QE-on or QE-off; Growth or No-Growth; Cleanest 'Dirty' Shirt or Un-Decoupling; none of that matters. There are divergences everywhere - intraday and long-term - but none of that matters. What matters is hope, faith, and a little Central Bank charity. That is, of course, until someone drops the bowl of global Kool-Aid (Merkel 'nein'; Bernanke 'no'; Xiaochaun 'bu') or markets believe they want Romney/Ryan. With the equity markets in general making new 2012 highs today (as we noted earlier [6]), on a day with better-than-recent volumes and heavy average trade-size at the highs, we can do nothing but stand back and admire the year-to-date performance of bonds, stocks, commodities, and verbal diarrhea. There appeared as much stop-runs and short-covering up here as new positioning - but that's how every break out starts of course - though we note that while stocks are at 2012 highs; high-yield credit is well off its tights, VIX off its lows (and notably less steep than its steeps) and Treasuries are still way off their high-yields. There was modest selling-pressure after-hours in futures - failing to test back down to VWAP - but volume, average-trade-size, and intraday-range ended at two-week highs.
On the day, in general risk assets (as proxied by CONTEXT) and stocks were highly systemically correlated (though it seemed that Treasuries, USD, and Oil were leading equities higher early on)...
[7]
Year-to-date - high beta NASDAAPL has been the play and while apparently every hedge fund owns it - their returns remain unimpressive to say the least. Quite a divergence of performance among one nation's equities...
[8]
Interestingly, the Dow Transports' performance seems to fit more with the rest of the world's asset classes - bonds, commodities, FX - than with US equities...
[9]
Treasuries vary from +6bps (30Y) to -7bps (7Y) year-to-date...
[10]
and while the USD is up 2.75% for the year, there is decent dispersion among the majors with AUD stronger by 2.9% and EUR weaker by 4.9%...
[11]
and from the last time we were at these heights in S&P 500 e-mini futures, it's been a quick-down and slow grind higher...
[12]
Charts: Bloomberg