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Futures Creep Toward All Time Highs Again

Tyler Durden's picture




 

While events in Ukraine have once again broken out into lethal fighting, and in a surprise development the Chinese Yuan crossed the 6.25 line for the first time in two years threatening to accelerate the unwind of carry trades which have a 6.25-6.30 point of max pain, futures remain completely focused solely on the strong after-hours results from Apple and Facebook which have helped push Spoos overnight to near record levels once again. The biggest push was given to NASDAQ futures which are back up 1% with optimism for US tech returning with the material earnings beats from both Apple ($11.62 EPS vs Est $10.17 EPS) and Facebook ($0.34 Adj EPS vs $0.24 forecast). Shares in both companies rose in afterhours trading with Facebook up +5% and Apple up more than +7% (supported further by the announcement that the company was expanding its share buyback plan to $90bn from $60bn). Not even the Nikkei being down 1%, the SHCOMP down 0.5% and the USDJPY once again treading water could put a dent in the tech-driven euphoria, which somehow also managed to slam gold and silver to month lows.

On today's calendar we have initial claims which consensus expects to rise to 315K from 304K, but far more important than layoffs (since hiring is well below pre-recession levels), is the Durable Goods report also at 8:30am which will show whether or not the long suffering and longer expected capex boom is finally coming.

Bulletin summary headlines from Bloomberg and RanSquawk

  • Treasuries little changed before week’s auctions conclude with $29b 7Y notes, WI yield 2.315%; drew 2.258% in March.
  • 5Y notes sold yesterday drew 1.732%, 0.6bp above WI yield at 1pm according to Stone & McCarthy and highest since May 2011
  • ECB’s Draghi said any worsening of the medium-term outlook for inflation in the euro area could be the trigger for broad-based asset purchases
  • Spain sold EU2.65b 10Y bonds at a record low 3.059%, down from 3.291% at a previous sale on April 3
  • Ukraine said its forces entered the city of Slovyansk and killed five pro-Russian separatists as it stepped up an offensive in the east, a day after the government in Moscow warned it would respond if Russians were attacked
  • Bank of Japan officials are increasingly concerned the nation’s bond market is failing to reflect emerging inflation, raising the risk of a sudden surge in yields, according to people familiar with the matter 
  • German business confidence rose in April, with the Ifo institute’s business climate index advancing to 111.2 from 110.7 in March
  • Obama warned China the U.S. would protect East China Sea islands administered by Japan and urged the two countries to peacefully resolve a dispute over the territory that has raised tensions across Asia
  • Sovereign yields mostly higher. Asian stocks mostly lower, with Nikkei -0.9%, Shanghai -0.5%. European equity markets, U.S. stock futures gain. WTI crude and copper higher, gold little changed
  • European equities are seen higher across the board (Eurostoxx50 +0.9%) amid European M&A activity, positive EU earnings, Apple earnings and a dovish Draghi. E-Mini S&P futures have now retraced all of the biotech/Ukraine led sell-off and are now 10 points off record highs.
  • ECB's Draghi said that that bond and money markets could cause the central bank to act with potential rate cuts, asset purchases and an extension of full-allotment tools.
  • Spot gold on the lowest levels of the month trading below the 100 DMA, with no real levels of support until USD 1238/oz, which was last seen at the end of Jan 2014.
  • Later will see the release of US weekly jobs data, durable goods, EIA nat gas, comments from ECB's Constancio and a host of earnings.

US Event Calendar

  • 8:30am: Durable Goods Orders, March, est. 2% (prior 2.2%);
    • Durables Ex Transportation, March, est. 0.6% (prior 0.2%, revised 0.1%)
    • Capital Goods Orders Non-def Ex-Aircraft, March, est. 1.5%  prior -1.3%, revised -1.4%)
    • Capital Goods Shipments Non-def Ex-Aircraft, March, est. 1% (prior 0.5%, revised 0.6%)
  • 11:00am POMO: Fed to purchase $450m-$700m in 2024-2031 sector

Asian Headlines

Nikkei 225 closed down by 0.97% on fears of lower guidance given Japan's recent sales tax rise as Japanese earnings season starts. Shanghai Composite closed down 0.5% as the PBoC conducted the 20th consecutive liquidity drain.

