IBB
335.11
-0.86
-0.26%
 
AAPL
155.98
-3.78
-2.37%
 
TVIX
8.67
-0.11
-1.25%
 
XIV
110.81
+0.89
+0.81%
 
TNA
66.32
-0.23
-0.35%
 
TZA
13.32
+0.05
+0.38%
 
UVXY
15.83
-0.24
-1.49%
 
NASDAQ
6605.067
-19.153
-0.2891%
 
S&P500
2562.1
+0.84
+0.03%
 
NYSE
12380.323
+9.303
+0.0752%
 
IBB
335.11
-0.86
-0.26%
 
AAPL
155.98
-3.78
-2.37%
 
TVIX
8.67
-0.11
-1.25%
 
XIV
110.81
+0.89
+0.81%
 
TNA
66.32
-0.23
-0.35%
 
TZA
13.32
+0.05
+0.38%
 
UVXY
15.83
-0.24
-1.49%
 
NASDAQ
6605.067
-19.153
-0.2891%
 
S&P500
2562.1
+0.84
+0.03%
 
NYSE
12380.323
+9.303
+0.0752%
 
Morning Note April 20, 2016

Education

Morning Note-  
Wed, April 20, 16  
08:30 ET Update:
[Stockboardasset] S&P futures +9bps
08:30 ET Update:
[Stockboardasset] Nikkei +25bps

 

Money manger’s long spec inventory is the highest since July’14 for WTI NYMEX. The thesis of the trade was on a false narrative of a freeze or production cut deal. As of prior weekend, the narrative was shredded to pieces as the Saudi’s prevented a deal from occurring. Immediately, the long spec inventory (highest in 2 years) repackaged the thesis of Kuwait’s strike will offset the break down in talks. 48 hours later Kuwait announces the strikes are over and production is back to normal. Saudi Arabia announces it can unleash +1 million additional barrels at moments notice. Russia announces oil output freeze may not be needed in June, and output may rise to 540m Tons this YR. Russia also mentions oil prices will return to lows in 3-4 weeks if producers can’t make a deal. What’s more disturbing is the thesis for 1Q16 of advancing WTI more than +50% was based on the false narrative of freeze deals. Also, the high correlation to US equities boosted some +15% simultaneously. Equities and commodities have advanced modestly on false narratives, but continue to levitate, which seems odd. Equities are in an earnings recession with macro data deteriorating, and the commodities continue oversupply and lackluster demand. So, who is propping prices and what is the end game?

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Morning Note Apr. 18, 2016

Education

Morning Note-  
Mon, April 18, 16  
08:30 ET Update:
[Stockboardasset] S&P futures -30bps
08:30 ET Update:
[Stockboardasset] Nikkei -300ps

 

Front running markets is the failed Doha meeting. Top producers of OPEC/Non-OPEC failed to cut or freeze production. Sunday evening, WTI open -7% discount vs. prior session, along with /ES -50bps.


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Morning Note April 15, 2016

Education

Morning Note-  
Fri, April 15, 16  
08:30 ET Update:
[Stockboardasset] S&P futures -26bps
08:30 ET Update:
[Stockboardasset] Nikkei -88bps

Overnight 1Q16 Chinese GDP printed as expected 6.7%. This is the lowest print since the great recession, as the economy financed more than $1 Trillion for the consumer. Global markets are mixed as Yellen’s excuses for rate hike delay is running out of options. The FED’s conundrum is pleasing all three ECB, BOJ, and PBOC simultaneously. Recently, the Shanghai Accord policies of arresting the USD to please the PBOC seem to be waning. The USD has firmed support at the 94 handle, as the PBOC earlier this week conducted the 3rd largest deval since August’15.

