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Overnight Carry-Driven Futures Ramp Pushes Stocks Just Shy Of New Record

Tyler Durden's picture




 

Just when it seemed that the ever deteriorating situation in the Crimean, the unexpected plunge in Chinese exports which has sent the Yuan reeling again, the Copper slam which is down some 10% in two days, and the outright collapse in Japan's capital flows, not to mention the worst GDP print under Abe, may not be quite "priced in" by a market that is now expecting well beyond perfection in perpetuity, further shown by Goldman over the weekend which reprorted that revenue multiples have never been greater, and futures may finally dip, here came - right on schedule - the USDJPY levitation liftathon, which boosted futures from down 10 to barely unchanged, and which should be green by the second USDJPY ramp some time just after 8 am.

While the risk averse sentiment which was evident overnight in Asia as a result on weaker than expected trade data carried over into the European session and resulted in stocks opening lower, the cautious sentiment gradually reversed as market participants sought to capitalise on the sell-off. The sharp slide in Chinese exports and data overall was in part attributed to China clamping down on fake invoicing, as well as copper financing, also coincided with iron ore entering bear market territory, which in turn meant that basic material related stocks underperformed this morning. However the flight to quality was short lived and stocks have gradually moved off lows, with USD/JPY also recovering overnight losses, since it is widely expected that China will hit its growth targets which the state announced only last week. At the same time, Bunds were able to close the opening gap higher and USTs moved back to flat. There was little in terms of tier 1 macroeconomic releases this morning and going forward, market participants will get to digest comments by Draghi and Coeure, while the BoE will conduct its first APF op this week (part of Gilt reinvestment programme)

Bulletin overnight summary from Bloomberg and RanSquawk:

  • Commodities under pressure following the release of Chinese Trade Balance data, which itself was attributed to China clamping down on fake invoicing, as well as copper financing.
  • However the consequent cautious sentiment was short lived in Europe this morning and stocks managed to recover off lowest levels of the session, with Bunds also closing the opening gap higher.
  • Eurogroup Chairman Dijsselbloem said that Greece will not get the next bailout loan tranche unless an agreement with the Troika is reached.
  • Treasuries little changed, 10Y yields 2.794% after closing at highest since Jan. 22 Friday following stronger than forecast payrolls; focus on retail sales tomorrow, $64b 3Y/10Y/30Y auctions.
  • China’s exports plunged 18.1% in February vs expectations for gain of 7.5% while producer prices fell 2%, the most since July
  • China’s broadest measure of new credit trailed analysts’ estimates in February, indicating a slowdown in shadow banking following the near-default of a trust investment product
  • The yuan fell after the PBOC bank cut the currency’s fixing by 0.18%, most since July 2012
  • Russian forces advanced in Ukraine’s Crimean peninsula, ignoring Western calls to halt a military takeover before the region’s separatist referendum
  • Investigators from nine countries are struggling to solve the mystery of a missing Malaysian jet, as Vietnamese forces today failed to find the airplane debris they had spotted yesterday off the country’s southern coast
  • The amount of debt globally has soared more than 40% to $100t since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates
  • Philly Fed President Charles Plosser said recent encouraging economic data isn’t enough to change the pace of the central bank’s asset purchases
  • Sovereign yields mostly lower. EU peripheral spreads widen. Asian equities fall, with Nikkei-1%, Shanghai -2.9%. European equity markets gain, U.S. stock-index futures decline. WTI crude, gold and copper lower

US Event Calendar:

  • No Major events
  • POMO - 11:00am: Fed to purchase $2.25b-$2.75b notes in 2021-2024 sector

Asian Headlines

Chinese CPI (Feb) Y/Y 2.0% vs. Exp. 2.1% (Prev. 2.5%), PPI (Feb) Y/Y -2.0% vs. Exp. -1.9% (Prev. -1.6%)
Chinese Trade Balance (Feb) (USD) Y/Y -22.99bln vs. Exp. 14.50bln (Prev. 31.86bln, Rev. 31.87bln)
Exports (Feb) Y/Y -18.1% vs. Exp. 7.5% (Prev. 10.6%)
Imports (Feb) Y/Y 10.1% vs. Exp. 7.6% (Prev. 10.0%)
Japanese GDP SA (Q4 F) Q/Q 0.2% vs. Exp. 0.2% (Prev. 0.3%)
GDP Annualized SA (Q4 F) Q/Q 0.7% vs. Exp. 0.9% (Prev. 1.0%)

EU & UK Headlines

ECB's Noyer says rate cuts not 'too controversial' for the ECB, adding that economic data has been inline with baseline scenario and economic conditions are inline with monetary policy at this stage. ECB's Noyer also said that he fully agrees with BUBA Chief that suspension of sterilisation is one of the tools ECB could use if needed. (RTRS/BBG)

ECB set to give Eurozone banks details of asset quality test approach on dealing with bad loans, according to sources. (RTRS)

Eurogroup Chairman Dijsselbloem said that Greece will not get the next bailout loan tranche unless an agreement with the Troika is reached. (Ta Nea)

- Over the weekend the Greek government and Troika officials reached an agreement on the capital needs of the country's banks. (Athens News Agency)

- The Eurogroup are meeting in Brussels today to discuss the Greek economic adjustment program; Troika are set to return to Greece on Wednesday March 12th.

