As gold loses its 200DMA once again (along with Silver weakness) as the USD rallied post FOMC and stocks were starting to limp lower, Jamie saved the day and the stock market had that most embarrassing of affliction - premature exuberation. While it seemed to have come as a shock to some that banks passed the stress test, the market's reaction (given only recently markets were worrying over NIMs, trading revenues, and real estate) was incredulous. The US majors were all up 6-7% (apart from Morgan Stanley which managed a measly 3.8% on the day!). With XLF now up more than 37% from its Oct11 lows, financials remain the major outperformers in this rally and we note that credit markets are missing the fun - the last time JPM stock was here, its CDS was trading 25bps tighter. Credit and equity moved in sync and tore higher on the JPM news. Gold (and Silver) which had been falling managed a decent bounce into the close while the USD closed at its highs post FOMC as did Treasury yields as for the first time since the 2011 bubble popped, the NASDAQ closed above 3000 (thanks in large part to AAPL's 3% rally over $568).
US Major financials post FOMC (red arrow) and post JPM (green arrow)...
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and Commodities suffered further (but did bounce notably into the close)...
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As stocks and credit resynced in a rip higher on JPM (green vertical arrow) after leaking off after FOMC (red vertical arrow)...
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In other news, there is a rumor floating around that just to prove how healthy the banks really are, Jamie Dimon has told his Fed subordinates to return Mark to Market accounting, which has been dead for nearly 4 years.
Wait.
What's that?
Sorry... Rumor denied.
All is well though - apart from the fact that the credit market in financials does not seem as prematurely exuberant as stocks (yet)...
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