However, the Hang Seng (+0.24%) closed higher as China Unicom, China's 2nd mobile operator, reported strong earnings. JGBs closed lower by 2 ticks despite the weakness in Japanese stocks. (RANsquawk)

EU & UK Headlines

ECB's Draghi struck a dovish tone highlighting that tensions in the bond and money markets could cause the ECB to act on policy (specifically highlighting rate cuts, asset-purchases and an extension of full-allotment as tools on the table). These comments comes as excess liquidity in the Euro-area fell below EUR 100bln for the first time since 2011. ECB sources suggest no consensus now on need for May policy action, which is in line with ECB Nowotny comments yesterday.

German IFO survey beat expectations (111.2 vs. Exp. 110.4) which provided support for EUR/USD and equities. Peripheral bonds also benefited from a well-covered Spanish auction, with all three lines sold at the lowest funding cost on record.

US Headlines

According to sources, the White House are considering a former American Bankers Association lawyer as a possible nominee to the board of the Fed. (RTRS) Currently the Fed is operating with just four of its seven board positions filled. Today sees large-cap earnings from Visa, 3M, Microsoft, Caterpillar and Amazon.com, with markets keen to see if the companies repeat the forecast-beating earnings from Apple after-market yesterday.

Equities

Apple shares trade higher by 7.5% pre-market after their impressive earnings report with the E-Mini S&P trading at 3-week highs, paring the recent biotech and momentum name inspired sell-off. E-mini's now trade back in touching distance of record highs. European equities are higher across the board (Eurostoxx50 +0.9%) further buoyed by positive M&A news from Alstom (+14%), Scania (10%) and Telekom Austria (+6.75%), which are the best performing stocks across Europe.

FX

The EUR's initial strength (led by better-than-expected IFO) was pared following Draghi's dovish speech. NZD is one of the outperforming currencies following the RBNZ's 25bps rate hike and slightly hawkish statement.

Commodities

Spot gold ( USD -6.70) trades at is lowest levels in April trading through its 100 DMA and WTI moves higher (USD 0.41) in line with stronger equities.

On the geopolitical front Ukraine's armoured vehicles enter separatist-held Slovyansk. This comes after earlier reports that there had been a shootout in the area resulting in deaths and injuries and Obama has announced that the US is ready to move on additional Russian sanctions. (BBG)

Jim Reid concludes the overnight recap:

Onto markets and still elevated tensions in the Ukraine and disappointing US data led to softness in markets yesterday in spite of stronger than expected European data. However strong after-hours results from Apple and Facebook have helped US futures overnight. Prior to these earnings reports the S&P 500 closed down -0.22% with the NASDAQ continuing its 2014 underperformance, falling a further -0.83%. The NASDAQ is now down -1.2% YTD (vs the S&P500’s +1.5%). Overnight NASDAQ futures are back up 1% with optimism for US tech returning with the material earnings beats from both Apple ($11.62 EPS vs Est $10.17 EPS) and Facebook ($0.34 Adj EPS vs $0.24 forecast). Shares in both companies rose in afterhours trading with Facebook up +5% and Apple up more than +7% (supported further by the announcement that the company was expanding its share buyback plan to $90bn from $60bn).

In spite of these better than expected earnings figures, Asian markets have struggled to make much headway overnight with the Nikkei down -0.44%, the Hang Seng up +0.19% and the Shanghai Composite unch. In other news the Reserve Bank of New Zealand raised interest rates for the second month on the back of rising inflation concerns. The NZD has strengthened around 0.5% vs the AUD. Elsewhere Bloomberg is reporting that General Electric Co. is in talks to buy France's Alstom SA in a $13bn deal (a 25% premium) which would make it GE’s biggest acquisition ever. The story suggests a deal could be announced as early as next week. It'll be interesting to see whether this boosts European equities this morning. Clearly there have been a lot of M&A stories already this week, especially in the pharma space.

