Dudley Double-Speak & China Cash Send Stocks To Record Highs As Global Economic Hope Crashes

"This is madness... this is the new normal..."

 

Let's start with this... The data-independent central bank balance sheet and the farce of global equity market strength... Global economic data has not been this disappointing in 15 months - no wonder global stocks are at record highs...

This is the most violent plunge in global economic hope since 2012... and fastest rise in the world's central bank balance sheet since 2011 (up 12% in the last six months)

And this makes all the sense in the fucking world...Pumping up the global central bank balance sheet just pumps up the multiple expansion - perfect

 

But all major US equity indices closed green today... with Nasdaq the big winner today - this is the best day for the Nasdaq since November 7th

 

Helped by a collapse in VIX to 10.01...(but note that Nasdaq Futures cannot get above the highs from last wednesday... and flah crash ledge)

 

But Nasdaq remains red since Pre-FANG crash...

 

While FANG Stocks are all the rage, Bloomberg's David Wilson and Citi's Tobias Levkovich have introduced a more 'real' sounding stock-acronym - FANTASIA (Facebook, Amazon, Netflix, Tesla, Alphabet, SalesForce, Intel, and Apple), which has retraced 50% of its recent dive...

 

But FANGs faded after the opening ramp...

And in case you were gonna just shrug that off - how do you think this ends?

As WSJ notes..."one client of his had about 40% of his net worth in Apple, directly and across various funds, but he refused to diversify because of his experience with high returns, low volatility and his assumption Apple’s rise would continue.  "

And on another note of fantasy, while corporate bond prices remain 'high', appetite for corporate debt belies signs of fear seeping into the high-yield market...

As Bloomberg notyes, total open interest in put options for the largest junk ETF has hit a record of almost two million contracts.

“With the decline in crude this year, we are starting to see energy high-yield spreads rise,” writes Pravit Chintawongvanich, head of derivatives strategy at Macro Risk Advisors. “HYG’s weighted average spread, meanwhile, has been flat this year.”

Fed's Dudley sparked selling in Treasuries early on... but note the dramatic bear flattening...

For the first time since Dec 2007 (when the last US recession started), the spread between 30Y and 5Y Treasuries dropped below 100bps... even as Fed's Dudley went full hawk proclaiming that halting the tightening cycle now would imperil the economy... oh and a flattening yield curve is not a negative signal for the US economy!

 

US 2s30s also tumbled...

 

The Dollar rallied notably today after Dudley's hawkish comments...

 

The dollar strength sparked selling in crude and PMs but copper ramained bid...

 

Gold broke below its 200-day moving-average and crude tumbled to cycle lows...

 

 

Finally, we wonder if any of this silliness as due to the biggest liquidity injection since January overnight in China?

 

Comments

Iconoclast421 Mon, 06/19/2017 - 16:06 Permalink

lol as if the Macro Surprise Index means anything. It doesnt, unless they put ECB and BoJ money printing rates in that index. If they were to stop printing, THAT would be a Macro Surprise!

D.r. Funk yogibear Mon, 06/19/2017 - 16:18 Permalink

False.At some point, the disparity between index-levels and sentiment/reality/metrics hits a break point.You can claim, or say, they can print as much as they need for infinity. The dislocation just grows, The point of inflection (realization, "threshold realization") ...does... ...indeed... remain 

In reply to by yogibear

takeaction Mon, 06/19/2017 - 16:08 Permalink

All hope is crashing.....we are close to war with Russia....chaos world-wide...yet stocks are up, Metals slammed....?..Oh I understand......No I don't.

Jtrillian Crypto-World-Order (not verified) Mon, 06/19/2017 - 17:12 Permalink

I'm sure someone said that during Weimar.  I'm sure someone recently said that in Venezuela.  I wonder how that worked out?  Central banks have made it clear that they would rather devalue the currency to oblivion rather than admit their failed policy.  This looks to be the ramp up to hyperinflation for the Western world. I have a feeling the economic landscape is going to be very different in a few years... if anyone survives the transition. 

In reply to by Crypto-World-Order (not verified)

Iconoclast421 Mon, 06/19/2017 - 16:14 Permalink

The number of put options that expire worthless is a curious thing. For those that are constantly buying these puts, this is sort of like a tax on your own capital gains. Only the money goes to the bankers instead of uncle sam. Interesting. Of course, the bankers just dump that money back into the market to ensure that it goes higher, completing the self-fulfilling prophecy. This raises the question: knowing that the money from your expired puts is going to be dumped back into the market anyway (by the ones who wrote the puts), does buying puts to protect your gains actually result in any real cost to you?

khakuda Mon, 06/19/2017 - 16:27 Permalink

The Fed has overstayed their welcome and now needs to pump rates higher and faster than expectations to quell the growing asset bubble, yet not pop the bubble because the real economy would get even more wiped - politically infeasible.Janet will leave before she tries to stick that landing.

