Global Stocks Rise To Record Highs As Tax Reform Is “Priced In” All Over Again

Yesterday we joked that with the US House of Representatives set to vote for the GOP tax bill on Tuesday, markets would “price in” the same tax legislation they have been pricing in every day for the past year, all over again…
Get ready for US markets to price in tax reform all over again in just a few short hours
— zerohedge (@zerohedge) December 19, 2017

… and sure enough, that’s precisely the narrative being spun this morning to explain why US futures and global stocks are once again, drumroll, higher. To wit, from Bloomberg: “European stocks struggled to build on Monday’s jump as the common currency advanced, while U. S. equity futures edged higher as the prospects for tax cuts in the world’s largest economy continued to buoy sentiment.” Of course, US equity futures have been doing that precisely that every single day for weeks and months on end, but now that Congressional passage finally appears imminent, it may finally be time to stop buying the endless rumor and sell the news. As a reminder, on Monday Republican Senator Susan Collins of Maine said she’ll back the GOP tax bill, a move that all but clinches the votes necessary to pass the legislation. Both the House and Senate plan to vote by Wednesday on final legislation before sending it to the president.
As markets grind toward the end of a stellar year for global stocks, the biggest focus for investors still chasing gains is the progress of U. S. tax reform, which is inching toward a denouement. The House is scheduled to vote Tuesday on the tax bill following a floor debate that morning. It then goes to the Senate, where Republican leaders intend to bring it up as soon as they get it. ‘It will help sustain a very strong year of earnings growth for U. S. and for global equities,’ said Timothy Graf, State Street Bank & Trust head of macro strategy EMEA., speaking on Bloomberg TV. ‘It will keep sentiment robust.’

This post was published at Zero Hedge on Dec 19, 2017.

15 Market Red Flag: Stocks May Be About To Tank: ‘If There’s One Thing That You Need To Pay Attention To It’s This…’

Stock and bond markets may be teetering on the edge of a widespread crash following a stellar year that has seen all-time highs across just about every major asset class. Earlier today Zero Hedge reported that Bloomberg market commentator Mark Cudmore says markets could be in for a violent downside break in the weeks ahead.
It’s a sentiment also shared by Traders Choice analyst Greg Mannarino, who up until this point has been generally bullish on short-term market movements. On Thursday, however, Mannarino reports that bond buying, which has been used to prop up stocks through massive cash injections in recent weeks and months, failed to keep stocks from falling.
This, says Mannarino, is a major red flag that could signal a reversal going forward:
If there’s one thing that you need to pay attention to it’s this… savage bond buying occurred today in an attempt to re-prop up the stock market and it didn’t work…
They’re trying to play a game here and it’s been working time and time again…
Without fail every single time… except for today… that has worked.

This post was published at shtfplan on December 15th, 2017.

Strong 30-Year Auction Sets The Stage For Yellen’s Final Rate Hike

After yesterday’s stellar 3Y morning auction, and disappointing 10Y afternoon auction, today’s reopening of the 29-Year, 11-month RZ3 Cusip was right down the middle.
The bond stopped at a high yield of 2.804%, stopping through the When Issued 2.808% by 0.4bps, the third consecutive stop through in a row. The high yield was above November’s 2.801% but below October’s 2.870%.

This post was published at Zero Hedge on Dec 12, 2017.

Europe Rebounds From Chinese Rout After Stellar PMIs; US Closed For Holiday

#Eurozone output #PMI hits 79-month high (57.5) in November. Employment rises to greatest extent in 17 years. pic.twitter.com/hCY1Dx9uzh
— Markit Economics (@MarkitEconomics) November 23, 2017

Nothing can keep the BTFD spirit at bay in Europe this Thanksgiving morning.
Having started the session on the back-foot after the biggest Chinese stock market tumble in 17 months (the SHCOMP dropped -2.3%, most since June 2016) amid tighter liquidity conditions as a result of today’s Thanksgiving holiday in the US and attempts by regulators to rein in asset management firms and the micro-loan market, the negative sentiment was short-lived however, a slew of blockbuster November Eurozone PMIs, among which the highest output print in 79 months, with the highest employment number in 17 years, helped revive sentiment in Europe – and brought the Eurostoxx back to green on the session. Among the notable composite PMI prints:
France 60.1 vs est. 57.2 Germany 57.6 vs ext. 56.7 Euro zone 57.5 vs est. 56.0 Markit noted this was a multi-year highs seen for all main indicators of output, demand, employment and

This post was published at Zero Hedge on Nov 23, 2017.