Prior to all this yesterday saw equity weakness across Europe with the Core countries and Italy bearing the brunt of the moves with the DAX and CAC closing down –0.58% and –0.74% respectively whilst the FTSE MIB was down –1.18%. This weakness was felt in credit markets too with iTraxx Main and Xover +1 and +4bps wider respectively. Markets weren’t helped by the continued build up of tensions in the Ukraine yesterday as both the Ukrainian and Russian governments issued statements. The government in Kiev stated it was ready to resume operations against militants in the country’s eastern cities whilst Russia pledged to defend its citizens inside Ukraine, with the Russian foreign minister drawing parallels to the Russian invasion of Georgia in 2008, saying his country was prepared to “respond” if its “legitimate interests” were “attacked directly, like they were in South Ossetia.” This news flow appeared to override what was a relatively good day of European data with April euro-area flash PMI’s up 0.9 points to 54 (vs expectation of no change), the highest level since May 2011. This broad figure reflected a stronger than expected service reading in Germany (55 vs 53.3E) offsetting a weakening of the French Composite to 50.5 (from 51.8). According to our European economists the Euro area April flash readings are consistent with growth between +0.4% and +0.5% in Q2, slightly higher than their current forecasts. This generally positive news flow carried over to our side of the Channel where the BoE released its April 9th minutes in which it said it saw Britain’s recovery, ”building momentum,” even as, “near-term inflationary pressure appeared to have eased further.” All of this comes on the back of the IMF’s report earlier in the month that it expects the UK to be the fastest growing of any of the G7 economies this year.

Over in the US we saw weaker than expected March data on new home sales which fell -14.5% to +384k (vs consensus expectation of +450k). DB’s Joe LaVorgna puts this fall down to a continued weather-related hangover as he notes sales closed in March are largely a function of buyer activity in the prior two months.

Looking to the day ahead it’s relatively quiet on the data front with the stand out release being US initial jobless claims. DB’s Joe LaVorgna expects a reading of 325k whilst BBG consensus is expecting 315K (vs 304k previously).

 

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Thu, 04/24/2014 - 07:04 | 4689705 Cognitive Dissonance
Cognitive Dissonance's picture

Sensing the end is near, the feeding frenzy is always the greatest just before the food source is exhausted.

Thu, 04/24/2014 - 07:14 | 4689713 GetZeeGold
GetZeeGold's picture

 

 

Just don't look down......everything should be fine.

Thu, 04/24/2014 - 07:44 | 4689811 negative rates
negative rates's picture

I thought max pain was anything below the 6.68 threshold.

Thu, 04/24/2014 - 07:14 | 4689716 Serfs Up
Serfs Up's picture

No bubble is fully coooked until the final blow-off top.

Bring it.

/My time.  It is coming.

Thu, 04/24/2014 - 07:24 | 4689746 OptionsHedge
OptionsHedge's picture

there is no feeding frenzy....notice the volume. But there is certainly panic frenzy as markets dip to breathe.

Thu, 04/24/2014 - 08:01 | 4689867 Cognitive Dissonance
Cognitive Dissonance's picture

Not a general market feeding frenzy........yet........but the most shorted have definitely been feasted upon. And I would contend that when the frenzy is in full force the weak and frightened pull back as the wild ones gobble, push and trample. So while there are less pigs at the feeding trough, meaning less volume, the frenzy is still very real. :)

Thu, 04/24/2014 - 07:39 | 4689793 SubjectivObject
SubjectivObject's picture

It's 8 AM.  Do you know where your precious meal ticket is?

Thu, 04/24/2014 - 07:41 | 4689797 Stoploss
Stoploss's picture

This is how you know women are behind these crusades. 

Suppressing gold and natty doesn't do any harm to Russia, although they really think it does.

What will they do when he shuts off the oil and gas? Cry??

Thu, 04/24/2014 - 07:45 | 4689815 negative rates
negative rates's picture

Yea, when people stop throwing food in city trash cans, you know we have a problem Houston.

Thu, 04/24/2014 - 07:05 | 4689706 Sudden Debt
Sudden Debt's picture

I don't think this market will keep rising untill june. I somehow expect a summer of hell.

The question is what will be the trigger?

