Stocks had their worst day in a month; Treasuries their worst day in 3 weeks; and the USD strengthened the most in 3 weeks as Gold dropped. All seeming signals that the printing machine is less a factor than it was yesterday. The 'Taper' action apparently reflects better headline data this morning (EU PMI once again being claimed that all is well - just like in Jan 2012; US home sales beating expectations (but home prices collapsing) [5]; and US PMI beating expectations (in its typical lower highs cyclical pattern of the last few years). Today's good-is-bad drop in stocks was also accompanied by the heaviest volume in almost 3 weeks (as the 3rd day in a row saw the S&P 500 fail to break 1,700 at the opening rush). WTI slid back to around $105 (as gas prices have stabilzied at highs) and the spread to Brent leaks back wider. VIX rose 0.6 vols (its most in a month) back above 13%.
[6]
Worst day in the S&P in a month...
[7]
The S&P tried again at the open to run to 1,700 - and failed...
[8]
As despite 'good' headline home sales data (which we showed wa sin fact terrible) [5]... builders were sold hard...
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Of course, once cash markets closed, futures chased back to the safety of VWAP...
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Commodities also slid from the macro data release...
[11]
Much of taoday's equity weakness was likely the normal algo-driven spillover from FX carry as once the data hit the algos decided to sell AUD...
[12]
Charts: Bloomberg
Bonus Chart: "The US PMI Deja Deja Deja Deja Vu Growth 'Scare' Cycle" - 20130724_PMI - The jump to 53.2 in Markit's US PMI this morning was apparently seen by the market as good-is-bad but when put in context it is more of the same pattern that we have seen for the past three years. A growth scare seems to push PMIs down only to be rescued by a rapid promise of moar money to save the day and lift wealth. The only problem - as is clear in the chart below - is that the peaks are getting lower and lower is the ability to lift 'hope' is fading...
[13]
Via Markit,
The pace of manufacturing growth nevertheless remains well below that seen at the start of the year, in part reflecting weaker demand from many export markets, notably China and other emerging economies. Employment growth is disappointingly weak as a result, as firm focus on cost-cutting to boost competitiveness.