Crude Carnage Contagion: Biggest Stock Bloodbath In 3 Years, Credit Crashes

We leave it to Jack to explain what happened this week...



Quite a week!!

  • WTI's 2nd worst week in over 3 years (down 10 of last 11 weeks)
  • Dow's worst worst week in 3 years
  • Financials worst week in 2 months
  • Materials worst week since Sept 2011
  • VIX's Biggest week since Sept 2011
  • Gold's best week in 6 months
  • Silver's last 2 weeks are best in 6 months
  • HY Credit's worst 2 weeks since May 2012
  • IG Credit's worst week in 2 months
  • 10Y Yield's best week since June 2012
  • US Oil Rig Count worst week in 2 years
  • The USDollar's worst week since July 2013
  • USDJPY's worst week since June 2013
  • Portugal Bonds worst week since July 2011
  • Greek stocks worst week since 1987

Some serious intraday volatility this week as hope kept shining through but in the end, reality won. Despite spiking euphoria among US Consumers, concerns over Greek elections, Japanese elections, the GDP-plunge-driven collapse in oil prices (with neither OPEC nor non-OPEC willing to blink yet on cutting production), and contagion to high-yield finallly caught up with stocks after they blindly followed the mainstream media narrative that low oil prices are unequivocally good for every muppet.

First things first... 2014 so far... "why would you buy a Treasury bond when you can buy stocks with dividends?"

 

Here's why crude matters...

 

No Hindenburg Omen today but it appears the Dow & S&P are pressing down to test their 50DMAs...

 

On the week, The Dow was the laggard... NOT OFF THE LOWS

 

And Energy sector the worst...

 

The Russell 2000 closed the week negative year-to-date...

 

VIX surged this week (ignore the excitement over percentage moves)...

 

Treasury yields collapsed...

 

Leaving the decoupling at epic levels... between bonds and stocks..

 

and between credit and stocks...

 

The Dollar slipped a little today to end the week down over 1%

 

Gold and Silver had great weeks - very stable as the rest of the markets turmoiled - while oil prices

 

Crude is now down 25% from the initial OPEC leaks...back below $58!!

 

Makes you wonder eh? The decoupling began when QE3 was hinted at...

 

and energy credit is near 1000bps now... and is starting to spread to rest of the HY markets...

 

notably worse than stocks (for now)...

*  *  *

But it's all about the fundamentals!! Great Jobs Data, Great Retail Sales Data, and Great Consumer Confidence Data - unless that's all totally manipulated bullshit?

Charts: Bloomberg

Bonus Chart: How much longer can this go on?