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QE Trade Continues As Bonds, Bullion, And High-Beta Stocks Bounce

Tyler Durden's picture




 

So Venezuela is collapsing, Thailand is crumbling, and Ukraine is for all intent and purpose under martial law, US macro data is dreadful (and no, it's not all the frigging weather), and German consumer confidence dumped again; and US stocks soar (8th day in a row for Nasdaq for first time since July) on the back of a BoJ move that was fully expected (and entirely under-utlized) but sprung USDJPY back above 102. S&P futures volume was 35% below average as the day-session range was extremely small. The Russell 2000 almost reached unchanged for 2014. The un-taper, QE balls-to-the-wall trade continues it would appear - Gold (and even more so silver - longest win-streak in 46 years) continue to surge; Treasury yields continue to slide; the USD slips lower (led by EUR strength); and of course, high-beta equities jump higher (as stodgy big caps underperform). Unfortunately, the EM crisis is far from over - as EM FX tumbled today. VIX also rose notably, disconnecting from stocks; and credit markets are wider today than Friday's close.

 

While stocks made the headlines, the real news was made in commodity-land with silver and crude oil surging...

 

Quite a mixed day - KO dragging the Dow down, Trannies weak but high beta honeys soared...

 

The Nasdaq is following a very similar path to July - the last time it tested its 100DMA - up 7.8% in the last 8 days - the most since Dec 2011

 

Despite some early weakness, stocks recovered to track the flatness in USDJPY... but EM FX kept sliding... look at the narrowness of the trading range this afternoon

 

Treasuries rallied along with stocks but soon after Europe closed, bonds started to sell-off modestly... the sell-off Friday has been eradicated...

 

FX markets overall were quite volatile though we note the knee-jerk of the BoJ is starting to fade. USD slipped lower as EUR strength dragged it down...

 

Year to date - the Nasdaq is in full bulltard mode; The Russell and S&P are closing in on unchanged for 2014

 

VIX decoupled from stocks today...

 

And credit markets are worse than Friday's close...

 

Charts: Bloomberg

Bonus Chart: WTI crude prices have risen at their fastest pace in 9 years (and are at their highest on record)...

 

Bonus Bonus Chart: The Nikkei got a little over-excited this afternoon as USDJPY slid lower...

 

 

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Tue, 02/18/2014 - 17:06 | 4449649 Obama_4_Dictator
Obama_4_Dictator's picture

Lock in those profits before the correction.

Tue, 02/18/2014 - 17:08 | 4449664 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

Correction aka robbery.

Tue, 02/18/2014 - 17:19 | 4449720 jbvtme
jbvtme's picture

stawks (as opposed to gold) are a safe haven for a declining dollar which is on its way to the barber for a 30% haircut.

Tue, 02/18/2014 - 17:21 | 4449734 Obama_4_Dictator
Obama_4_Dictator's picture

Then Gold will increase 30%.

Tue, 02/18/2014 - 17:26 | 4449756 fonestar
fonestar's picture

....and in other news Bitcoin had an uneventful day, stable at around $610.

Tue, 02/18/2014 - 17:52 | 4449868 Charles Nelson ...
Charles Nelson Reilly's picture

if I had a bitcoin for everytime you posted about bitcoins.... i'd be worth 4 figures!

Tue, 02/18/2014 - 18:05 | 4449924 fonestar
fonestar's picture

You'd be worth alot more than that.

Tue, 02/18/2014 - 17:38 | 4449808 jbvtme
jbvtme's picture

yes krugman, it's true bitch

Tue, 02/18/2014 - 17:31 | 4449719 TheRideNeverEnds
TheRideNeverEnds's picture

Time for corrections are over, its all or nothing; there are two options from here, you know it, I know it, they know it.   They keep printing more money at a faster and faster pace untill it comes unglued and crashes into the ground or they stop printing money and the whole thing comes unglued and crashes into the ground.  

 

The only real question is when, not if, it will all fall apart and do you have the capital to hold shorts as the positions move potentially another few hundred percent against you demonstrating the true nature of infinite risk.

 

If you like selling em here at 1840 you are going to LOVE selling them next year at 2840....

Tue, 02/18/2014 - 17:51 | 4449860 skwid vacuous
skwid vacuous's picture

1875 end of week or you go away ? ...mmm?

Tue, 02/18/2014 - 17:10 | 4449661 Ham-bone
Ham-bone's picture

What makes more sense -

that the Fed ran (runs) a secondary QE program (perhaps equal to the on-books QE...perhaps double) through foreign financial centers of the world through countries like Ireland, Belgium, Norway, Taiwan, UK, HK, Russia, etc, etc. to maintain the US Treasury bid / yield and these purchases are "attributed" via TIC in the nation where they are purchased (not to purchaser)

ie, who believes that our good friend Russia increased their holdings from $8 B in Jan '07 to $140 B today???  Make sense???

ie, how bout China increasing from $400 B in '07 to $1.268 T now in US Treasury debt???

ie, how about Norway who held $0 in June '07 now holding $97 B in Treasury debt???  Make sense???

ie, Ireland held $10 B in '07...now holds $125 B???  Make sense???

And on and on...

OR

These countries love american debt that yields nothing, will be paid back in inflated dollars, and ties them to a dollar based global system they are trying to move away from???  Since '08 they have all supposedly massively increased their holdings for somebody???