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Morning Note Apr 14, 2016

Education

Morning Note-
Thur, April 14, 16
08:30 ET Update:
[Stockboardasset] S&P futures  -4bps
08:30 ET Update:
[Stockboardasset] Nikkei  +100bps

 

 

Us Bank Earnings

  1. BLACKROCK 1Q ADJ EPS $4.25, EST. $4.30
  2. PNC Financial Q1 EPS $1.68 vs. $1.70 Est.
  3. Bank of America 1Q EPS $.21 IN LINE

Prior session, USD has stabilized with +150bps advancement. In return, the PBOC has devalued the YUAN by the most since Jan 7, 2016. Advancement in the USD has helped construct resistance in the mid 42s for WTI and has eased BOJ/ECB concerns of their appreciating FX. Kuroda comments overnight with a belief that the YEN appreciation and equities decline weren’t because of NIRP. China’s trade data prior session on imports was an accounting gimmick hiding the capital flows, which remain a concern. China’s imports data soared 116% compared side by side with other DM/EM countries is not plausible. Comes at a perfect timing as the IMF continues to downgrade global growth. EU woes of BREXIT are starting to make headlines in the US print. Morning polls have leave/remain tied at 39%. Eurozone March CPI Y/Y is flat at 0%.

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Morning Note Apr. 13, 2016

Education

Morning Note-
Wed, April 13, 16
08:30 ET Update:
[Stockboardasset] S&P futures  +50bps
08:30 ET Update:
[Stockboardasset] Nikkei  +300bps

Prior session WTI climbs to a 4-month high lifting US equities +100bps. The catalyst was on recycled news of Saudi and Russia Agreeing on a Production Freeze from 2-11-16 presented as “new news” with no sources. Repeat news is always good to stoke Algos. We notice that both actual news and recycled news were released on technically challenged areas for the SPX. Afterhour’s prior session, API released data on a large build than expected coming in at 6.2 million barrels. EIA is set to report this morning at 1030am.

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Morning Note Apr. 12, 2016

Education

Morning Note-
Tues, April 12, 16
08:30 ET Update:
[Stockboardasset] S&P futures  +35bps
08:30 ET Update:
[Stockboardasset] Nikkei  +182bps

 

Earnings season has officially kicked off with Alcoa financially engineering their vehicle to beat on earnings, but of course miss on revenues. Banks are forecasted to take a major hit 1Q16 as financial transactions were the lowest since the great recession. JPM will be the oracle tomorrow for the industry in earnings season. Negative guidance for SPX EPS reaches a 10 Year high, as 59% of the companies in the index have negative forecasts. The contagion is not limited to energy, but has spread through the system like a nasty cold. Simply, earnings peaked 1H15, and companies aren’t making as much money. Government statistics continue to be somewhat misleading, as everyone waits for growth or QE promising a recover. Seems, as the promise land of recoveries currently does not exist, as a global slowdown is under way. We question analyst who see a V-Shape recovery in earnings, due to global markets would have to support such growth. Frankly, the global economy is feeling the reversions of large K-Waves reverting in corporate profits and commodities. This is due to ZLB has not produced further growth, and NIRP has backfired in EU/JPN. The artificial demand lines in corporate profits and commodities were built on interest rate step down since the early 1980s, but now on ZLB is structurally maxed out; a reversion seems to be the obvious call here. So, does that mean new baseline growth trajectories will be issued? Prior week, we’ve seen Atlanta FED GDPNOW, Goldman, and Barclays revise 1Q16 GDP <1%. Jim Reid of DB talks about cycles and explains why he thinks late cycle fears continue to build and US corporate debt accumulation now compares with prior default cycles.  DB research desk has issued a list of recession fears, just like other countless banks.  The earnings implosion of 1Q16 and the illusion of liquidity in markets is concerning. Are global markets structurally topping out here from decades of debt, and an interest rate, which cannot go lower than ZLB? Of course there is NIRP, but latest in experiments in EU/JPN have not gone to plan. NPLs in EU baking industry are having a Lehman moment, and JPN is seeing a massive pullout of global funds. Central banks have to give more speeches, and secrete messages these days to support an agenda. This simply means their control over markets is deteriorating at an alarm pace. Even the latest WSJ article says central banks aren’t superhero’s. That’s a nail in the coffin for credibility, and by the way that’s how central banking works in the belief system.

