Connect with us

Articles

Futures Rise, Europe And China Bounce With North American Markets Closed For Holiday

It may be a holiday in the US, but US equity futures are once again levitating…

Share this article:

Published

on

This article was originally published by Zero Hedge

Futures Rise, Europe And China Bounce With US Closed For Holiday

It may be a holiday in the US, but US equity futures are once again levitating and on the verge of new all time highs, while global shares posted their longest winning streak in three months on Monday, aided by fading odds of an imminent taper coupled with talk of more stimulus in Japan and China, while oil slid as the Saudis cut prices for Asian customers by more than twice the expected amount in a sign the world’s largest crude exporter wants to entice buyers to take more of its barrels.

The labor day holiday in the US means trading conditions will be extremely thin, which helped MSCI’s all-country world index gain 0.2%, touching a new record level and on course for its seventh consecutive closing high. Meanwhile in the US, S&P futs rose 0.2% to 4,544 while Nasdaq futures inched up 0.3%.

In Europe the STOXX index of 600 European companies was 0.7% higher, inching closer to August record peaks, while the Euro Stoxx 50 rose as much as 0.9%. Other majors added ~0.6% with tech, household & personal goods and insurance doing much of the heavy lifting. Real estate is the only sector in the red. S&P futures follow Europe, rising 0.2%. Luxury firms LVMH, Kering and Hermes led gains on France’s CAC 40 Index, with Bryan Garnier noting that China’s “common prosperity” goal won’t hurt all luxury companies the same way while helping expand the country’s middle class -- a positive overall for the sector; LVMH shares were up 2% as of 12:20pm in Paris while Kering, the owner of Gucci, gains 1.6%; Hermes gained 1.8%. LVMH shares had shed 7% in August, as investors jumped out of the expensive luxury sector amid worries about the new policy in China, a crucial growth engine for the industry. “Common prosperity” policy “does not mean ‘killing’ rich people,” Bryan Garnier analyst Loic Morvan writes in a note. Elsewhere, here are some of the biggest European movers today:

  • Norsk Hydro shares jump as much as 5% to the highest level since July 2008 after the aluminum price climbed because of political unrest in Guinea.
  • Scor shares gain as much as 3.4% after JPMorgan raised its recommendation on the stock to overweight from neutral.
  • Leonardo shares rise as much as 2.3% after the group’s CEO said on Friday that the company plans to proceed with the IPO of its U.S. unit DRS “as soon as conditions allow.”
  • Dechra Pharmaceuticals shares fall as much as 9.5% after the company posted results that met estimates. Stifel cuts its rating to hold, noting little upside in the stock.
  • EQT AB shares drop as much as 6.4%, seeing $2 billion wiped off the company’s market value after analysts at Nordea Bank cut their recommendation on the stock to sell.
  • Spie shares lose as much as 4.7% after the company said it’s submitting an offer to buy Engie’s Equans unit and plans to use a combination of debt and equity to fund the transaction.

Investors were also still assessing the fallout from the September payrolls report, which showed a much smaller increase in jobs than expected, at just 235,000, but also a sharp pickup in wages, hinting at stagflation. The latter was enough to nudge longer-dated Treasury yields higher and steepen the yield curve, even as markets speculated over whether the Federal Reserve might not start tapering until later than previously thought.

“Expectations of a delay in Fed tapering as well as a new administration in Japan is supporting equity markets and we expect this to continue,” said Sebastien Galy, senior macro strategist at Nordea Investment Funds. “Buy-on-dip is as robust as ever, taking negative news such as U.S. nonfarm payrolls as good news which is typical of an advanced carry trade.”

Investors “are now already betting on the Fed delaying tapering,” Pierre Veyret, a technical analyst at ActivTrades, wrote in emailed comments. “Even if the prospect of sustained monetary support is helping to lift market sentiment, today’s session is likely to stay muted but technical,” especially given the holiday in the U.S. and lack of macro data releases, he said.

“Employment decelerated sharply in August, with little indication of a pickup in labour supply,” said Barclays economist Jonathan Millar. “This puts the Fed in a quandary as it balances risks of a sharp demand slowdown against those of tight supply and inflation...We still expect the Fed to signal tapering in September, but now expect it to begin in December not November. QE will likely end by the middle of 2022.

