
Dr Yellen is Singing her Sirens song, Booby trap, Tape painting, Vaudville Routine.
It may be more apt to say she's singing her Lilith song. She doesn't having the looks of a Siren to start with, but she sure has the evil hag look down Paaaaaat!
From Wiki:
The Hebrew term Lilith or "Lilit" (translated as "Night creatures", "night monster", "night hag" or "screech owl") first occurs in Isaiah 34:14, either singular or plural according to variations in the earliest manuscripts, though in a list of animals. In the Dead Sea Scrolls Songs of the Sage the term first occurs in a list of monsters.
Yellen: I thaught Bernie said dont taper not do taper.
I'm scratching my head over the usd/jpy trade. I'm going to go out on a limb here. I think it tests the 50 day average (102.00) or even the 101.50 area before it takes another leg higher.
If stocks don't rally soon Yellen will be forced to announce $150 Billion/month QE sooner than she was anticipating.
$25 Billion/month of student debt securities should fuel the Higher Education tuition hikes for next year.
Bullish for financials and elbow patches on sleeves.
You forgot to add bullish for knee pads for politicians.
Just watch Ben and his hoardes defend 3.00% on the 10 yr yield. They lose that, to lets say 3.05 overnight - The Dow will lose 1000 points in two days. Watch how they pound it down on every touch at 3.00%
LOL, kind of reminds of those magic candles on a birthday cake. Makes me wonder how they're going to spit on it to put it out.
Ben?
Ben who?
He don't come round here no more.
Ben is on the beach with Corzine. Both are yucking it up about how they ripped of their prospective clients and got away with it.
Can't happen here. We gotta new plateau goin' on.
of course the ''market'' is off its lows and is moving towards the green.
must be all those btfd people all buying at the same exact time every day with no volume.
How could the market possibly be down at all? According to the mainstream financial media, the economy is full speed ahead and all the news is good. In any case a -0.30 movement down is the only "correction" that this market ever sees, and is resoundly met with intense buying.
And the colours of the index bind your eyes with trembling mermaids,
And you touch the distant markets with tales of brave Bernanke,
How his naked ears were tortured by the Yellen sweetly singing,
For the Goldman Sachs are calling you to kiss their white laced lips.
Talking about a HY bubble, look at PHK which is trading at roughly 50% (yes..just shy of 50%) OVER its NAV.
The fund must earn about 18% on its assets to cover the inflated distribution rate which stands around 12%.
Even with leverage we know this can't be done in today's HY markets.
Note that this isn't even a HY fund per se as it holds mostly mortgage backed paper these days with sprinkles of investment grade and HY.
The fund must resort to very speculative derivative bets to plug the "hole" in what the portfolio can earn income wise and what the fund needs to pay for its distribution.
Let's see where and when Bill Gross stumbles with those bets once the taper/unwind starts affecting assets more profoundly.
Last time he was wrong with a bet on treasury rates back in 2011, this fund's NAv fell like a rock and it finished the year at the 100% percentile.
Next time would be worse, I predict.
While it was very expensive back then to short PHK, the borrow rates have gone down significantly and are now below 6%.
This is one of my favourite shorts as a hedge vs. HY positions (say, HY Closed End funds at DISCOUNTS to NAV).