The Ram Seasmoke Mon, 06/19/2017 - 16:38 Permalink

You know Smoke, I am starting to have the same idea.  Nothing new.  More fraud.  More corruption.  More wars.  The' predictions' are pretty useless, so knowing its going to end someday reallly buys you nothing.   Seems like things will end with a wimper more than a bang.  Slowly, one by one, people starve or die off from disease because most of the hospitals are closed down.  Meanwhile, somewhere in India or China, there is some network engineer making sure the market ticker still works as the 'market' continues its stratospheric 'gains'.  Someone forgets to post the 'Closed' sign.  It ended, and know one really noticed.

In reply to by Seasmoke

decentraliseds… (not verified) Mon, 06/19/2017 - 16:19 Permalink

 Why waste time on this alligator when the swamp’s most critical economic and political problems revolve around the hegemony of a global corporate cartel, which is headquartered in the US because this is where their dominant military force resides. The US Constitution is therefore the “kingpin” of an all-inclusive global financial empire. These fictitious entities now own the USA and command its military infrastructure by virtue of the Federal Reserve Corporation, regulatory capture, MSM propaganda, and congressional lobbying. The Founders had to fight a bloody Revolutionary War to win our right to incorporate as a nation – the USA. But then, for whatever reason, our Founders granted the greediest businessmen among them unrestricted corporate charters with enough potential capital & power to compete with the individual states, smaller sovereign nations, and eventually to buy out the USA itself. The only way The People can regain our sovereignty as a constitutional republic now is to severely curtail the privileges of any corporation doing business here. To remain sovereign we have to stop granting corporate charters to just any “suit” that comes along without fulfilling a defined social value in return. The "Divine Right Of Kings” should not apply to fictitious entities just because they are “Too Big To Fail”. We can't afford to privatize our Treasury to transnational banks anymore. Government must be held responsible only to the electorate, not fictitious entities; and banks must be held responsible to the government if we are ever to restore sanity, much less prosperity, to the world. It was a loophole in our Constitution that allowed corporate charters to be so easily obtained that a swamp of corruption inevitably flooded our entire economic system. It is a swamp that can't be drained at this point because the Constitution doesn’t provide a drain. This 28th amendment is intended to install that drain so Congress can pull the plug ASAP. As a matter of political practicality we must rely on the Article 5 option to do this, for which the electorate will need overwhelming consensus beforehand. Seriously; an Article 5 Constitutional Convention is rapidly becoming our only sensible option. This is what I think it will take to save the world; and nobody gets hurt: 28th Amendment: Corporations are not persons in any sense of the word and shall be granted only those rights and privileges that Congress deems necessary for the well-being of the People. Congress shall provide legislation defining the terms and conditions of corporate charters according to their purpose; which shall include, but are not limited to: 1, prohibitions against any corporation; a, owning another corporation; b, becoming economically indispensable or monopolistic; or c, otherwise distorting the general economy; 2, prohibitions against any form of interference in the affairs of; a, government, b, education, c, news media; or d, healthcare, and 3, provisions for; a, the auditing of standardized, current, and transparent account books; b, the establishment of state and municipal banking; and c, civil and criminal penalties to be suffered by corporate executives for violation of the terms of a corporate charter.    

Barney08 Mon, 06/19/2017 - 16:22 Permalink

3/4 of the S&P move before 10:00a.m. Then it just bounces back and forth for a round trip of 6 points for the rest of the day. Makes zero sense. Who is trading those 6 points?

Rigged, the fix is in.

Barney08 Rainman Mon, 06/19/2017 - 16:37 Permalink

Point taken but the vol was dogshit. Check the contracts and ops. Even better the close was the algos and the machines but look at the rest of the day.....

Like a well trained puppy.

Do we fill the gap like way back in the good old days? Or does FANG rip anothe trillion in mkt cap before anyone notices there might be a whisper of risk in the market?

In reply to by Rainman

D.r. Funk Barney08 Mon, 06/19/2017 - 16:32 Permalink

Those of us tracking the b s awhile having been saying ...quite awhile... contrived gap-open futures account for a lot of gains 2ND:Many. Many people.Forget.THE NYSE WAS SOLD TO GERMANY.6 years ago.You forgot that right? You all forgot that right?They most likely consolidated manipulation/control with Euronext. Coordinated with the Ecb. Wish you Dumbasses would point this out more, much less remember it 

In reply to by Barney08