Bond Bears Are Scratching Their Heads While Looking At These Charts

Tyler Durden's picture


Large speculators (read - hedge funds or the supposed "smart money") have shifted their S&P 500 positioning to net short, increased their Russell 2000 short positioning and decreased their NASDAQ longs to one-year lows. Market-neutral funds have dropped exposure notably in the last week and long/short funds are well below market norms for their long positioning. But what has the bond bears really scratching their heads (as they added to their shorts in the last week) is that the last time so many people were convinced that rates can only go higher (based on CFTC data), bad things happened in stocks.

The smart money is the shortest it has been in the last few years... and is down 1.15% in 2014 (hedge funds).


Smart money is short and getting shorter...


And the flow is one way...


But bond bears keep adding to their shorts...


Which didn't end so well last time for stocks.


So in summary - Hedge funds are selling (and most short in years), smart money traders are selling, retail (who was buying until recently) has been selling recently (as we noted here)... so who is buying?

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Tue, 05/27/2014 - 13:58 | 4798987 Dr. Richard Head
Dr. Richard Head's picture

Who is buying?  Why unicorns and leprechauns, of course.  

Tue, 05/27/2014 - 14:03 | 4799004 slotmouth
slotmouth's picture


Tue, 05/27/2014 - 14:12 | 4799025 NDXTrader
NDXTrader's picture

The BOJ and Fed. S&P goes down...Nikkei goes down. Nikkei goes down and a lot of politicians are out of a job

Tue, 05/27/2014 - 14:18 | 4799039 disabledvet
disabledvet's picture

mamamamamamam MY KUBOTA!

Tue, 05/27/2014 - 15:00 | 4799163 ACP
ACP's picture

The Fed is the biggest buyer, of course. If they have the cash to bang up the GBP vs USD to move the financials up, bang up the USD vs JPY to bang up the overall market, bang up the SPY and es minis, all at the same time, they have the money to short bonds.

Tue, 05/27/2014 - 14:16 | 4799033 max2205
max2205's picture

'Smart' people can be stupid too

Tue, 05/27/2014 - 14:16 | 4799035 Jumbotron
Jumbotron's picture

Belgium.  For the Fed.

Tue, 05/27/2014 - 15:33 | 4799308 sidiji
sidiji's picture

hmm doesnt this mean stocks are undervalued or am i missing something?

Wed, 05/28/2014 - 03:36 | 4801079 pcrs
pcrs's picture


Tue, 05/27/2014 - 13:57 | 4798988 Skin666
Skin666's picture

We need to talk about Kevin

Tue, 05/27/2014 - 13:58 | 4798989 pound the vix
Tue, 05/27/2014 - 14:01 | 4798993 The Most Intere...
The Most Interesting Frog in the World's picture

Bond bulls are scratching their balls over these charts!

Tue, 05/27/2014 - 14:01 | 4798996 alien-IQ
alien-IQ's picture

Gee...looks like all the ingredients required for a massive short squeeze rally are in place.

New new all-timier higherest stock prices seem to be a forgone conclusion.

Looks like I picked the wrong year to quit shooting dope...

Tue, 05/27/2014 - 14:30 | 4799070 disabledvet
disabledvet's picture

that would be the "ideal" scenario....Dimon, Immelt and Blankfien are being forced to cover a ten trillion dollar short position.

Sounds like a perfect time to launch a full scale formalized invasion of Russia if that's the case.

Tue, 05/27/2014 - 14:06 | 4798998 CrashisOptimistic
CrashisOptimistic's picture

I don't know why the focus on equities.  Or maybe for good reason since I keep adblock on.  I guess the Tylers do whatever clickbait compels.

But here's the deal, macro-wise.

Oil is $104 and has been north of $100 most of the year.  This morning Bloomberg had an article on the enormous debt being run up by the shale drillers, because they have to drill frantically to offset the steep declines.

At $104 ($110ish Brent), and the US importing 8 mbpd, this is drainage of a money sort.  Right out of GDP.  The money leaves the country.

This is destimulative.  If there is not going to be growth, there is not going to be interest rate rise, and there damn sure isn't if that's what keeps drilling alive.  That's simply how the math works.  If there's no growth, there's no private borrowing to fund that growth.  If no one other than drillers is demanding business loans, how can a business loan lender raise rates on them?

