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Bonds & Bullion Tumble As Stocks Stumble On Macro Weakness

Tyler Durden's picture




 

Treasury yields pushed 4-5bps higher on the day - the worst in 3 weeks - as yesterday's test of 2014 lows saw some reactive bond-selling. Asian and EU PMIs sent stocks to record-er highs but absymal US PMI and housing data took the shine off the exuberance early on (despite the best efforts at a 5th short-squeeze ramp at the open in a row). AUDJPY was in charge of stocks once again helping the S&P desperatly cling to unchanged. Espirito Santo bankruptcy headlines stumbled stocks at around 1300ET (but that dip was bought). The USD rose modestly (now up almost 0.5% on the week) led by GBP and EUR weakness but that was nothing compared to the dumpfest in precious metals. Silver's worst day in 6 months and a big drop in gold retraced them to near June FOMC levels. Credit markets continue to diverge bearishly from stocks (now 30bps wider than the tights as stocks rally to new highs). Despite the ubiquitous late-day ramp, stocks ended the day mixed around unchanged (and VIX higher on the day). By the close the S&P 500 closed +0.045% to a new all-time-record high.

 

Sine MH17 Headlines, the Dow remains red and today saw some gains erased...

 

But today was all about the opening ramp/short squeeze once again...Notice the plunge at 1300ET when BES Bankrutcy headlines hit...

 

As AUDJPY ruled the day...

 

And helped to create the 5th short squeeze in a row...

 

Treasuries sold off today leaving yields up 1.5 to 3bps on the week...

 

Since MH17 headlines hit, HY is 10-15bps wider and US equity markets are up 1-2%...

 

High yield credit spreads are 30bps off their early July tights but stocks are higher still... Something is breaking

 

Commodity markets were very active. Copper soared, Oil rolled over again in its range and gold and silver collapsed...

 

Quite a day in the gold futures markets...

 

 

Do not blame todasy's albeit tiny gains on Jobless claims being great - US PMI employment plunge to 10 month lows...

 

Charts: Bloomberg

 

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Thu, 07/24/2014 - 16:16 | 5000205 TheRideNeverEnds
TheRideNeverEnds's picture

I was thinking there must be an error with my data feed as my watchlist is an odd shade of green today.  

 

Whats going on, did Gartman go long again? 

Thu, 07/24/2014 - 19:15 | 5001298 Squid-puppets a...
Squid-puppets a-go-go's picture

yer, precious metals dropped - you mean anyone still listens to Goldman Sachs????

Thu, 07/24/2014 - 16:18 | 5000209 gcjohns1971
gcjohns1971's picture

Let us remember the wisdom of our fore fathers' formula for reaction to a crisis enshrined in the hallowed halls of 1929:

"When in Danger,

When in Doubt,

Run in Circles,

Scream and shout."

 

Amen!

Thu, 07/24/2014 - 16:26 | 5000259 NoDebt
NoDebt's picture

Times have changed, friend.  We have better crisis management protocols than we did back in great-grand-daddy's time.  Here is the current state of the art in crisis management:

1.  Deny there is a problem.  When that stops working, proceed to step two.

2.  Admit there is a problem, but there is nothing that can be done about it.  When that stops working, proceed to step three.

3.  Admit there is a problem and there was something that could have been done about it, but it's too late now.

Problem solved.

Thu, 07/24/2014 - 16:57 | 5000399 lordylord
lordylord's picture

NoDebt, all wrong.  This is how government actually operates:

 

1) Exploit any potential problem.  If one doesn't exist, make up a problem.  

2) Pretend to fix the problem with a top-down approach.  Make sure you make the problem worse.   

3) Repeat step 2 until total control over a population is achieved.

Thu, 07/24/2014 - 17:11 | 5000474 gcjohns1971
gcjohns1971's picture

Lordy Lord's version seems to better fit reality.

 

But they couldn't do it if most people didn't still do it the old-fashioned way.

To quote Frank Herbert, "Fear is the mind-killer!"

Thu, 07/24/2014 - 17:38 | 5000678 NoDebt
NoDebt's picture

I must concede he has more advanced training in these matters than do I.

