| | | Equity Markets1. Once again let’s begin with the stock market which has been eerily quiet until Tuesday afternoon. Apple hit a new high, pushing major indices to record levels.
According to Deutsche Bank, we have not seen this level of stability in the S&P 500 since at least 1927.
Source: @ReutersJamie
The daily volume in the SPDR S&P 500 ETF (SPY), which tends to be the most liquid equity security in the US markets, hit the lowest level since 2006.
Source: @chrisdieterich; Read full article
2. And then came the “fire and fury” comment from President Trump as he threatened North Korea. It’s worth noting that irrespective of the outcome of the threat, this move is sure to boost the President’s approval ratings domestically.
Source: @WSJ; Read full article
The markets suddenly came to life as VIX jumped.
The small caps outperformance that has been in place since the elections has suddenly ended.
( that is not an a bullish omen... or indication..... Editorial comment from JJP)
3. In Asia, the South Korean won slumped on the news.
The stock markets in South Korea and Japan (second chart below) retreated.
South Korean equity options are now pricing in a risk premium which could rise further in the coming days.
Source: @Callum_Thomas
US equity futures drifted lower in after-hours trading.
4. In other developments, energy stocks continue to lag crude oil prices.
Source: Goldman Sachs, @joshdigga
• Here is the relative performance of the different components of the energy industry.
(the refiners consistently outperform in an environment of declining crude prices.)
Source: Goldman Sachs, @joshdigga
• Energy MLPs took a hit as the Plains All American Pipeline reported soft earnings. The company suggested that the pipeline space is facing increased competition.
MLP stocks are commonly found in income portfolios because of their high dividends and lower exposure to oil prices (at least in theory). But many investors have been ignoring the competitive landscape. Here is the MLP index.
5. Pharmaceuticals are undergoing an unprecedented adjustment. Here is the 2-year relative performance vs. the S&P 500 (now down by over 50%).
As an example, take a look at Depomed which develops oral drug delivery methods.
6. Finally, the charts below raise further concerns about the market (discussed yesterday).
• A significant percentage of the S&P 500 companies now trades below the 200-day moving average.
Source: @jessefelder
• Short interest in the most liquid index ETFs continues to drift lower.
Source: @VrntPerception
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• The market is betting on continuing improvements in margins. Here is the price-to-sales ratio.
Source: Cantor Market Strategy
It’s worth noting that except for the largest companies, the price-to-revenue ratios for much of the S&P 500 universe are above the dot-come bubble highs.
Source: @WhatILearnedTW, @hussmanjp, @josephncohen
• Third quarter earnings estimates are drifting lower.
Source: @FactSet; Read full article
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Credit1. European HY bonds now yield the same as US Treasury securities. ( no reach for yield..... indicative of a
very fully valued and highly speculative market.)
Source: @jsblokland, @TihoBrkan
2. Faced with prolonged “harvesting” periods, private equity funds are taking more cash out of their portfolio companies by putting on more debt.(Editorial note... that's exactly what I would be doing JJP)
Source: @lcdnews; Read full article
3. Middle-market CLO growth spikes.
Source: @theleadleft; Read full article
AlternativesUS upper middle market private equity activity accelerates despite frothy valuations.
Source: @valuewalk, @josephncohen; Read full article
Commodities1. Aluminum blasted past $2,000/ton amid rising demand for cars and aircraft as well as firmer construction activity in China. Also, according to Bloomberg, “the Shandong province called for cuts to illegal aluminum capacity.”
Source: Bloomberg.com; Read full article
2. Other industrial metals joined the rally.
• Copper (China):
Here is the copper-to-gold ratio, which according to some, will herald higher bond yields.
• The industrial metals index:
Back to Index
RatesBond term premium in the largest developed economies has been depressed amid the central banks’ balance sheet expansion.
BITCOIN
4. Bitcoin hit another record high as Asian investors pile in.
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10. The most valuable startups in the world.
Source: @wef, @josephncohen; Read full article |
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