Bitcoin has rebounded over $1000 off its lows, breaking back above $10,000... The question on everyone's mind, did the bubble just burst or do you BTFD?
It's not just the ECB that was humiliated for holding Steinhoff securities: so were all major US banks, which have collectively lost over $1 billion on their Steinhoff exposure.
The old playbook is back as VIX has been hammered back below 12 and into the red for the day, sparking just enough momentum (notably lower beta) to send The Dow back above 26,000... for now...
"In 1987 stocks crashed a few months after that. A repeat of that scenario suggests potential danger, especially as the market moves become parabolic. Those recently holding cash appear to be chasing a rallying market, adding fuel to the fire."
Goldman's FICC - bond, FX and commodity revenue - printed just $1.00 billion, well below the $1.28BN est., and a 50% plunge from the $2.00Bn reported a year earlier. This was the worst bond trading at Goldman since the financial crisis.
While global shares pulled back in early trading from record highs on Wednesday, U.S. equity index futures are staging another comeback and point to a higher open on Wednesday following a volatile day of trading Tuesday which saw the S&P 500 have its worst reversal in two years.
"We do think multiples can overshoot as the Euphoria stage persists. We just want to make it clear this is the more speculative and low quality part of the rally which means any reversal will find less valuation support."
Traders have never paid more to place levered long bets relative to downside protection in US equity markets... perhaps that was the final straw on the endless-bull-market-camel's back...
"Investors have bought the 2nd largest amount of S&P 500 futures since at least 2010, while at the same time net holdings of S&P 500 calls are the highest and the net holdings of S&P 500 puts are the lowest since at least 2010"
The Dow has tumbled back below 26,000 and all major US equity markets are stumbling notably after their exuberant open as VIX extends its pre-market ramp above 11 to its highest in 5 weeks...
With Goldman having shuttered much of its commodity front-office in recent years, it probably won't come as a big surprise that the bank has become increasingly less reliant on commodities as a profit center following repeated probes into manipulation by Goldman and other big banks, as well as organic revenue declines in the sector.
When markets open for trading today, the S&P will rise above 2,800 and the Dow Jones will not only make a new record high, it will do so in historic fashion with just 12 days needed to move from 25,000 to 26,000, the fastest 1,000 point move in history.
As we start the third week of the year its more of the same – lots of angst about markets as bursting bubbles, and as much fear about missing further upside before they might or might not burst.
Just as we suggested, US oil rig counts surged last week, tracking the lagged uptick in WTI prices and suggesting production's upward path will continue (after last week's weather-impacted drop)... will shale show restraint this time?
