As for the Ukraine peace talks in Minsk that were earlier reported a having some initial success which sent the market up this afternoon, the truth of the matter is it was just Germany and France readying a proposal to REAFFIRM the cease-fire deal that was already in place and never actually happened. Isn't politics amazing? "We have a major breakthrough, we are reaffirming our commitment to a cease-fire deal that never took place and never will"
I suspect the EU/Greek announcement is along the same lines, but even if it weren't, there was a Greek deal in place before Syriza won elections so if there's any slack given to Greece by the EU, it's not any better for the EYU' position although perhaps for Greece's, thus you essentially have a worse deal than what you started with and the market should rally on that?
In any case, it's too early to speculate on speculation.
We are hearing a growing chorus of fund managers either talking about or readying themselves for a market crash. Last week Carl Icahn warned of a "major bubble", yesterday George Soros' 13F showed he had increased his SPY put position by 600% to $2 billion dollars. And we know (from yesterday) that Third Point's Dan Loeb views the market as a "Haunted House" with something scary around every corner and has brought down leverage. Appaloosa finds have done the same and suggested that others think about doing the same.
While I generally don't trust what people like this say, it's another thing to know that they actually did it like Soros' 13f filing with the SEC, but beyond that, there's some prestige for the guy who calls the top rather than gets whallopped by it like Buffet.
*Dealing with what we know from today (and I'll check futures again later tonight to see what has happened since the deal that wasn't was announced)....
I use to use commodities as a leading indicator, they are a risk asset, but somewhere around QE2, commodity inflation caused input costs to rise exceptionally high for manufacturers and the F_E_D made some changes and commodities lost just about all correlation with the market.
However there's a reason that commodities reflect the economy and thus the market, with the Baltic Dry shipping Index hitting a new record low today, it's not very difficult to surmise that global economic activity is sharply declining, this is also very easy to see in US Macro data which normally thrives at this time of year due to seasonal adjustments (basically lies to get better prints), that typically ends around the end of the first quarter, however this is the first year I can recall in which the seasonal adjustment factor hasn't led to a strong open to the year with regard to US macro data, in fact as you have probably heard me say, this is the worst start for a year in over a decade.
This is the US Macro Data surprise index vs the SPX.
The second event is the end of QE3 and the red line is the trend of US Macro economic data vs the SPX, see anything interesting there?
As for commodities, perhaps they are starting to have a better forecasting record once again like they did in the past.
While we're on the subject, the SPX:RUT Ratio (custom indicator) refused again to confirm today's price action or action in this area at all.
And the VXX is showing relative strength vs the SPX.
Also you may have seen, but as of this week's CFTC futures data, the Net Spec VIX position is at record highs.
Yields which have also been supportive of the market through the 3 bounce attempts this year are also seeing the worm turn as yields are starting to lead lower, equities are drawn toward yields like a magnet.
Additionally PIMCO's HY Fund which has been up almost non-stop since January 1st, also supportive of the market's efforts to bounce (this being the 3rd time) has also seen the worm turn.
***Ooops Now I see the EUR/USD, Euro and Index futures are giving up the gains from the false statements from earlier, so I'll likely take a closer look at futures later tonight rather than spend a lot of time covering data that can just be run over. There's a decent chance the real deal will be seen in futures, I suspect it already has.
As for the other typical data I like to keep an eye on after the close, as for the Dominant P/V relationship, there's nothing even close to a dominant relationship today.
Of the 9 S&P sectors, only 4 of 9 closed with a gain today with Consumer Staples leading at a paltry +.47% and Utilities lagging at a more substantial -2.17% after yesterday's big day.
Of the 238 Morningstar groups I track another luke-warm reading of 103 of 238 closed green, not the best internals at all today.
Lastly I wanted to mention today's 10 year Treasury auction. Yesterday we had a 3 year auction which saw indirects (foreign entities) with the highest take-down for a 3 year auction in 5 years. Today the Treasury sold $21 billion in 10 year Ts, which not only priced 1.4 bps though the When Issued 2.014%, hitting the high yield at 2.000%, but saw the highest Indirect Bid, of 59.5%, since December of 2011. When this happened, stocks actually declined today. It appears the assumption that treasury yields have hit their bottom may not be exactly accurate and foreign demand is smoldering. Additionally it seems the expectations (being a 10-year auction) are for inflation to stay low, perhaps even something worse like deflation which raises interesting questions for the F_E_D, but as I have noted, they inoculated themselves so long as they say, "They expect inflation to move gradually toward their target of 2%.
Tomorrow we have a 30 year so we should have a better feel, but the great rotation out of treasuries and into stocks looks like it's a dead end thus far.
Again, as of right now, the false rumors are being re-discounted as Index futures give back the gains...
NASDAQ 100 Index futures giving back the Greek / EU rumor gains...
I'll check in on futures in a bit.