FYI -

this data really is utterly worthless...read.

Long and short of this is we have no idea who bought these, who owns these, only where they are purchased and being held.  Nothing to stop the Fed or ESF or whatever to buy all the Treasury's they want with free money and hold them in China or Japan or Belgium to attribute them to "foreigners" rather than Fed???  If this is 10% right, be very very afraid of the dollar.

http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticfaq2.aspx#q7

Tue, 02/18/2014 - 17:12 | 4449685 NOTaREALmerican
NOTaREALmerican's picture

Interesting...  

Tue, 02/18/2014 - 17:56 | 4449715 Ham-bone
Ham-bone's picture

If above is even remotely correct - Dollar may be the dirtiest dirty shirt!!!

These nations are de-dollarizing asap via removing dollar trading (particularly China/ Russia), talking dollar down, but strangely their attributed holdings only go up...perhaps they really are moving away and we only see the facade of dollar stabiliteeeee'

The biggest "red flag" in this is the Fed tapering, and they were buying all medium term Notes / all Bonds (up to their 70% limit) but on their stated exit from QE, "Foreigners" who own $5 T+ would have seen rates would be rising and prices falling...if they were "investors" they would have been selling.  But no selling...these are not "investors".  This is someone unconcerned with taking losses.

Tue, 02/18/2014 - 17:47 | 4449851 El Hosel
El Hosel's picture

... Miss, Miss, Miss,  LZB,MFRM,AMWD,  Chairs, Beds, Cabinets.

Un-Taper Party on Garth.

Tue, 02/18/2014 - 17:45 | 4449843 Everybodys All ...
Everybodys All American's picture

I've long suspected something like this going on and yet very very hard to prove. Belgium buying our debt is a big red flag ... It's not like they have the money to buy shit. The ponzi continues...

Tue, 02/18/2014 - 18:43 | 4450075 fuu
fuu's picture

With a GDP if $486B Belgium spent 10% in December buying treasuries according to the data.

Tue, 02/18/2014 - 19:21 | 4450188 Everybodys All ...
Everybodys All American's picture

Does Belgium have a functioning government? Honestly, I thought they were still in disarray.

Tue, 02/18/2014 - 20:00 | 4450363 fuu
fuu's picture

If they spent 10% of their GDP in a single month buying treasuries I would say no they do not have a functioning governemnt.

Tue, 02/18/2014 - 18:03 | 4449903 silver surfer
silver surfer's picture

So the FED has printers all over the world interesting indeed.

As a follow up, Norway only holds around $9 B  in treasury debt in their foreign exchange reserves http://www.norges-bank.no/pages/97577/FI_holdings_Reserves_Sorted_12.pdf, and around $3,5 B in their Money market portfolio.http://www.norges-bank.no/pages/97577/money_market_portfolio_12.pdf

Tue, 02/18/2014 - 18:11 | 4449954 Ham-bone
Ham-bone's picture

And the remaining $85 B is "attributed" to Norway in the TIC report...

Tue, 02/18/2014 - 18:21 | 4449982 silver surfer
silver surfer's picture

There must be alot of stupid rich Norwegians then ? ...

Tue, 02/18/2014 - 18:06 | 4449929 DetectiveStern
DetectiveStern's picture

You gotta buy something with the money you get for selling oil and other goods to the US. They pay in dollars so it makess more sense to keep it in USD than convert it your your currency knowing that the yanks are going to deflate it.

 

Tue, 02/18/2014 - 18:14 | 4449968 Ham-bone
Ham-bone's picture

So it didn't make sense to buy T's prior to '08 when Norway sold oil for $'s and T's were yielding 4%-7% but since '08 it makes sense to lock into something yielding 1%-2%???

Tue, 02/18/2014 - 18:19 | 4449987 Winston Churchill
Winston Churchill's picture

They are lying about everything else, so why not ?

Tue, 02/18/2014 - 17:15 | 4449696 Tsar Pointless
Tsar Pointless's picture

So S&P 2000 and $4.00 gasoline by April.

Okay then. Bullish.

Tue, 02/18/2014 - 17:54 | 4449869 skwid vacuous
skwid vacuous's picture

and $6 nat gas, and $1.09 mighty dog cans for aunt thelma, she won't know the difference

Tue, 02/18/2014 - 20:33 | 4450540 MeelionDollerBogus
MeelionDollerBogus's picture

sing it brudda! Alpo's for spoiled grannies.

Tue, 02/18/2014 - 17:38 | 4449809 hugovanderbubble
hugovanderbubble's picture

Markets are no longer rational

Tue, 02/18/2014 - 18:07 | 4449938 bullocks
bullocks's picture

TVIX closed at 6.66 ....just sayin'! *flies away*

Tue, 02/18/2014 - 19:59 | 4450358 fuu
fuu's picture

Only $70,834,000,000 in TOMO today. Rate moved up from 3 bp to 4bp.

Tue, 02/18/2014 - 20:11 | 4450410 MeelionDollerBogus
MeelionDollerBogus's picture

It's the Cramer all-in-buy-buy-BUY discount! Don't miss these low prices!
Nobody can beat this market, nooOOOOOOoooobuuuuuudy!

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