IBB
304.68
+0.62
+0.20%
 
AAPL
157.21
-0.29
-0.18%
 
TVIX
19.54
-1.71
-8.05%
 
XIV
77.1
+3.21
+4.34%
 
TNA
48.99
-0.03
-0.06%
 
TZA
18.27
0.00
0.00%
 
UVXY
35.87
-3.1
-7.95%
 
NASDAQ
6213.127
-3.399
-0.0547%
 
S&P500
2428.37
+2.82
+0.12%
 
NYSE
11719.267
+19.436
+0.1661%
 
IBB
304.68
+0.62
+0.20%
 
AAPL
157.21
-0.29
-0.18%
 
TVIX
19.54
-1.71
-8.05%
 
XIV
77.1
+3.21
+4.34%
 
TNA
48.99
-0.03
-0.06%
 
TZA
18.27
0.00
0.00%
 
UVXY
35.87
-3.1
-7.95%
 
NASDAQ
6213.127
-3.399
-0.0547%
 
S&P500
2428.37
+2.82
+0.12%
 
NYSE
11719.267
+19.436
+0.1661%
 
Morning Note June 14, 2016

Education

 
Tues, June 14, 16  
08:30 ET Update:
[Stockboardasset] S&P futures -15bps
08:30 ET Update:
[Stockboardasset] Nikkei   -129bps

 

 

The UK referendum is front and center trumping the upcoming FOMC meeting. The FED is at risk of becoming the boy who cried wolf as well as worthless forward guidance to steer markets is being depleted. Prior session markets were in tune to the four BREXIT polls putting the “leave” camp ahead sending GBPUSD to the low 1.41 handle and EURUSD to the low 1.12. FX volatility has spiked EVZ in a parabolic state in the past two sessions. EU equity and EU bank equity are in a sour state as monies are flowing into bunds crushing yields negative for the first time on record. This phenomenon of crashing treasury yields is a world wide problem from the UK, US, JPY, DET, and most DM countries.  Overnight, USDJPY was smashed to the 105 handle as AUDJPY made new 2016 lows signaling overall health in Asia is lackluster. 10YR JGBs traded higher amid weakness in Nikkei with yields curves pressured all yields printing fresh lows. China/PBOC have to hold volatility tight for just the US cash session due to the decision on MSCI inclusion. Perhaps, the suppression of volatility in recent months is why Asia was calm. More CNY DEVAL in the overnight session by the PBOC has sent concerns to global markets, but Brexit trumps Asia so far. ASX200 was hit hard overnight -200bps. Around 230am US ET, the DXY started a trajectory to the high 94 handle advancing nearly 50bps. WTI is under pressure on the lower 48 handle with Copper printing low 2.03 handle. Return of volatility has certainty made an entrance, and we believe an era of volatility is upon us. SKEW tags 137 handle enabling 12% probability of SPX 2std DEV move. High beta/Low beta ratio is on the verge of the market transitioning to low beta. XLF, XLV, and XRT are sub 320sma.

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Morning Note June 13, 2016

Education

 
Mon, June 13, 16  
08:30 ET Update:
[Stockboardasset] S&P futures -40bps
08:30 ET Update:
[Stockboardasset] Nikkei   -200bps

 

 