Dow To Rise Above 22,000 On Apple Earnings; Europe Pressured By Surging Euro

Nasdaq 100 futures jumped 0.8% after Apple surged to record highs following a strong beat and optimistic projections ahead of the launch of the company’s new batch of iPhones. Eminis are little changed, up 0.1% to 2,475, trailing Asian markets, while European stocks and crude oil fall.
Apple surged 6% after-hours to a new record highm taking its market capitalization above $830 billion. That should help carry the Dow through the 22,000 mark when the market opens. Among Asia’s Apple suppliers, LG Innnotek jumped 10 percent and SK Hynix, the world’s second-biggest memory chip maker, rose 3.8 percent. Murata Manufacturing firmed 4.9 percent and Taiyo Yuden 4.4 percent, helping the Nikkei up 0.47 percent.
“It is all about Apple,” said Naeem Aslam chief market analyst at Think Markets. “The firm comfortably topped its forecast and produced stellar numbers for its revenue and profit.
Oil came under pressure again as higher than expected US inventories and reports of rising OPEC output helped drive prices below back below $48/bbl (WTI crude). In FX markets, the USD dollar gave up some gains late in the session with DXY edging down by 0.1% and the euro rising to $1.1827. Treasury yields are 0.5-2bps higher across the curve with the 10y at 2.273%.

This post was published at Zero Hedge on Aug 2, 2017.

Ahead Of The Fed: Strongest Demand For 2Y Paper Since 2015

With the FOMC members currently huddling deep inside the bowels of the Marriner Eccles building, perhaps scheming how to spook markets by announcing a surprise rate hike tomorrow, one would have assumed demand for 2 Year paper in today’s auction would be less than stellar. One would be wrong, because moments ago the Treasury sold $26bn in 2 year paper to what was clearly an overabundance of demand: the high yield of 1.395% stopped through the When Issued 1.401% by 0.6 bps, and was the highest yield going back to October 2008.
The bid-to-cover rose to 3.06 from 3.03 in June, and was above the six previous auction average of 2.84. It was also the highest Bid to Cover since November 2015.
The internals were also rather impressive, with Indirects taking down 58.5%, above the 56.6% in June, and above the 6MMA of 54.1%. Directs were awarded 16.9%, down slightly from 18.4% last month and above the 6 month average of 13.7%. Combined these two meant record buyside interest, leaving Dealers with just 24.6% of the auction, down from 25.0% and below the 32.1% 6month average. This was the lowest Dealer award on record.
In other words, if anyone was worried about a surprise announcement by the Fed tomorrow, one which would send 2Y yields spiking, it wasn’t to be found among the bidders for today’s auction.

This post was published at Zero Hedge on Jul 25, 2017.

Earnings Driven Stock Market

The ‘earnings season’ is the period each quarter when the vast majority of corporate earnings are reported. The bulk of the stellar gains in the stock market this year have occurred around earnings season. Alcoa typically kicks it off around the 3rd week at the start of each calendar quarter and 6 to 8-week market rallies have ensued. Should this pattern repeat, then we should begin to see upward price action around the 3rd week of July and price acceleration in August. While we have already edged into the price and time window for our expected medium-term top in 2017, we will be interested to see if sentiment measures finally become overbought should this rally continue to the upper end of our time and price window.
The earnings improvement in early 2017 was virtually guaranteed with the exceptional year over year comparisons of the energy sector and technology.

This post was published at FinancialSense on 06/28/2017.

Blockbuster 3Y Auction: Soaring Indirects And Bid to Cover Scream Fed Hike Is “Policy Error”

So much for worries about a hawkish Fed and a balance sheet “normalization” pressuring bonds yields.
Moments ago the Fed auctioned off both a 6 month Bill in a strong auction, but more importantly conducted a stellar 3 Year auction, which not only stopped through the 1.508% When Issued, printing at 1.500% (83.8% alloted at the high), the lowest yield since February, and the first non-tailing auction since the same month, but it was the internals that took the prize.

This post was published at Zero Hedge on Jun 12, 2017.