US Headlines

Republicans are challenging Barack Obama to use America’s burgeoning energy production to stand up to Russia by calling on the president to loosen limits on US oil and gas exports to Europe. (FT)

Equities

French CAC index has outperformed its peers since the get-go, with Bouygues trading up 6.5% following reports that the company has agreed to sell its mobile network and much of its spectrum to Iliad for up to EUR 1.8bln as a way to head off competition regulators' concerns about its pending bid for Vivendi's SFR. Also of note, Rolls Royce shares opened up 2% following reports that Daimler will sell a 50% stake valued at GBP 1.9bln in an engine joint venture to partner with Rolls Royce holdings and to invest in its automotive and truck business. Despite the reversal in sentiment, basic materials remained the worst performing sector, with precious and base metal prices also trading lower.

FX

The risk averse sentiment which was evident overnight in Asia gradually ebbed, which in turn allowed the commodity linked AUD/USD to recover overnight losses, with EUR/CHF also moving into positive territory as market participants downplayed the implications of the latest Chinese Trade data on long-term outlook for the economy.

SNB's Chairman Jordan said the SNB will not exclude tools like negative rates; the SNB will not rule out taking further steps to ensure its monetary-policy stance remains appropriate. (BBG/Basler Zeitung)

Commodities

Base and precious metals have seen substantial weakness in overnight trade, retaining the trend seen on Friday, with iron ore entering a bear markets, copper plunging to multi-month lows and gold down following the release of Chinese trade balance data overnight.

Chinese demand for gold is seen as falling 17% this quarter, from 250 mt from 300 mt, as prices for the metal rally, according to the China Gold Association. (BBG)

Morgan Stanley lowered it 2014 average gold price forecast by 11.6% to USD 1160/oz and cut its 2015 forecast by 12.5% to USD 1138/oz. (RTRS)

Russian forces have tightened their control of Crimea on Sunday in spite of warnings from the US and its allies not to continue its military escalation or attempts to annex the peninsula. Russian troops took over a Ukrainian border post in the west of the region, detaining 30 Ukrainian troops, and now occupy a dozen such posts, according to the Ukrainian border guard. (FT)

Chinese Crude Oil Imports (Feb) 23.05mln tonnes, up 11% Y/Y, down 18.1% M/M. (DJN)

Libya's El Sharara oilfield has resumed production, with output gradually increasing, according to NOC. (BBG)

 

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Mon, 03/10/2014 - 07:12 | 4529769 GetZeeGold
GetZeeGold's picture

 

 

Everything is dialed in and fixed.......don't touch anything!

Mon, 03/10/2014 - 07:16 | 4529772 Obchelli
Obchelli's picture

And as I said last night futures are back up based on F**G Nothing....

F**k Japan, F**k China, F**k Asia as a whole and EU too...

 

 

USA USA USA

 

Is Kevin Henry working at night shift?

Mon, 03/10/2014 - 07:31 | 4529778 fonzannoon
fonzannoon's picture

what I am about to say is going to shock some people on here. 

This market is rigged.

Mon, 03/10/2014 - 07:49 | 4529783 GetZeeGold
GetZeeGold's picture

 

 

Hold on.....let me find my shocked face.

http://www.youtube.com/watch?v=srw3RdiIlrQ

Mon, 03/10/2014 - 10:03 | 4530097 Manthong
Manthong's picture

“Shop ‘Till You Drop”

New motto of Fed, ESF and PPT

Mon, 03/10/2014 - 07:50 | 4529798 negative rates
negative rates's picture

These cards are marked, new deck. 

Mon, 03/10/2014 - 08:17 | 4529828 thismarketisrigged
thismarketisrigged's picture

I AGREE!!!!!!!!!!!!!!

Mon, 03/10/2014 - 07:30 | 4529776 negative rates
negative rates's picture

I would'nt mess with that if I were you Yogi, I would'nt touch that if I were you yogi.

Mon, 03/10/2014 - 07:15 | 4529771 firstdivision
firstdivision's picture

Me thinks 'The Big Short' part deux is setting up right now. 

Someone's 'Buy $NG' button seems stuck this morning, or did some London trader show up drunk again?