It's always hard to raise the price of things no one wants, and oil is eating away all desire to borrow.

Tue, 05/27/2014 - 14:02 | 4799000 davinci7_gis
davinci7_gis's picture

Somone here on ZH, who knows more than me, said some guy name Algo was buying..could it be him again?

Tue, 05/27/2014 - 14:14 | 4799028 motorollin
motorollin's picture

There's a book about him. Flowers for Algonon.

Tue, 05/27/2014 - 14:04 | 4799008 JSD
JSD's picture

"Which didn't end so well last time for stocks."  <--- Nothing posted on this site does. Yet, here we are, all time highs.  

Tue, 05/27/2014 - 14:06 | 4799009 Al Huxley
Al Huxley's picture

I just want to know when Facebook will be $200 - is it this week, or do I have to wait until next week?

Tue, 05/27/2014 - 14:17 | 4799037 NoDebt
NoDebt's picture

"Nobody cares about manipulation, as long as it's in the right direction."  I think that might have been Fonz who said that.  Truer words were never spoke.

Tue, 05/27/2014 - 14:06 | 4799011 saints51
saints51's picture

Mr. Yellen is buying and buying a shit load.

Tue, 05/27/2014 - 14:07 | 4799012 Dr. Engali
Dr. Engali's picture

The Dow at 16,666.66 is interesting.

Tue, 05/27/2014 - 14:08 | 4799016 Al Huxley
Al Huxley's picture

You know, based on all those charts it looks like the hedge funds' ability to get short at the right time is abysmal.  Those all look like 'massive short squeeze any day now'.

Tue, 05/27/2014 - 14:13 | 4799022 JustObserving
JustObserving's picture

Where is inflation?  Gold and silver get closer to free everyday.  TWTR is 59% below its high this year. The supermarkets here pay you to take groceries off their shelves.  And Bernanke is dirt-cheap at $250,000 per hour.   It's time treasury rates went negative to demonstrate our full faith in the Community Organizer and the honesty and integrity of the Yellen Fed.

Tue, 05/27/2014 - 14:12 | 4799027 Dr. Engali
Dr. Engali's picture

The shorts underestimate Belgium's ...ahem the fed's.... buying power.

Tue, 05/27/2014 - 14:16 | 4799034 LawsofPhysics
LawsofPhysics's picture

The "new normal".  When we say "everything is rigged", we mean fucking everything...

Tue, 05/27/2014 - 14:19 | 4799042 NoDebt
NoDebt's picture

The NSA captured EVERYTHING EVERYWHERE.  Should we really be that surprised if an operation of a similar scope is taking place in financial markets?  

Tue, 05/27/2014 - 14:22 | 4799046 LawsofPhysics
LawsofPhysics's picture

Not at all.  Of course, that being the case, if one thing implodes everything implodes...

Reminds me of the soviet union in the 80's.  "They pretend to pay us and we pretend to work".


Look, you're "rich".

Tue, 05/27/2014 - 14:58 | 4799154 Ban KKiller
Ban KKiller's picture

Thank goodness my chickens don't read the wall street urinal.

Tue, 05/27/2014 - 14:27 | 4799059 JJdog
JJdog's picture

Aliens! From Mars

Tue, 05/27/2014 - 14:53 | 4799123 CaptainSpaulding
CaptainSpaulding's picture

Is this the "Things that make you go hmmm" portion of the shoe??

Tue, 05/27/2014 - 14:55 | 4799141 TheRideNeverEnds
TheRideNeverEnds's picture

Bonds up, notes up, stocks up, VIX up, gas up, gold down limit.


everything is going according to plan.  Just buy everything and sell gold against it; 'merrica!

Tue, 05/27/2014 - 15:01 | 4799158 praps
praps's picture

It's quite simple.  People with money are afraid that a wealth tax is coming to their bank accounts.  So they are exchanging cash for any other long term yield bearing asset e.g. equities  bonds, real estate.  So dollar goes down and everything else goes up.


There's no limit to how high markets can go in these circumstances when money becomes a hot potato.

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