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USDJPY Surge Sends Stocks Higher As Bond Yields Tumble

Tyler Durden's picture




 

This morning makes as much sense as most mornings. US equity markets, after some weakness in the European session have been lifted wholesale towards Friday's highs on the heels of a USDJPY 102 stop-running algo. At the same time bonds are being bnought aggressively with 10Y and 30Y yields now lower on the week. The USD index is surging higher on EUR and GBP weakness and commodities are sliding.

Normal?

 

USDJPY in charge of stocks... but that 102 stops have been run now

 

And bonds are rallying...

 

The USD Index is jumping...

 

and Commodities are sliding...

 

 

Charts: Bloomberg

 

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Tue, 07/29/2014 - 08:45 | 5017075 algol_dog
algol_dog's picture

Somethings really wrong here!

Tue, 07/29/2014 - 08:50 | 5017095 slaughterer
slaughterer's picture

Kev' is running the normal pre-FOMC reality-distortion-field  while leafing through some back issues of Trader magazine.

Tue, 07/29/2014 - 08:47 | 5017082 NoWayJose
NoWayJose's picture

yup - LaGarde was out saying the GBP was overvalued - is that really the 'work' the IMF is supposed to be doing?

Tue, 07/29/2014 - 08:52 | 5017100 Ghordius
Ghordius's picture

depends. from the IMF's shareholders. after all, she was appointed by them. and yes, they are still squabbling about the quotas

Tue, 07/29/2014 - 08:54 | 5017109 LawsofPhysics
LawsofPhysics's picture

Only when there are no more "pounds" of flesh to extract will things get interesting, not before.

Tue, 07/29/2014 - 09:08 | 5017158 fonzannoon
fonzannoon's picture

borrowing costs dropping

equities rising

dollar strengthening

pm's falling

extra coke and hookers being sent to hamptons

film at 11

Tue, 07/29/2014 - 08:51 | 5017084 ChartreuseDog
ChartreuseDog's picture

Something for everyone, a comedy tonight!

 

Something familiar,
Something peculiar,
Something for everyone:
A comedy tonight!

Something appealing,
Something appalling,
Something for everyone:
A comedy tonight!

Nothing with kings, nothing with crowns;
Bring on the lovers, liars and clowns!
Tue, 07/29/2014 - 08:50 | 5017093 ArisAron
ArisAron's picture

No worries!! It's pump and dump Tuesday!!

Tue, 07/29/2014 - 08:52 | 5017102 LawsofPhysics
LawsofPhysics's picture

Stock and bonds going up, no manipulation there, just normal "market" functioning...

Better "taper" another 10 billion... ...stat!

Tue, 07/29/2014 - 09:38 | 5017276 disabledvet
disabledvet's picture

Further taper will probably cause a further rally as "extraordinary measures" gradually get wound down. Sinc e the denominator is the economy (recession) no way you want to be long commodities, short treasuries.

Overlay all this with both an energy cost (not just price but actual cost of energy) collapse and a "war everywhere" scenario (transfer payments sustained, means of production simply bought and paid for by Uncle Sam...and all the other Governments out there) plus "Gestapo Incorporated" and "presto" you've got a bid in equities and the dollar too.

Not everything is going to the moon...a lot worth selling, maybe even a few things worth selling short. My personal view remains treasuries are heading on the thirty year to "the one percenter range."

Tue, 07/29/2014 - 08:59 | 5017124 yogibear
yogibear's picture

There's an election coming up in November. Obama and his party have to keep it looking good until November.

Tue, 07/29/2014 - 09:42 | 5017290 disabledvet
disabledvet's picture

This election will suck for Republicans and Democrats as the only thing collapsing in value and price are homes.

EXISTING homes that is.

New home builds still cost a fortune.

Tue, 07/29/2014 - 08:59 | 5017125 Kaiser Sousa
Kaiser Sousa's picture

what the fuck is this shit all about....

http://www.kitco.com/charts/livesilver.html

Tue, 07/29/2014 - 08:59 | 5017127 dobermangang
dobermangang's picture

UPS misses.  Lowers guidance.  

Welcome to "Recovery Summer" version 6.

Tue, 07/29/2014 - 09:02 | 5017139 Tanz der Lemminge
Tanz der Lemminge's picture

Makes sense. Amazon is probably one of their biggest shippers.

Tue, 07/29/2014 - 09:01 | 5017135 monopoly
monopoly's picture

When this shit hits the fan it will be an amazing turn around in markets. Gonna make the crash of 2000 look like childs play. But I am still not shorting this market. My short term timing has always been bad.

Tue, 07/29/2014 - 09:12 | 5017165 Renfield
Renfield's picture

Can I call this a hyperinflationary crack-up boom yet? Or do I still need to keep that opinion behind my own house doors?

I have been dwelling on this thought lately: "If once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that consequently the prices of all commodities and services will not cease to rise, everybody becomes eager to buy as much as possible and to restrict his cash holding to a minimum size."