Mon, 03/10/2014 - 07:51 | 4529801 1fortheroad
1fortheroad's picture

Yea, Congress and all their vast wisdom wants to fix Europes Nat Gas problems now.

Mon, 03/10/2014 - 07:27 | 4529773 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

When Asia is "up" that's a good sign for the U.S. open, but when we have a big down day in the Far East markets, then this, of course,  means nothing. Keep buying stocks people. Find some extra change in the cushions.

Mon, 03/10/2014 - 07:31 | 4529775 GetZeeGold
GetZeeGold's picture

 

 

Just got a call from the trading desk.....everything is looking A-OK!

http://www.youtube.com/watch?v=vIMwMsY0ndo

Mon, 03/10/2014 - 08:27 | 4529839 wallstreetapost...
wallstreetaposteriori's picture

"Totally fucked"....  I'm not sure if you can even lose any money trading the futures anymore.  Its like a "guaranteed return".

Mon, 03/10/2014 - 09:07 | 4529916 negative rates
negative rates's picture

When the trading day ends, you will.

Mon, 03/10/2014 - 07:36 | 4529786 spankfish
spankfish's picture

Totally off subject... best stock pick of the day!!! The Tylers need to do a story on this one...

Take a look at the signs being held up by the protesters... errr... ahhh, bought and paid for protesters/security service personnel.

"NATO good buy"

You just can't make this shit up...

http://www.dailymail.co.uk/news/article-2576490/Are-Blackwater-active-Ukraine-Videos-spark-talk-U-S-mercenary-outfit-deployed-Donetsk.html

Mon, 03/10/2014 - 07:54 | 4529795 GetZeeGold
GetZeeGold's picture

 

 

I noticed they backed out of there pretty damn quick.....good call.

 

Those guys are yelling Blackwater......yep......time to go!

http://www.youtube.com/watch?v=0EIeb_6MT9k&feature=player_embedded#t=28

 

....and there they go!

http://www.youtube.com/watch?feature=player_embedded&v=r8TFbJdv1bg

Mon, 03/10/2014 - 08:13 | 4529811 Quinvarius
Quinvarius's picture

The only good use for them is to secure government buildings since the Ukrainian reserves didn't show up, the police are pissed, and the military is defecting.  Anyone who took that contract is a moron.  Fighting off Taliban in sandals with surplus weapons from a fortified military base is one thing.  Facing down well supplied Russian tanks, Infantry, Spetznaz, and Russian backed East European militia organizations in a street fight with only what you could carry in on an airplane is something else.  The fact that they are running around on the streets high profile probably indicates that those guys were lost and could not find their site more than anything else.

Mon, 03/10/2014 - 07:42 | 4529790 spankfish
spankfish's picture

Hmmm... perhaps its the Tylers photo bombing the protest?

Mon, 03/10/2014 - 07:43 | 4529793 new game
new game's picture

blackwater turn red sea

cue gerald

Mon, 03/10/2014 - 07:55 | 4529805 jubber
jubber's picture

All of Europe opened lower then suddenly shot up this morning on no news whatsover,.. Italian bank bad loans rose 24.5% y/y in January..so FTSEMIB bounced 400 points !

Total nonsense...but big POMO comiing as the Dow rises 70 points from the overnight low and the S&P is now green just up the 10 points...sigh

Mon, 03/10/2014 - 08:01 | 4529810 MickV
MickV's picture

BTFWW3

Mon, 03/10/2014 - 08:08 | 4529815 DavidC
DavidC's picture

I'm reminded of the cow in 'Me, Myself and Irene' where Jim Carrey keeps shooting the 'dead' cow in the road only for it to revive each time (and then it appears in the credits at the end with a bandage on its head).

No matter what the data and fundamentals this market keeps popping back up again.

DavidC

Mon, 03/10/2014 - 08:10 | 4529819 GrinandBearit
GrinandBearit's picture

But wait, ZH said a few articles before this that the futures would be red because of the carry trade?

I want my money back!

Mon, 03/10/2014 - 08:49 | 4529874 ms8172
ms8172's picture

So the futures are down this morning???.. of course they are... I took my short bets off the table last week watching the S&P drag me through the gravel.  Is someone watching my trades?   LOL

Mon, 03/10/2014 - 09:22 | 4529964 q99x2
q99x2's picture

As long as the FEDs market index producing software is running we are good to go.

BTFATH

Mon, 03/10/2014 - 09:25 | 4529979 elwind45
elwind45's picture

The Fed never sleeps when it comes to being the worlds fireman with income produced from everywhere America. This may not be the dip heard around the world but central bankers were burning the last of the midnight oil?

Mon, 03/10/2014 - 09:49 | 4530054 B2u
B2u's picture

Surprise, surprise, surprise....

 

http://www.youtube.com/watch?v=J6_1Pw1xm9U

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