Global markets are in a continuation of risk off. That unraveling stared last Friday, as the latest BREXIT Poll vote Leave 55 and 45 Remain sent volatility vibrations through global markets. CBOE EUROFX skyrocketed +19%. This morning EU equities are under pressure as DAX cannot maintain the 10k handle. EU banks are under pressure as well continuing to tread water at 2008 lows. GBPUSD has based accordingly after the sell off from BREXIT Poll at the low 1.41 handle. EURUSD maintains the 1.12 handle. Over to Asia, the AUDJPY is at 1Q16 lows 78.50 handle, which is a good indication of regional health. Asian equities took a beating as PBOC continued CNYUSD DEVAL and the USDJPY slipped to the low 106 handle. Over the weekend, BTCCNY (Bitcoin-CNY) soared +20%, as its movement are a great forward looking indicator of PBOC Sunday night DEVAL. FITCH affirms Japan at “A”; Outlook revised to negative. Japan’s 20YR yield falls to record .18%. In fact, the global benchmark for 10-YR yields for DM are in a dangerous spiral. Lackluster global growth, NIRP, and central banks failure has led the charge of capital flight to safety. DXY remains at the 94 handle as US economic calendar is light today. US Equities are under pressure in the PM, as well as commodities. WTI prints the mid-48 handle, as copper flirts with the 2.04. Return of volatility is on our mind as the VIX term structure breaks to .90. SKEW prints at 133 enabling 11.75% probability of a 2std. DEV move. High beta/Low Beta ratio depicts the possible flow into low beta will start near term. Uncertainties of the FED, US Macro data, as well as BREXIT is plaguing global markets from expansion. SPY/TLT Ratio is now under the daily 50sma ratio meaning the capital flight into safety is the theme. Back to the VIX, draw a supply line from 8-24-15 to mid-Feb high and extend to present date. You’ll see the BARR structure is signaling a reversal. St Louis money index is negative diverging equities <WLSH> meaning the FED has no ambition as of last week to lift markets further. The reflation trade is still in play, but we caution if the reflation stalls, we have to recognize the only way to pull out from a stall is down. The employment environment with recent NFP is concerning, as well as TEMP works rounding a top, perhaps it’s a signal the earnings recession is affecting hiring.

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Morning Note June 10, 2016

Education

 
Fri, June 10, 16  
08:30 ET Update:
[Stockboardasset] S&P futures -60bps
08:30 ET Update:
[Stockboardasset] Nikkei   -135bps

 

 

Global Equity markets are finally paying attention to global 10-year treasury yield curves crashing. Fears of BREXIT have ignited as well, as Schaeuble says EURO AREA PREPARING FOR POSSIBLE BREXIT FALLOUT. DAX rejected 10k, and DB is on alert for a downside breakout of triangle.  EURUSD is under slight pressure on the 1.13 handle, as DXY regains the 94 handle. At the 3am market, I watched a large seller come in WTI 30mins before EU Cash session. The forward 12m price/ earnings ratio of the energy sector suggest a bubble coming in at 70. There is a large negative divergence of copper vs. WTI, usually both move in tandem. Doesn’t help when China controls 8)% global stockpiles and is deflating another commodity bubble from 1Q. USDJPY sustains the 106 handle as the strong YEN is being blamed for corporate profitability deterioration. Japan’s largest primary dealer considers quitting its role in the bond market as JGBs yields crash.  PBOC CNY DEVAL has subsided in early June as FED crushed the DXY back to the 93 handle to hit .618 support, and now bouncing back to 94. Over in the US, the employment environment is a major concern. Some are hinting the corporate profit recession has affected hiring. Prior session US inventories increased the most since June’15.  In the same week, Soros and Gross have voiced concerns in a bearish slant. Return of volatility is certainty right around the corner. The battle over bonds or equities could conclude this week as TLT tags the 134 handle. It’s odd how at the start of the ECB bond buying program this week global risk off is triggered.

2016-06-08_23-10-09

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Morning Note June 9, 2016

Education

 
Thur, June 9, 16  
08:30 ET Update:
[Stockboardasset] S&P futures -35bps
08:30 ET Update:
[Stockboardasset] Nikkei   -155bps

 

 

