Overnight weakness from Japan (NKY -3%) and USDJPY slowly leaked away as Europe was bid - bouncing higher on Draghi's SovQE "whatever it takes" comments (and multiple broken markets), but once he stopped speaking stocks faded to the lows of the day at the European Close. Once it was just the American algos playing, the S&P and Dow ripped back to green. However, Small Caps, Nasdaq and Trannies were not playing along, nor was VIX or HY Credit. The USD surged 0.45% (on EUR weakness) which stalled the bounce in commodities. Gold flatlined through the US session (-0.25%) with Silver -1% (bouncing this afternoon). Oil prices slipped 0.5% again (but above Friday's lows) at $75.50. Treasury yields rose 1-2bps on the day (but 5-6bps off the overnight lows as Europe opened) but flatlined during US session. Most notably, it seems many feel like Carl Icahn that a major correction is coming and hedging via VIX and HY credit was significant.
- CARL ICAHN STILL HEDGING AGAINST STOCK-MARKET DECLINE, BELIEVES THERE WILL BE A 'MAJOR CORRECTION'
- ICAHN SAYS CORPORATE EARNINGS ARE ‘SUSPECT’: REUTERS
- ICAHN: "YOU HAVE TO BE CONCERNED" ABOUT GLOBAL GROWTH: REUTERS
Last six days S&P close: 2038, 2039, 2038, 2039, 2039, 2041.
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Quite a divergence in major stock indices today... with Small Caps slammed at the close
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But realistically, the S&P and Dow merely crept back to the futures close from Friday.
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This is The Russell 2000's worst streak since the Bullard lows and the start of the drop last month...
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HY credit is not buying this exuberance...
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Nor is VIX...
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But on the day, Treasury yields surged in the Europe session then flatlined in US session...
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FX markets were a one-way-street of USD strength until Draghi stopped speaking
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Oil prices were almost not mentioned today - but fell - along with the rest of the commodity complex...
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Charts: Bloomberg
Bonus Chart: While USDJPY levitated back during the US and EU session, Japanese stocks hardly liofted at all...
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