Thu, 07/24/2014 - 20:57 | 5001716 FreedomGuy
FreedomGuy's picture

All problems are caused by lack of funding and lack of power. All solutions require more money and more power.

I nearly choked today when I heard the VA admit there was a problem and they asked for $13 billion MORE in order to fix it. I think this proves my point.

Thu, 07/24/2014 - 16:18 | 5000210 Quinvarius
Quinvarius's picture

Stock bulls have over stayed their welcome.  The stock markets are the only markets that have not been getting crushed in the past few months while the US macro implodes and the economy suffers QE withdraw.  Every time Japan did a wave of QE, their stock market gave back everything after the hot money stopped.  The US market is going to give it all back.  Conviction GTFO of stocks.

Thu, 07/24/2014 - 16:22 | 5000239 Rainman
Rainman's picture

The boyz know If a big hole blows through stawks the whole shitshow comes down. Please ....Think of the children. Think of the pension funds.

Thu, 07/24/2014 - 16:41 | 5000318 Quinvarius
Quinvarius's picture

I know.  But they gambled that QE would work, or at least told everyone it would, and it didn't.  All they have now is a massive speculative financial bubble in stocks.  It will end without more juice.  A lot more juice.

Thu, 07/24/2014 - 16:52 | 5000382 Rainman
Rainman's picture

Grandma will put STP into the next powerload of Juice for sure .... public pension funds must be saved , housing must be rescued ! ...sweet jeezus, there can no longer be victims !!

Thu, 07/24/2014 - 16:23 | 5000242 thismarketisrigged
thismarketisrigged's picture

wow, dow down a whopping 2.83 pts to be exact and the  nasdaq down 1.59 pts.

 

i believe the last say 4 down days have not = 70 pts combined loss on the dow which is truly pathetic.

 

we all know what tomorrow means, green green green in this rigged shit  market.

 

 

Thu, 07/24/2014 - 16:28 | 5000269 NoDebt
NoDebt's picture

Yeah, but that's just the cracking of the ice before the avalanche.  Tomorrow.  Just you wait and see.

Thu, 07/24/2014 - 18:05 | 5000858 TheRideNeverEnds
TheRideNeverEnds's picture

So you are telling me we may have another "down" day tomorrow?

 

I think the probability of that happening is basically zero in this new normal market.

Thu, 07/24/2014 - 16:25 | 5000252 fockewulf190
fockewulf190's picture

All this means for me is more phyzz for my fiat paper.  Keep it up Janet...no better keep it down instead.

Thu, 07/24/2014 - 16:42 | 5000276 Rainman
Rainman's picture

Bloomturd says gold got spanked because of an improving world economy outlook ....thus less demand for a safe haven .... hahahaha

                 http://www.bloomberg.com/news/2014-07-24/gold-drops-below-1-300-to-1-week-low-as-stock-rally-cuts-demand.html

Thu, 07/24/2014 - 16:38 | 5000300 Latitude25
Latitude25's picture

Day by day more manipulator desperation.  Damit Janit the only way to keep the bubble floating is covert money printing to the moon.

Thu, 07/24/2014 - 16:39 | 5000306 Lewshine
Lewshine's picture

The Fed doesn't care about any economic micro OR macro realities. It doesn't care about jobs or the collapsing housing market, or the coming sub-prime auto finance disaster. They don't care about the wars around the world, or when not if the Ebola virus hits our shores - THEY ONLY CARE ABOUT MAKING THOSE BANKS AND INSTITUTIONS WHOLE FROM THE 2008 COLLAPSE. THOSE FUNDS CONTINUE TO BE TAKEN FROM THE WORKING CLASS THROUGH THE FED'S FINANCIAL ENGINEERING WITHIN THE WORLD MARKETS - PERIOD!

Today, after market close, 7 consumer related companies that included the likes of AMZN, VISA, Starbucks, Pandora - all took a shit and missed lowered expectations. However, tomorrow is Friday...GOT CALLS??? 

Thu, 07/24/2014 - 16:47 | 5000357 Quinvarius
Quinvarius's picture

There is not enough money in the world to make those banks whole.  Nor will there ever be.  If we printed 40 quadrillion, they would lever that up 10x in derivatives, and half of them would lose it all.