Post payrolls the market is playing a dangerous of group think in a time where conditional liquidity is present. USDJPY crushed to the 106 handle as Japan’s economy is set to decline 2Q. Strong YEN is eating to corporate profits, along with overnight machine orders plunge to 2014 levels. Quantitative failure of the BOJ sums it up. Asia as a whole, we look at the AUDJPY now at 1Q lows low 79 handle. China’s awaits MSCI inclusion decision which speaks volume of why there is limited volatility. Taming the dragon. China controls 80% of global copper stockpiles and the recent negative divergence of WTI to low 2 handle is concerning. Well, its not concerning Dr. Copper is leading what reality is vs. other commodities and assets that are artificially inflated by CB meddling. Our concerns of CNY DEVAL remain elevated. HK Home Prices are certainty center front, along with ASX real-estate. Moody’s says Australian banks face increased risks from rising house prices. The greater fool lives on. Over to Europe, where the German bond yield is now below zero for the first time in history. EU Banks with NPLs remain on elevated watch. BREXIT vote is certainty our primary focus in the EU as well the FED meeting. The perfect storm for globalist would be Rate Hike coupled with a BREXIT.  After all, nearly every base economic indicator on a global stage is printing negative from raw materials demand, manufacturing, exports, corporate earnings, retail sales, and employment. Precisely why we welcome volatility in the near term. Over in the US, prior session JOLTS, one of Yellen’s favorite labor series notes deterioration in hiring given the latest NFP. The US Story for now remains the employment environment. We watch the battle of who will win TLT or SPY ?

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Morning Note June 8, 2016

Education

 
WED, June 8, 16  
08:30 ET Update:
[Stockboardasset] S&P futures +21bps
08:30 ET Update:
[Stockboardasset] Nikkei   +51bps

 

 

In the overnight session, markets caught a sign of relief with Clinton winning the democratic nomination. AUDJPY remains in a bracket from May on the 77-79 handle as China has suppressed all volatility while waiting for MSCI inclusion decision. China’s trade data missed expectations, as well as the world growth cut global forecasts. The threat of CNYUSD remains elevated, but has subsided with DXY crushed to the 93 handle. US Markets continue to be stimulated by Friday’s weak payrolls and Yellen’s dovish comments, as well as WTI. The corporate earnings recession is hinting at a hiring slowdown. The next set of data will be 10am JOLTs report. Joao Gomes prior session mentions the main worry is the FED is delaying the increase until it’s too late. We sort of agree, as the employment environment is deteriorating, along with the risk of current reflation since mid-Feb may not produce the intended results. If anyone has flown a light aircraft, the only way to correct a stall is down. US CHAIN STORE SALES -5.9% W/W IN JUN 4 WK, LAST 1.8%. The American worker productivity drops again which is the weakest 2 quarters since 4Q12. Recently the service sector has been under pressure. MISS: Consumer credit balances rise $13.4 billion in April (+$18 billion expected).  On top of structure deficiencies of a decaying economy, the Shiller P/E is at 26.47, price to sales 1.87, SPX earnings growth -15.42% contracting, real medium income contracting for 2 decades, and population growth on multi decade decline (multpl.com). “Income, Population, Credit and Welfare have flat lined for the foreseeable future”.

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Morning Note June 7, 2016

Education

 
Tues, June 7, 16  
08:30 ET Update:
[Stockboardasset] S&P futures +20bps
08:30 ET Update:
[Stockboardasset] Nikkei   +72bps

 

 

Yellen has successfully completed a round trip in FED expectations in less than 10 sessions. As Cato warns large market players disrupting ebb and flows of markets never turns out well. After the NFP +38k exp +160k worst since 2010, Yellen was trying to balance the nervousness of the report at Friday’s conference.  After the digestion over the weekend, risks assets prior session had another resilient day as DXY stabilized to the low 94 handle. WTI this morning is above the 50 handle on speculation of more supply disruptions from Nigeria. EM equities have ignited as well as EM FX.

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Morning Note June 6, 2016

Education

 
Mon, June 6, 16  
08:30 ET Update:
[Stockboardasset] S&P futures flat
08:30 ET Update:
[Stockboardasset] Nikkei   90bps

 

 

Futures are flat as the market awaits Janet Yellen’s speech at 1230. Last week’s NFP came in at +38k exp +160k with a four month negative slope opens the market up to economic reality. Probabilities of a rate hike were crushed along with DXY -185bps. MARKIT reported a round of gloppy employment data as well as weaker rise in service sector business activity in May. Banks, retail, and transports showed the most stress upon NFP release. Seems as corporate profit recession is hitting at a hiring slowdown, and as of Friday renewed talks about a recession flourished. DB concludes “would imply that the economy could enter recession as soon as the second half of this year. The FED’s recent meddling in reflation appears to be cracking.