May Payrolls Preview: The Tiebreaker

After a poor March jobs report, followed by an April scorcher, the May payrolls report due at 8:30am on Friday will be the tiebreaker, not only for the current state of the economy where both soft and hard data have been deteriorating in recent weeks, but perhaps also for the June rate hike decision, which as the Fed noted in its May FOMC minutes, may not take place without “evidence” that the recent “transitory weakness” in the economy is over. Here are the consensus expectations for tomorrow’s report:
May Nonfarm Payrolls Exp. 185K (Range 140K to 235K) vs April 211K Unemployment Rate Exp. 4.4% (Range 4.30%-4.60%) vs April 4.4% Average Hourly Earnings M/M Exp. 0.20%, vs April 0.30%; Y/Y Exp. 2.60%, vs April 2.50% Payrolls Expectation
In terms of overall expectations, the consensus is looking for 185k nonfarm payrolls to be added to the US economy in May – the same as the April consensus – compared to 211k actual jobs added in April. That according to RanSquawk would be in line with the 185k/month pace seen in 2017 thus far. On one hand, there is potential for upside surprise, as per today’s stellar ADP report which came in at 253K, far above the 185K expected. On the other, Goldman believes a favorable swing in the weather between the March and April survey periods boosted last month’s hiring pace, and suggests the 211k pace of April job growth “likely overstates the near-term underlying trend”, as such there will be payback in the May report. Also, Goldman cautions that the ADP measure has been running above official private payroll growth so far this year, by 60k per month on average, so take it with a grain of salt.

This post was published at Zero Hedge on Jun 2, 2017.

Banks Tumble After BofA, JPM Warn Revenue Will Be Down As Much As 15%

The collapse in volatility is finally trickling up to the big banks.
Moments ago, JPM CFO Marianne Lake speaking at a Deutsche Bank conference in New York, warned that contrary to expectations for an ongoing rebound in revenue and profits, the bank’s second quarter revenue has been 15% lower from a year ago. And while she said that US economic figures are “solid, not stellar”, she blamed the same thing that has been the nightmare of daytraders everywhere: collapsing volatility.
From the newswires
JPMORGAN 2Q MARKET REVENUE HAS BEEN DOWN ABOUT 15 PERCENT FROM YEAR EARLIER, CFO SAYS JPMORGAN CFO SAYS MARKET REVENUE LOWER ON LOWER VOLATILITY THAN YEAR EARLIER JPMORGAN CFO: LOW RATES, LOW VOLATILITY HAVE LEAD TO LOW CLIENT FLOWS JPMORGAN CFO: DOESN’T SEE REASON 2Q TREND WOULD CHANGE IN JUNE

This post was published at Zero Hedge on May 31, 2017.

Brick-and-Mortar Retail Meltdown Has a Busy Month

After years of asset stripping by private equity firms and hedge funds. This morning, luxury handbag retailer Michael Kors Holdings, which had had stellar sales through 2014, revealed in its Q4 earnings report that it would close up to 125 retail stores and take a $125 million charge, to save $60 million this fiscal year.
Sales plunged 11.3% year-over-year in Q4, and the company lost $27 million, or 17 cents a share. It doused investors with a gloomy outlook for its fiscal year 2018, with revenues expected to drop over 5% to $4.25 billion, and with same-store sales plunging ‘in the high-single digit range.’
The company was dogged by heavy promotions, a ‘difficult retail environment,’ and a ‘product and store experience’ that didn’t ‘sufficiently engage and excite consumers,’ CEO John Idol said. So the company needs to enhance the store experience ‘to deepen consumer desire and demand for our products.’
Despite a ‘new $1 billion stock repurchase program’ – funded with the money the company is losing, so to speak – share plunged 8.5%.

This post was published at Wolf Street on May 31, 2017.

How Debt-Asset Bubbles Implode: The Supernova Model of Financial Collapse

Gravity eventually overpowers financial fakery.
When debt-asset bubbles expand at rates far above the expansion of earnings and real-world productive wealth, their collapse is inevitable. The Supernova model of financial collapse is one way to understand this. As I noted yesterday in Will the Crazy Global Debt Bubble Ever End?, I’ve used the Supernova analogy for years, but didn’t properly explain why it illuminates the dynamics of financial bubbles imploding. According to Wikipedia, “A supernova is an astronomical event that occurs during the last stellar evolutionary stages of a massive star’s life, whose dramatic and catastrophic destruction is marked by one final titanic explosion.” A key feature of a pre-supernova super-massive star is its rapid expansion. As the star consumes its available fuel via nuclear fusion, the star’s outer layer expands. Once there is no longer enough fuel/fusion to resist the force of gravity, the star implodes as gravity takes over.

This post was published at Charles Hugh Smith on MONDAY, MAY 29, 2017.