Earlier in the session, Asian stocks rose, boosted by a rally in Japan on prospects of better economic and pandemic policies under a new leader. Chinese shares also jumped. MSCI’s broadest index of Asia-Pacific shares outside Japan rose about 0.6% overnight to the highest since late July, while the broader MSCI Asia Pacific Index climbed as much as 0.8%, on track to close at a two-month high, as communication services and technology shares led the advance.  Gains in Asia were led by Japan, where the equity benchmark rose to a 31-year high on wagers for new economic policies once Prime Minister Yoshihide Suga steps down. Japan’s Nikkei gained 1.8% to a five-month top, extending a rally on hopes a new prime minister there would bring added fiscal spending (and thus even more debt-monetizing QE).  Hopes of fresh stimulus from Beijing through fiscal and monetary policy lifted Chinese blue chips 1.9%.

Japan’s Nikkei 225 gauge was among top-performing benchmarks, while the Topix extended gains from a more than 30-year high after Japan’s prime minister’s exit was announced Friday. “As Suga’s rising unpopularity partly stems from a perceived inability on his part to manage the Covid-19 pandemic, the new leadership will have to address this issue,” Jun Rong Yeap, a market strategist at IG Asia, wrote in a note. “This seems to bring high hopes of further economic stimulus to aid businesses and also bolstering of healthcare systems to tackle rising Covid-19 cases.”

Chinese stocks rose overall, with the Hang Seng Tech Index ending the day higher. China’s technology majors committing funds to social initiatives “could potentially turn out to be the critical ‘circuit breaker’ that eases negative sentiment towards the sector,” Nomura strategists Chetan Seth and Amit Phillips wrote in a note, effectively saying that CHinese tech giants can bribe their way to stock upside. Tencent shares were among the top contributors to the Asian benchmark’s rise as Citigroup said its to-be-launched League of Legends Mobile game could buoy sentiment about China’s gaming industry. Taiwan Semiconductor Manufacturing also jumped as Goldman Sachs raised its price target on expectations of a price hike for wafers. Sentiment toward Asian stocks has improved since late August on optimism of gradual tapering by the Federal Reserve. Disappointing U.S. payroll growth data on Friday reinforced that view, as the economy added 235,000 jobs in August - the smallest increase in seven months

In rates, the rise in U.S. 10-year yields to 1.33% limited some of the pressure on the dollar from the poor payrolls print, though its index still touched a one-month low before steadying at 92.207. Cash Treasurys were closed on Monday. Fixed income was also quiet in Europe ahead of this week’s risk events. Bunds bear flatten a touch, gilts bull steepen; both settling off extremes of the morning’s trade. Italy leads a modest tightening in peripheral spreads. Long-end Spain lags after reports the sovereign intends to raise 5 billion euros from a debut green debt deal.

In FX, the dollar was changing hands versus the yen at 109.90, while the euro stood at $1.1868 after hitting a five-week top of $1.1908 on Friday. currencies traded in a tight range with a hint of USD outperformance. AUD, SEK and NZD are at the bottom of the G-10 scoreboard. Indonesia’s rupiah and the Thai baht led most emerging Asian currencies higher as gains in regional equities boosted risk appetite. The Taiwan dollar climbed, touching the strongest level since early June. Indonesia’s rupiah advances for a third day, aided by foreign fund inflows into the nation’s bonds and equities.

The European Central Bank holds its policy meeting this week and a number of policy hawks have been calling for a step back in the bank’s huge asset-buying programme, though President Christine Lagarde has sounded more dovish. Euro zone sovereign bond yields barely budged on Monday. In early trade, Germany’s benchmark 10-year Bund yield was steady at -0.36%. “We expect the ECB to announce a reduced pace of Q4 PEPP (pandemic emergency purchase programme) at its September meeting on the back of easier financial conditions,” said analysts at TD Securities. “All other policy levers are likely to be left on hold, with inflation forecasts revised sharply up this year and next. Communication risks are high, and Lagarde will want to avoid sounding overly hawkish, instead emphasising ‘persistence’.”

In commodities, oil slid after Saudi Arabia slashed prices of all crude grades to Asian customers, while leaving prices to northwestern Europe and the United States steady. While futures rebounded from Asia’s lows, WTI remains ~0.9% lower but recovers above $68.50; Brent returns back below $72 after a short-lived bounce.