War? Foodinflation? Oil? Fat finger?

Thu, 04/24/2014 - 07:45 | 4689814 Headbanger
Headbanger's picture

The return of Justin Beiber?

Thu, 04/24/2014 - 07:10 | 4689709 Bangin7GramRocks
Bangin7GramRocks's picture

It will move higher as long as the Fed wants it to move higher. Take your historical charts, print them out on a large format printer, roll them up tight and insert them into your poop shoot.

Thu, 04/24/2014 - 07:21 | 4689734 OptionsHedge
OptionsHedge's picture

expecting ZH to have another panic freakout as markets primed for new hi's today.

Thu, 04/24/2014 - 07:24 | 4689740 GetZeeGold
GetZeeGold's picture

 

 

We are the Titanic!

 

Belgium has our back......what could possibly go wrong?

Thu, 04/24/2014 - 07:49 | 4689827 negative rates
negative rates's picture

Maybe it was really designed to sink, now there's a job for him, raise the Titanic whole and in one piece, that shouldn't take him to long, or cost too much.

Thu, 04/24/2014 - 07:29 | 4689759 Bill of Rights
Bill of Rights's picture

Lets get there first and brag later shall we.

Thu, 04/24/2014 - 07:25 | 4689747 fonzannoon
fonzannoon's picture

There goes silver into the $18's. 

Thu, 04/24/2014 - 07:30 | 4689758 GetZeeGold
GetZeeGold's picture

 

 

It's amazing what you can do with a little hot QE cash.

 

Be sure to thank your grandkids for me.

Thu, 04/24/2014 - 07:33 | 4689771 fonzannoon
fonzannoon's picture

I did not get any of that cash, you did????

Thu, 04/24/2014 - 07:38 | 4689786 GetZeeGold
GetZeeGold's picture

 

 

Someone did.......and they spent if so they could buy real money cheap.

 

You paid for it.....be happy for them.

Thu, 04/24/2014 - 07:42 | 4689804 fonzannoon
fonzannoon's picture

that's where I draw the line. I will pay for it. But I refuse to be happy about it.

Thu, 04/24/2014 - 07:41 | 4689799 NoDebt
NoDebt's picture

Do you own stawks?  Well, there you go then.

Thu, 04/24/2014 - 07:50 | 4689830 negative rates
negative rates's picture

Everything goes to hell, unless you prop it up.

Thu, 04/24/2014 - 07:44 | 4689809 AdvancingTime
AdvancingTime's picture

 Yes it is about charts and computer driven lust!  Damn the reports of ebbing growth and problems across the world, FULL SPEED AHEAD! Do not wonder if we have become fall to complacent to the dangers before us as asked in the following article.

 http://brucewilds.blogspot.com/2014/01/have-we-been-lulled-into-complace...

Thu, 04/24/2014 - 07:58 | 4689855 Comte d'herblay
Comte d'herblay's picture

A gazillion pentijillion paragraphs have been written just in the last 5 years analyzing this and that about what to do about gambling in the stock markets when in reality it hasn't been a gamble at all.  There was no risk in simply buying the Devil's Brew at 666, the NAZZY at 1550, and the dow at 8,200

We are now at 1880, 3,610, and 16,500.

U do the math.

The only advice among all those paragraphs that was completely accurate, simple to follow, and a total no-brainer for the first time I have seen in my admittedly short life.

J B T D.

O and O.

 

Thu, 04/24/2014 - 07:59 | 4689861 GFORCE
GFORCE's picture

The market wants to get up to the previous high and see if there are sellers there. I'd imagine we'll test the highs in dow and sp before the market falls again. Over the last 8 years in May, the dow has fallen roughly 1200 points in all but one year- the 2007 squeeze.

With the negative backdrop of Russia etc, I'd imagine the 'sell in May' crowd will be out in force.

Thu, 04/24/2014 - 08:24 | 4689924 NDXTrader
NDXTrader's picture

It boggles my mind that people are so easily fooled. A stock split and buy back program to cover up the delayed release of iPhone 6. Tablets getting cannibalized by larger phones - which Apple doesn't have

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