Gold Juniors’ Q1’17 Fundamentals

The junior gold miners’ stocks suffered a serious thrashing between mid-April and early May. Relentless heavy selling blasted many back down near deep mid-December lows, leaving sentiment in tatters. But traders distracted by weak technicals need to keep their eyes on the fundamental ball. The gold juniors just finished their Q1 earnings season, which was solid. Their low stock prices are disconnected from reality.
Four times a year publicly-traded companies release treasure troves of valuable information in the form of quarterly reports. These are generally due by 45 days after quarter-ends in the US and Canada. They offer true and clear snapshots of what’s really going on operationally, shattering the misconceptions bred by the ever-shifting winds of sentiment. There’s no junior-gold-miner data that is more highly anticipated.
Until later last year, the definitive list of elite junior gold stocks to analyze came from the world’s most-popular junior-gold-stock investment vehicle. The GDXJ VanEck Vectors Junior Gold Miners ETF was born in November 2009, and is the second-largest gold-stock ETF after its big brother GDX which tracks the larger major gold miners. Investors love junior gold miners’ stellar potential, so GDXJ has been very popular.
Unfortunately this fame has recently created major problems severely hobbling the usefulness of GDXJ. This sector ETF has shifted from being beneficial for junior gold miners to outright harming them. GDXJ is literally advertised as a ‘Junior Gold Miners ETF’. Investors only buy GDXJ shares because they think this ETF gives them direct exposure to junior gold miners’ stocks. But that’s increasingly becoming less true.

This post was published at ZEAL LLC on May 19, 2017.

Is China Trying To (Slowly) Burst Another Stock Market Bubble?

The pressure point in Asian stock markets this week has been the decline in Chinese equities (the biggest weekly drop in 4 months).

Despite a stellar performance of the economy the outlook for the Shanghai Composite Index isn’t promising as the government is taking advantage of better growth to spur deleveraging.
For a market relying more on liquidity than fundamentals, China’s worsening monetary conditions index suggests tough times ahead…

This post was published at Zero Hedge on Apr 21, 2017.

RBC On Today’s “Remarkable” Market Move: “Suddenly Treasuries Can Not Sell Off”

With stocks blasting off the moment today’s stellar ADP report hit (even if subsequent PMI and ISM soft data roundly refuted the highest surge in private payrolls in over two years), pushed higher by the momentum ignition in USDJPY, some traders have declared today the day the reflation trade has (again) come back. Perhaps, however as RBC’s Charlie McElligott correctly points out, something sticks out: “conversations with a number of clients shows me that many have been recently debating internally on ‘throwing in the towel’ on the trade – especially after the brutal start to the week with the US rates rally. That is what makes today’s move in US rates after the strong headline ADP print so remarkable and FURTHER anxiety-inducing for said ‘reflationistas.’ Treasuries suddenly cannot sell-off.”
And without both the 10Y – and crude – validating the move in stocks, it is only a matter of time before the anti-reflation trade takes hold in stocks.
Here are some thoughts from RBC’s McElligott as to what may be causing today’s persistent bid in the Treasury complex.
RBC Big Picture: THINKING OUT LOUD
#HOTTAKE: Crude 2.8% off WTD lows. Breakevens ‘firming’ after their recent weakness. Energy leading S&P sectors MTD / ‘value’ factor and cyclical ‘longs’ outperforming WTD in equities, while HY has led IG in credit over the same period. US banks index BKX is 2.0% off its lows made Monday morning. Booyah.

This post was published at Zero Hedge on Apr 5, 2017.

Why Are Stocks Unhappy: RBC Looks Below The Surface Of Today’s Selling

After a stellar quarter for US equities, stocks have unexpectedly slumped on the first day of Q2 despite “whispers” of pent upmutual fund reallocation into risk assets that would take place today.
So why are stocks lower, besides “more sellers than buyers” and “money going back to the sidelines” of course? For a comprehensive assessment of what is going on below the surface, here is RBC’s Charlie McElligott (who as a reminder warned on Friday about the Double Whammy in the April Effect) looking today’s rates reversal, the shift to “anti-beta” leadership and the “momentum factor” reversal, all of which explain the bad start to the second quarter.
RATES REVERSAL, ‘ANTI-BETA’ LEADERSHIP AND ‘MOMENTUM FACTOR’ REVERSAL WITHIN EQUITIES NOT GOOD START TO Q2
Summary
Kind of the start to Q2 that I was exactly highlighting in Friday’s note, i.e. rates reversing fueled by softening ‘soft’ data vs ‘prices paid’ overshoot, helping to ‘kick off’ a reversal within equities ‘momentum’ longs as ‘growth’ names fading,’defensives’ lead and ‘reflation’ is again hammered. Early focus on the big ‘Prices Paid’ beat in today’s ISM (highest absolute # since ’11), with S&P futures at lows on the session following the release indicating ‘bad inflation’ concerns when weighed against signs of ‘slowing growth’ (Street Q1 GDP downgrades, Atlanta Fed GDPNow downticking, Markit comments on Q2 post Manu PMI release) and weakening ‘soft data.’ This harkens back to the post Dec Fed concerns around ‘stagflation’ potentials and / or ‘hiking faster than we’re growing’ fears…i.e. Fed ‘policy error.’