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Morning Note Apr 11, 2016

Education

Morning Note-
Monday, April 11, 16
08:30 ET Update:
[Stockboardasset] S&P futures  +38bps
08:30 ET Update:
[Stockboardasset] Nikkei  +52bps

 

US Earnings Season will be starting today, as Alcoa will be the first to report. According to FACTSET,

the estimated earnings decline for SPX 1Q is -9.1%. US Banking complex will be in full focus, expected to have a disastrous quarter. Limited IPOs, No Tech IPOs, low-level M&A, and the overall financial transactions at a minimal have put a strain on banks. FACTSET states, 1Q16 will mark the 4th consecutive quarter Y/Y of declines in earnings since 4Q08, otherwise known as an earnings recession. As Bloomberg reports, buybacks are the only player in town buying equities, and during this reporting period will be on hold. Prior week, JPM, Goldman, and Atlanta FED GDPNOW revised 1Q16 GPD <1%. Financial conditions have to improve overall or US equities will face a mean reversion. FED speakers continue using jawboning comments to levitate SPX range bound for nearly 1-2 years ignoring fundamentals. Signaling the FED has made a policy error by not letting fundamentals dictate price discovery of equities.

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Morning Note Apr 8, 2016

Education

Morning Note-
Friday, April8, 16
08:30 ET Update:
[Stockboardasset] S&P futures +68bps
08:30 ET Update:
[Stockboardasset] Nikkei +282bps

 

All quiet on the global front after Japan’s FX woes and Europe’s faltering Banks. Its been a week of emotions as US equities have gone no where, but bracket in measured moves . Overnight, Puerto Rico Bonds crash after Moratorium raises default risk. We turn to auto sales where truck orders plunge 37% as unsold inventories reach 2007 levels. US light auto’s have downside imbalance from an ascending trend line developed at the helicopter drop when cash for clunkers was initiated. So, we turn to crude products to validate transportation concerns, and find gasoline demand has dropped to 14 month lows, and distillate demand are at recessionary levels. It’s been 11 months and counting as the SPX has not made a new high, it’s due to fundamentals realigning as an earnings recession depends. 1Q16 is set to report a terrible quarter marking this the 4th consecutive quarter Y/Y since 2009. We note, companies who use Non-GAAP vs. GAAP are playing a dangerous game of waiting for profits, the earnings recession could be much deeper as 30-40 cycles of corporate profits and commodities are reverting to baseline growth developed when interests rates were >10%. Tech and Biotech are much in focus as in a time of stress market analyst fall back to cash flows and basic fundamentals. To support our view of larger cycles converging present date, Greenberg Chubb’s CEO says, “Unwind in debt financing may stunt growth”. Rising credit risks, HY spreads widening, and the price of oil have been a measure of investment sentiment. US is in a tightening cycle with HY Default rates at Lehman Crisis levels. Yellen is taking a page from the DOT COM FED’s dual mandate, and is slowly deflating bubbles. Price/EBITDA is current at 2000 peak, as the US is in an earnings recession with 23x GAAP PE. IPO participations are at cycle lows, and in 1Q there were no tech IPOs. Us consumer credit rises $17.2bbillion vs. estimate of $14.9 Billion, but retail is sluggish.

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Morning Note Apr 7, 2016

Education

Morning Note-
Thur April 7, 16
08:30 ET Update:
[Stockboardasset] S&P futures  -44bps
08:30 ET Update:
[Stockboardasset] Nikkei  -111bps

 

 

One session after, the DOE managed to produce a massive inventory draw for WTI, in return advancing equities into a wall of worry and disproportionate valuations. The cracks overnight in  the global FX markets arrests further appreciation of US, EU, and Asian equities. Global economies are a few steps away from panic in the FX market. USDJPY slide to pre QQE levels, which has certainly alarmed the BOJ. YEN is a popular carry trade for higher interest rate assets, which may answer why global equities are coming under pressure. The recent capital flight in US Assets from China in 1Q has trumped 10 days of data collectively accordingly to FACTSET.

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Morning Note Apr 5, 16

Education

Morning Note

Tues April 5, 2016

8:30 ET                  S&P Futures -82bps

8:30 ET                  Nikkei -340bps

Global Markets have resumed a downward trajectory now in the 900th minute. Rumored in Feb’16, the Shanghai Accord was a collusion of central banks plotting to arrest the USD appreciation. Such action spurred global short cover rallies in equity indexes and commodities. The rallies were based on limited fundamentals, which provides traders with excellent opportunities for mean reversions. In particular, we’ve been vocal on WTI mean reversion (review oil note). Overnight, the Global Equity index continues a downward spiral post bear flag break. EU and Asian Indexes are all experiencing risk off. USDJPY touches a new multi year lows, and the USD is catching a bid in 94.50s. USD appreciation could re-enter the limelight enabling excellent opportunities in EURUSD short, EM short, or equity Index short.

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