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Morning Note June 3, 2016

Education

 
Fri, June 3, 16  
08:30 ET Update:
[Stockboardasset] S&P futures -50bps
08:30 ET Update:
[Stockboardasset] Nikkei   -163bps

 

 

May non-farm payrolls +38K vs 160K expected

  • Prior non-farm payrolls 160K (revised to 123K)
  • Two-month net revision -59K
  • Unemployment rate 4.7% vs 4.9% expected
  • Participation rate 62.6% vs 62.8% prior
  • Average hourly earnings 0.2% m/m vs +0.2% m/m exp
  • Prior avg hourly earnings revised to +0.4% from +0.3%
  • Average hourly earnings 2.5% y/y vs +2.5% y/y exp
  • Average weekly hours 34.4 vs 34.5 exp
  • Prior avg weekly hours revised to 34.4 from 34.5
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Morning Note June 2, 2016

Education

 
Thur, June 2, 16  
08:30 ET Update:
[Stockboardasset] S&P futures flat
08:30 ET Update:
[Stockboardasset] Nikkei   -163bps

 

 

[Stockboardasset] Nikkei   -163bps

 

 

The ECB leaves main interest unchanged at 0.0%. On June 8, the EU will start making purchases under its corporate sector purchasing program. It’s not often that consensus will nail this morning’s ADP employed 173k vs. 173k prior 156k. Markets are in fragile mode again as DXY sustains the

95-96 handle. AUDJPY is testing 1Q lows which signals stress in Asia. USDJPY found little support pared losses with Nikkei. OPEC Meeting is today as comments are plentiful prior session. WTI is at the 48 handle under pressure as the market awaits EIA data. Prior session, API reports a build, and seasonally that should not happen. Market continues to be in overcapacity. Prior session US Markets levitate due to RTRS OPEC headlines, then debunked hours later. It’s interesting how headlines are placed on technical levels for equities to jawbone. Conditional liquidity plagues US markets and global markets which will amplify price action. We welcome volatility as the status quo of reflation since mid-Feb will be hard to maintain heading into the summer months.

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Morning Note June 1, 2016

Education

 
WED, June 1, 16  
08:30 ET Update:
[Stockboardasset] S&P futures flat
08:30 ET Update:
[Stockboardasset] Nikkei   90bps

 

 

After dismal US FED Surveys, we expect US MFG ISM to contract. Overnight, a slew of Global MFG PMIs printed lackluster data in Asia and EU adding to risk off appetite in futures. Strong Dollar theme continues as stability in the 95-96 handle is in the 10th session. WTI has violated an important trend line forming a BARR Formation notable for a reversal. No confirmation yet as this T/A pattern is newly developed and should have more clarity post-OPEC meeting. We monitor the reflation trade TIP:IEF showing resistance since EOM-March. Commodities have rallied on a ex fundamental basis as the speculator took control. Eventually fundamentals will come into play reverting price. Bubble mania continues in energy stocks, dividend funds, MLPs, REIT’s, and HY as investors chase yield. Weakness in US MFG sector could weigh on cheerful recovery hopes for 2Q GDP. US productivity is now negative the first time in 30 years, as an earnings recession is in the 4th consecutive quarter. We “hope” for a 2H16 rebound in EPS, but for the past few years macro continues to decay throughout.  For markets, June is an abnormal month for events that could generate volatility. Dismal macro data on a global scale, Brexit, FX, EM, HY, commodities, QE Failure, Devaluations, election cycle, and valuations warrant caution in a time where conditional liquidity prevalent.

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