This post was published at Zero Hedge on Apr 3, 2017.

Legislation Consolidation in Stocks

The primary US stock market yardstick, the SP 500 Index rallied 17% into March 1st from the spike low on election day. In almost 5 months of stellar gains, the market has yet to experience more than a 2% correction on a closing basis and 3% intraday. Until March our advice has been to avoid waiting for corrections and keep investing as too many sat on their hands assuming a better entry ~5% lower was due. While 5% is not scary, the growing pent-up demand prevented such an ideal pullback.
Now that we have entered a new political phase where market expectations require being fed a dose of ‘real’ legislative success, we are in stall mode. The reality is setting in that the arduous hurdle of replacing Healthcare and Tax Reform will be delayed until late 2017 – at the earliest. No longer are we anxious to pay expected 2018 earnings today and Buy at any price. Throughout March we have been talking of consolidation. The chart below is essentially unchanged from previous iterations we have shown. This consolidation could last longer and correct further, but supportive economic data, deregulation orders and normalized household income growth provide support while Trump searches for legislative success to break out of the current incertitude.

This post was published at FinancialSense on 03/31/2017.

Good As Gold (Again)? Bitcoin Soars To New Record Highs

Bitcoin topped $1200 overnight for the first time, bringing it ever closer to the price for an ounce of gold…
As Bloomberg notes, a ten-day rally for the cryptocurrency has narrowed its gap with the precious metal to the smallest on record.
Each asset has been touted as an alternative to regular currencies, because of constraints on their supply and the capacity they offer to sidestep governments.
Partity looms once again…
But, as GoldMoney’s Stefan Wieler previously noted, the price of Bitcoin is closing in on the price of gold again this week; however, this comparison is completely arbitrary.
Gold is measured in weight, while Bitcoin, much like currency, is an abstract form of money and can only be measured in units of itself. One Bitcoin is worth a lot more than 1 gram of gold, but a lot less than 1 tonne. Despite Bitcoin’s stellar performance in 2016, the size and depth of the cryptocurrency market is dwarfed by the $7 trillion gold market.

This post was published at Zero Hedge on Feb 24, 2017.

U.K. Brexit Boom Still Sees Economy Plagued by Old Problems

The U.K. economy is maintaining its stellar performance since the Brexit vote, but the reasons may be cause for concern.
Growth beat expectations again in the fourth quarter, coming in at 0.6 percent, but the make-up of the performance hints at ongoing weak links. The expansion is still being almost entirely driven by services and consumer spending, continuing a trend of lopsided growth in seen in recent years.
While the support is welcome, it may prove unsustainable. Households are borrowing with abandon and saving less, and an expected pickup in inflation through this year raises the risk of a squeeze on incomes. Economists forecast a sharp slowdown this year, and Bank of England of England Governor Mark Carney has warned of pressure from inflation and weaker business spending.
‘Today’s data was good, but there are pockets of potential unsustainability in household spending that could drive a slowdown,’ said Chris Hare, an economist at Investec Securities in London and a former Bank of England official. The economy’s ‘rebalancing’ toward exports has so far failed to materialize, he said.

This post was published at bloomberg

Silver Stocks’ New Upleg

The silver miners’ stocks have surged higher in this young new year, putting the Trumphoria general-stock rally to shame. Following its fourth-quarter drubbing, this tiny contrarian sector is embarking on a major new upleg as traders return. Silver-stock uplegs tend to grow to massive proportions, and silver-mining fundamentals remain strong today. So odds are the silver stocks are going to power far higher in 2017.
Because silver stocks aren’t widely followed, most investors and speculators are unaware of this sector’s stellar upside potential. Silver mining is a challenging business both geologically and economically, so there aren’t many primary silver miners out there. And their stocks’ collective market capitalization is small, a rounding error compared to the broader stock markets. That doesn’t leave much room for funds to buy.
On top of that, silver itself is essentially a leveraged play on gold. The overwhelmingly-dominant driver of silver prices is gold-price action. Silver’s fortunes are inexorably slaved to gold’s own. So the great majority of contrarian capital flowing into precious-metals stocks naturally seeks out the far-larger gold miners. Silver stocks tend to fly under the radars of fund managers, creating exceptional opportunities.

This post was published at ZEAL LLC on January 27, 2017.