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US Celebrates, The World Levitates

Tyler Durden's picture




 

The US and UK markets may be closed for holiday today but that doesn't mean that US equity futures can't spin this weekend's resurrection of anti-EU sentiment in Europe, coupled with the just confirmed resumption of the "anti-terrorist" operation in Ukraine (more on that shortly) following its anticlimatic presidential elections in a positive light. They can and they have, and even though the USDJPY low volume ramp is oddly missing overnight, and 10 Years appear bid, spoos are set for another record high, and are already trading up 0.2% at 1901.3, above 1900 for the first time ever.

European shares remain higher with the autos and bank sectors outperforming and food & beverage, basic resources underperforming. The Italian and German markets are the best-performing larger bourses. The euro is little changed against the dollar. Greek 10yr bond yields fall; Italian yields decline.

Market Recap:

  • S&P 500 futures up 0.2% to 1901.3
  • Stoxx 600 up 0.4% to 343.1
  • US 10Yr yield down 0bps to 2.53%
  • German 10Yr yield up 0bps to 1.42%
  • MSCI Asia Pacific up 0.4% to 141.4
  • Gold spot up 0% to $1292.8/oz

FX/Bonds

  • Euro up 0.1% to $1.3642
  • Dollar Index down 0.13% to 80.29
  • Italian 10Yr yield down 12bps to 3.03%
  • Spanish 10Yr yield down 7bps to 2.92%
  • French 10Yr yield up 1bps to 1.83%

Commodities

  • Brent Futures down 0.5% to $109.9/bbl, WTI Futures down 0.3% to $104/bbl

Bulletin headline summary from RanSquawk:

  • News of a majority for Poroshenko in the Ukraine Presidential elections has underpinned positive sentiment which has seen both the DAX and E-mini S&P print fresh all-time highs after tripping good sized stops.
  • Italy has outperformed throughout the session as the EU Parliamentary elections reveal a victory for Italian PM Renzi against the populist challenge.
  • Today’s session is set to be a light one with both US and UK away from market and no tier 1 data to be released.

EU & UK HEADLINES (UK Markets closed for UK Spring bank holiday)

In ECB commentary, ECB's Coeure said ECB may adopt negative deposit rates, but it is too early to say exactly what the ECB will do at its June meeting. (Gazeta Wyborcza) Markets then failed to provide a reaction to later comments from President Draghi who said the ECB must be particularly alert to negative price spiral and the ECB could offer LTROs and buy ABS, whilst inflation expectations may need QE.

Italy has outperformed throughout the session with the FTSE MIB +2.5% and the yield on the Italian 10yr moving down towards the 3.0% level, this comes as Italian PM Renzi defeated the populist challenge in the EU parliamentary elections which signifies resounding support for Renzi's party. With the tightening of the IT/GE spread, the German 10y tripped stops and moved back below the key 146.00 handle.

Prelim Barclays month end extensions show Pan-Euro Agg at +0.04y (Prev. +0.10y), Sterling-Agg at +0.06y (Prev. +0.02y) US

HEADLINES (US markets closed for Memorial Day)

Newsflow from the US remains light, with US markets closed today for Memorial Day and no tier 1 data, Fed speakers or fixed income events on the schedule.

Prelim Barclays month end extensions show US Treasury at +0.13y (Prev. +0.08y)

EQUITIES

Stocks in Europe opened higher (Euro Stoxx +0.7%) and then extended these gains as participants responded to the news that Petro Poroshenko is currently leading the exit polls for the Ukrainian Presidential elections, which follows on from Friday where Russian president Putin said he would work with elected Ukraine President. Volumes are generally light due to UK and US holidays, however the DAX tripped stops on good size through the 9820 level (Jan & May highs) and then 9850 to print a fresh all-time highs. With European equities trading at their highest levels since 2008, the positive sentiment filtered through to US asset classes as the e-mini S&P broke above the 1900 handle to print its own all-time highs.

FX

Despite the strong performance in European equities, FX markets have been resilient to this morning’s price action with most pairs relatively rangebound. However, EUR/USD resides in marginal positive territory after breaking back above its 200DMA at 1.3639.

COMMODITIES

Morgan Stanley says that a reversal in Indian gold policy will not spur demand. In a report Morgan Stanley said that official numbers will rise but lost demand has been partially met by unofficial imports so effective rise in imports will be lower on a net basis. (BBG) Following the elections in India the Modi led BJP party have begun to reverse the gold curbs put in place last year.

WTI and Brent both trade lower heading into the North American session as the risk premium erodes further from an uneventful election in the Ukraine where exit polls shows Poroshenko as the victor.

 

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Mon, 05/26/2014 - 07:35 | 4794990 GetZeeGold
GetZeeGold's picture

 

 

Is this the matrix or reality?

Mon, 05/26/2014 - 07:50 | 4795012 valley chick
valley chick's picture

Matrix.  Reality soon will be a bitch.  Now go flip those pink slime burgers and slap it in a gmo bun. Oh..and wave aflag while you are at it. /sarc

Mon, 05/26/2014 - 07:52 | 4795014 smlbizman
smlbizman's picture

http://www.e-news.su/politics/12150-prozrachnye-vybory.html

it sure seems like this ukraine election was a sham....translate to english..

Mon, 05/26/2014 - 07:56 | 4795017 g'kar
g'kar's picture

it's not a complete meal without American cheese and whine.

