vrijdag 16 juni 2017

'Bricks And Slaughter'; Amazon Deal Slams Stocks As Yield Curve Crashes

Seemed appropriate...


As a reminder, US economic data has not disappointed this much since August 2011. This is the 13th straight week of disappointment for US economic data, and this week is the 2nd worst weekly economic disappoitment since June 2011...


The week saw Tech stocks hurt the most (this is the biggest two-week drop for S&P Tech Sector since Brexit) leaving the S&P scrmabled barely into the green, Trannies best, but Nasdaq and Small Caps the biggest losers...


The panic bid into the close as quad witch closed out...


VIX was crushed into the close as quad-witch caught up with the market. in a desperate attempt to close S&P green, even USDJPY was dragged in to play too...


Retailers were the worst hit on the week as Amazon's acquisition rippled through almost everything...


While value and growth remain divergent, we note that on the week, growth outperformed value...


Despite AMZN's big bounce (paying for its WFM acquisition in market cap gains), it remains well below last Thursday's pre-plunge close...


This is the worst drop for FANG Stocks since the post-election hangover...


Of course, today's headlines were all about Amazon (and Whole Foods)...


Notably the correlation between the market and retailer stocks has collapsed...


Despite the 36-hour meltup in the dollar after The Fed hiked rates, the Dollar Index is closing lower for 3rd week in a row, at its lowest weekly close since September...


CAD and AUD were strongest on the week and JPY weakest...


Treasury yields fell on the week, retracing yesterday's loses today back to pre-Fed lows...


The yield curve collapsed...


Notably, HY Energy credit risk is beginning to get very serious again...


As RBC notes, US HY Energy spreads hit 7 month highs yesterday, not surprisingly as crude broke to new lows. Here is further color from my man on the desk Dave Schulte, who highlights that some of these sellers are actually now harvesting LOSSES as opposed to taking-profits, which is amazing considering the enormous scale of the rally seen since early last year:
# “High yield E&P bonds tracked oil prices downward, hitting a succession of lower lows as the week progressed. Crude-focused beta credits (lower quality assets and/or high financial leverage) are weaker by as much as 6.5pts. Higher quality names (good assets in core plays with manageable capital structures) held up better, in part due to greater interest rate sensitivity, closing the week 2-3pts lower. Trading activity was very balanced until today; buyers now seem to be on hold, leaving sellers to push paper lower despite a modest uptick in crude.” 
The historically tight correlation between breakevens and risk appetite for stocks has collapsed with the former tumbling below pre-Trump levels as stocks hit record highs... 


Commodities were all broadly lower on the week, despite a weaker dollar week-over-week..


This is the 4th weekly drop in a row, the longest losing streak for crude since Aug 2015, closing at the lowest weekly close since the election...


Notably, the copper-to-crude ratio has reached back above the 5.5x historical resistance level...



Gold was sold once again after tagging pre-Trump levels...