In context, from the Mises institute:

"What happens if people expect that, in the future, the money-supply growth rate will increase to ever-higher rates? The demand for money would, sooner or later, collapse. Such an expectation would lead (relatively quickly) to a point at which no one would be willing to hold any money — as people would expect money to lose its purchasing power altogether. People would start fleeing out of money entirely. This is what Mises termed a crack-up boom:[2]

If once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that consequently the prices of all commodities and services will not cease to rise, everybody becomes eager to buy as much as possible and to restrict his cash holding to a minimum size. For under these circumstances the regular costs incurred by holding cash are increased by the losses caused by the progressive fall in purchasing power. The advantages of holding cash must be paid for by sacrifices which are deemed unreasonably burdensome. This phenomenon was, in the great European inflations of the 'twenties, called flight into real goods (Flucht in die Sachwerte) or crack-up boom (Katastrophenhausse). Everybody is anxious to swap his money against "real" goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.[4]

Consequences of a hyperinflation

Money is one of the primary measures of value in any society. As such, money is a central source of stability, continuity, and coherence in any community. By making money worthless, inflation threatens to undermine and dissolve all sense of value in a society. Consider what happens to our lives when we are forced to take our money purely on faith and that faith is betrayed by the government.

From an analysis of hyperinflation, several consequences are observed:[5]

  • people must concentrate more on the economic facts of life
  • government interventions lead to others, interfering with the market, but people learn to work around them
  • "flight into real goods" - the striving to quickly exchange depreciating money for real goods
  • the transfer of wealth disrupts the social order, and hard-working people can easily end up in poverty
  • a larger number of speculators
  • future becomes uncertain and unpredictable
  • authority of the older generation is discredited and power turns over to the youth
  • a rising number of substitutes and products of lower quality
  • while the rate of inflation differs, it affects every single country, and is the most pervasive economic fact of our time"

 

http://wiki.mises.org/wiki/Hyperinflation

 

Tue, 07/29/2014 - 09:52 | 5017345 Ghordius
Ghordius's picture

careful, though, with that "authority of the older generation is discredited and power turns over to the youth"

historically, this was nearly always a passage of power from the 60+ to the 40+, with a few 80+ "surviving" politically as "totems"

a very bad but very known example: Chancellor Hitler and President Hindenburg

Tue, 07/29/2014 - 09:20 | 5017209 jmcadg
jmcadg's picture

Probably a good idea. I shorted the Hang Seng a week ago. That fucker is close to 1000 pips down. It hasn't stopped rising More fool me :(

My market calls are fuckin' useless.

Tue, 07/29/2014 - 09:02 | 5017136 jtz5
jtz5's picture

It seems like USDJPY has been at 102 since the S&P was at 1500.  How exactly does that work???

Tue, 07/29/2014 - 09:19 | 5017197 holdbuysell
holdbuysell's picture

Swaps...and a boatload of them.

Oh, and Belgium.

Tue, 07/29/2014 - 09:16 | 5017188 Keltner Channel Surf
Keltner Channel Surf's picture

Could be wrong, but I think it's a fake-out, another day to short small caps at the open.

Tue, 07/29/2014 - 11:56 | 5018025 Youri Carma
Youri Carma's picture

There must be some relationship, or inverse relationship if you will, between some economic measures and war rhetorics.

I always thought that would be oil but it isn’t! Oil hardly blinked on all the chaos news from Iraq to the Ukraine?

Just like gold it keeps trading stubbornly sidewards within a very tight channel range.

Brent crude $109.21 and U.S. crude $103.36 June 04, 2014
Brent crude $113.22 and U.S. crude $106.86 June 12, 2014
Brent crude $113.47 and U.S. crude $106.91 June 17, 2014
Brent crude $114.37 and U.S. crude $106.17 June 19, 2014
Brent crude $115.01 and U.S. crude $106.51 June 19, 2014
Brent crude $114.50 and U.S. crude $106.32 June 24, 2014
Brent crude $112.21 and U.S. crude $104.85 June 30, 2014
Brent crude $111.96 and U.S. crude $105.28 July 02, 2014
Brent crude $110.74 and U.S. crude $104.01 July 03, 2014
Brent crude $110.73 and U.S. crude $103.87 July 03, 2014
Brent crude $110.78 and U.S. crude $103.81 July 03, 2014
Brent crude $110.81 and U.S. crude $103.83 July 04, 2014
Brent crude $108.09 and U.S. crude $101.97 July 09, 2014
Brent crude $108.73 and U.S. crude $102.91 July 10, 2014
Brent crude $107.89 and U.S. crude $102.34 July 11, 2014
Brent crude $106.74 and U.S. crude $100.93 July 14, 2014
Brent crude $107.78 and U.S. crude $104.58 July 21, 2014
Brent crude $107.96 and U.S. crude $102.68 July 23, 2014
Brent crude $107.28 and U.S. crude $100.69 A Barrel Now

But if anything oil went down with the rising of war rhetorics which is just amazing! Can you say RIGGED!?

btw Same with gold now at around $1,300 o/z from $1,311 o/z.

Tue, 07/29/2014 - 12:10 | 5018088 pholosophy1
pholosophy1's picture

Ok, wait a minute.  Before the FED started printing money after the crash (well actually some time before that) when markets operated "normally", lower interest rates were always synonymous with rising equity markets.  Remember Markets 101, don't fight the interest rate? Only since the crash have lower interest rates come to equal fear in the market, meaning the S&P dropped as interest rates dropped because of a "flight" to "safe" investments.  Seems we are finally getting back to normality in my book.  Lower rates = good for the market.  Hello?  Are we all stuck in panic mode?

Tue, 07/29/2014 - 12:50 | 5018255 LawsofPhysics
LawsofPhysics's picture

The Fed is still printing 45 billion per month.  All stimulus is fungible, period.

Wake me when the Fed's balance sheet levels off or actually starts to decrease, then I can answer your question.

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