Mon, 05/26/2014 - 08:09 | 4795034 tstraus
tstraus's picture

Matrix. I once held that financial markets were a gestalt, that they represented a sum greater than the collective intelligence of their individual participants. That ended in 2007 as the first waves of the tsunami of credit destruction had already washed ashore and markets kept hitting new highs. Collective willful blindness on such a scale I thought I would never see again. Not so, apparently. Fraud in his "Civilization and its Discontents" and then many years later Erich Fromm in the "Sane Society" the question was asked if a whole civilization can be insane. The answer is obviously yes, One of the most important battles for man (generic term, whoa be that I be politically incorrect) as an individual and for humankind is that the one between reality and illusion. For many reasons, Americans and most of the Americanized empire have lost that battle. We have chosen to take the wrong pill.

Mon, 05/26/2014 - 07:44 | 4795005 intric8
intric8's picture

Futures up over jewish oligarch Poroshenko's win in ukraine? Verily.

Mon, 05/26/2014 - 07:49 | 4795011 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

Any result, any data = futures up. 

Mon, 05/26/2014 - 07:55 | 4795016 dutchTender
dutchTender's picture

we are gonna floating on up ... to the  ....chitter

Mon, 05/26/2014 - 08:04 | 4795029 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

It's the final move to destroy all short positions, all bears. 

Mon, 05/26/2014 - 08:35 | 4795088 DavidC
DavidC's picture

I'm one of the few left standing and seriously doubting myself.

March 2009, turned on a sixpence (or the US equivalent) and still going up on lowest labour participation rate in 40-50 years, more leverage in the system than in 2008-9, Fed sitting on >$4 trillion of 'assets' (= debt), etc etc.

DavidC

Mon, 05/26/2014 - 08:07 | 4795038 AdvancingTime
AdvancingTime's picture

Over the years we have witnessed the type of market reversal the big banks supported by the Fed can generate with a concerted effort to buy S&P 500 index futures at crucial support points late in the day. This has proved more than enough to turn the markets from red to green in the blink of an eye. 

Even a bad report on job creation is twisted and spun as to mean more Federal Reserve support for easy money policies and a reason to rally the market. It seems no suggestion of weakness no matter how subtle can exist because it may begin to unravel the already fragile consumer confidence. For the big boys, its insider information and computer trading, this includes computing patterns that exploit where stops are placed, this improves their ability to wash the timid and weak bears out of their positions in this manipulated market. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/04/bears-have-little-reason-for-conf...

 

Mon, 05/26/2014 - 08:47 | 4795113 OC Sure
OC Sure's picture

There are trends within trends, any of which can be your friends,

But there is only one primary trend that is moving toward its end:

"Even a bad report on job creation is twisted and spun as to mean more Federal Reserve support for easy money policies and a reason to rally the market."

"...The trend has been established before the news is published, and in bull markets bear items are ignored and bull news exaggerated, and vice versa."

   - Jesse Livermore

Mon, 05/26/2014 - 08:07 | 4795040 buzzsaw99
buzzsaw99's picture

the eCONoME is strong

Mon, 05/26/2014 - 08:32 | 4795081 Obamanism
Obamanism's picture

European Political power kicked in the teeth by Anti-European parties, Ukraine in flames and the German markets are up nearly 1% and France 0.5%. I can only guess the markets thought the results in Europe were good and WW111 had not started. Down is up and UP is down.

 

Mon, 05/26/2014 - 09:04 | 4795137 intric8
intric8's picture

The yellen put may go down as the best ever. Market realities have been turned on their heads. Price action is a reflection of economic policy- optimistic cluelessness. This isnt goldilocks, its alice in wonderland. Stay long, the fed's mandate is to keep dem dems in power because their goals are most aligned going forward, thus the indices will sally forth as a function of manipulation, independent from reality. Avoid stops, lest they gun for them, flash-crash style.

Mon, 05/26/2014 - 08:42 | 4795103 post turtle saver
post turtle saver's picture

ah RThedge... that pesky squirrel and moose just can't be caught, can they? whatever is Fearless Leader going to say?

Mon, 05/26/2014 - 08:59 | 4795127 thismarketisrigged
thismarketisrigged's picture

every holiday in which the u.s is closed, global markets r always up significantly of course, just so the following day the u.s markets can go up another 1 and a half percent.

 

this happens after labor day, thanksgiving, memorial day, presidents day, independence day, whatever the holiday might be, its all but guranteed the next day will be an up day.

 

 

Mon, 05/26/2014 - 09:07 | 4795141 disabledvet
disabledvet's picture

Interesting way to finance the opening salvos of World War Three as well. "Just hyperinflate everything."

We had wage and price controls in WWII...along with obviously zero unemployment and We the People working our butts off (Rosie the Riveter.)

Now it's "nuke the dollar to achieve victory."

I'll be voting the Koch Brothers from now on. Move along...

Mon, 05/26/2014 - 09:29 | 4795169 tstraus
tstraus's picture

Mundus Vult dicipi, ergo dicipiatur" - the world wishes to be deceived, let it be deceived

Mon, 05/26/2014 - 12:03 | 4795551 Bear
Bear's picture

Bad news for The Bear

Mon, 05/26/2014 - 16:36 | 4796367 AdvancingTime
AdvancingTime's picture

 A big shift is occurring in what consumers are buying. Recently we are witnessing a shift from general consumer goods to more purchases of autos and healthcare. The first quarter GDP just came out with a near flat increase of just .1% yet these two sectors have been outperforming the economy. 

If indeed online and auto sales are roaring up double digits at the same time healthcare spending has increased 4.2% it is only fair to assume small business and someone else is getting their ass kicked. Interestingly, this is all occurring as the government continues to pour out billions of dollars each month in student loans, many of these loans will never be repaid. This can be viewed as more proof we are on the wrong path, more on this subject in the article below.

 http://brucewilds.blogspot.com/2014/05/consumption-of-autos-healthcare-a...

Do NOT follow this link or you will be banned from the site!