Thu, 07/24/2014 - 16:39 | 5000307 SameAsItEverWas
SameAsItEverWas's picture

agricultural products generally trade according to supply/demand and expectations thereof, simple things like drought, floods, and animal diseases.  why anyone would trade for their own account trying to beat Da Boyz with their free money and high-speed algo trading off XML newswires  beats me when there are alternatives like old-fashioned calendar spreads on soymeal and lean hogs with greatly reduced margins, lower volatility, and except when big money starts following a trend like the summer soybean rally a few years ago, big money stays away because these markets are too small for them ... just watch out for WASDEs and crop progress report releases because the algos go wild in that first minute or so when it's sometimes amusing to watch huge whipsaws that last seconds as some of the algos get it wrong because there's so much data to process. 

Thu, 07/24/2014 - 16:43 | 5000336 buzzsaw99
buzzsaw99's picture

By the pricking of my thumbs, something wicked this way comes...

Thu, 07/24/2014 - 17:09 | 5000463 gcjohns1971
gcjohns1971's picture

The stockmarket is where old, unloved Eurodollars go to die in a crack-up boom.

Thu, 07/24/2014 - 18:27 | 5001012 dragoneyes74
dragoneyes74's picture

This is the pullback that will reveal the strength, or lack thereof, in gold, which is forming a massive symmetrical triangle.  The uptrendline from the $1180 Dec low thru the $1240 June low currently runs thru $1260.  Gold isn't in big trouble unless that uptrendline gets taken out, but it's not likely to happen right now.  There will be all kinds of spec buying and Commercial short profit taking there, if we even get that far.  There's also support in the $1270/80 area. 

What's more likely is we bottom and get a bounce back into the $1320 area. Then we find out how strong the long side really is.  Whichever side of this triangle breaks will likely lead to a multi-month, multi-hundred dollar move.  I've been thinking the metals would make a strong rally before eventually rolling over again, but it's hard to have any confidence in that until the triangle gets taken out to the upside, which means a close above $1360.  Personally, I'm scaling into long-term calls and if the bottom of the triangle gets taken out, I'll bail.  

In terms of stocks, I had to take some time off due to Bull Market Fatigue, a new syndrome being studied by psychiatry.  The timing worked out well because it was easy to buy the NQ dip when I wasn't exposed already.  Which made me realize I'm not interested anymore in playing a lot of positions or the emotional intensity of short-term trading.  I'm gonna focus on the larger time frames, trade less, and go for the bigger moves like the gold triangle, then when a gift like last Thursday's selling into support the day before options expiration happens, I'm all over.  Meaning, I'm gonna focus on other things and set alerts on things that interest me.  It seems like every year there are 5-10 times when everything lines up so perfectly and what to do is obvious.  The other 95% of the year is a grind.  But this isn't my primary interest anyway so it's not hard to take a step back and be less involved.    

In terms of overall market direction, unless WW3 happens, or until there's a real threat to the financial system (which is eventually baked into the debt bubble cake--looking at you, Japan (and Europe) (and China) (and the US)), there's no reason for the dividend collecting big money players to be shaken out of their positions.  Until the risk free rate becomes enticing enough to make the possible price depreciation of overvalued dividend stocks a concern, I don't see why the dips won't continue to be bought, even though it makes no sense in terms of reflecting the real economy.  Maybe persistent bad data can eventually wear down the bull market psychology, or persistent bad news like developing war, but it will take real game-changing fear before a real correction has a chance to happen.  Asset managers have to stay long until that weekly trendline gets taken out by a good 50 points, then they just wait for the ensuing rally to the underside of it and sell into that.  Then a real correction can happen. Until there is a deep pullback that rallies back to a lower high, there's no reason to think dips won't continue to be bought.     

Thu, 07/24/2014 - 20:35 | 5001638 Angry Plant
Angry Plant's picture

Seems to be a concerted effort to dump paper gold. Remember all that missing copper in China and how fallout short term was likely to be a fall in price not a rise. We seem to be seeing money repostioning out of paper gold before the reported 100 billion in missing chinese gold finaly breaks into the mainstream. I wonder what bank the global ecconomy will designate as the fall guy the next AIG for this problem.

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