The prospect of a later start to Fed tapering proved only fleetingly positive for non-yielding gold, which stood at $1,825 an ounce, having reached its highest since mid-June at $1,833.80. L

Aluminum hit the highest in over a decade on the LME as political unrest in Guinea fueled concerns over supply of the raw material needed to make the metal. A unit of the military seized power and suspended the constitution, raising the possibility of disruption to bauxite shipment from the key global supplier. LME lead and nickel lag peers, dropping over 1%.

Bitcoin was up for a sixth day, trading around $51,700 apiece, while Ethereum continued to coil just under $4,000 waiting for the next major short squeeze that will take it to new record highs and $10,000 thereafter.

There is nothing on the US calendar today due to Labor day. In Germany, we got the July factory orders (3.4% vs -1.0 Exp.), August construction PMI (49.5, Last 49.5) and UK August construction PMI (55.2, exp. 56.9).

* * *

DB's Jim Reid concludes the overnight wrap

All of a sudden after 18 months at home I’m going to a DB conference this week and I’ll also be back in the office for a day. My wife is hosting a “he’s finally gone back to the office” party at home. Talking of parties we hosted a huge children’s party for the twins 4th birthday on Saturday. Given the lockdowns of the last year we wanted to do something special but boy was it stressful. Indeed I’m still recovering from having 70 screaming kids running loose and shouting in my ears. Good preparation for my first “live” team meeting back.

The champagne corks might be about to go off in the offices of the more hawkish European member states’ central banks this week as an important ECB meeting (Thursday) will be the main highlight. They could use it to announce the start of the end of the PEPP (more later). Before that though, today is a US holiday (Labor Day) with tomorrow and Wednesday Rosh Hashanah (Jewish New Year). So the week will likely get off to a slow start.

Elsewhere we’ll get monetary policy decisions from Australia (tomorrow), Canada (Wednesday), and Russia (Friday), and prior reports from Bloomberg have suggested that President Biden could decide who the next Fed Chair is from around this week. In terms of other data, it’ll be worth keeping an eye on the German ZEW (tomorrow), US JOLTS (Wednesday), China CPI/PPI (Thursday) and US PPI (Friday).

The ECB meeting on Thursday is likely the most important event though. At this meeting, the Governing Council are due to conduct a joint assessment of financing conditions and the outlook for inflation, which will be the basis for a recalibration of the pace of PEPP net purchases. The big question for investors will be whether the ECB slows down these purchases, and recent comments by Chief Economist Lane implied that the hurdle to decelerating purchases might be lower than the market had assumed, as he played down the broader significance of a deceleration. Furthermore, we’ve also had the flash CPI estimate that’s showed inflation was running at +3.0% in August, the highest level in nearly a decade. In their preview (link here), our European economists are of the view that an announcement of slower purchases is slightly more likely at this meeting than in December. So it could be a taper week.

Elsewhere it’ll be interesting to see what the Fed speakers make of Friday’s payrolls report. NY President Williams' (dove) has a speech on the economic outlook on Wednesday. Dallas' Kaplan (hawk / non-voter) talks on Wednesday and he has been a proponent of a September taper so will he wobble? Elsewhere Cleveland's Mester (hawk / non-voter) also talks on Friday.

Friday's jobs report had something for everyone. Weak payrolls but signs of supply constraints in the details. The headline (235k vs. 1053k last month including revisions) and private (243k vs. 798k) payrolls were below the consensus of 733k and 610k, respectively. It seems the Fed are disproportionately focused on this headline number but there was strength elsewhere. Both the headline U-3 (5.2% vs. 5.4%) and U-6 (8.8% vs. 9.2%) rates improved amidst a 509k gain in employment and 318k decline in unemployment. In addition, the prime-age (25-54) employment-to-population ratio improved a couple of tenths to 78% and prime-age participation held steady at 81.8%. Average earnings were at +4.3% against +3.9% expected. Perhaps this explains why 10 year yields ended the day around +4bps higher even with the substantial payrolls miss. It may also tell us a bit more about the positioning of the market now. We had many days of strong data in the early summer while rates rallied hard. The technicals back then were phenomenal and the market short. The technicals are now far less strong.

We’ll get an early chance to see an alternative view of the labour market with Wednesday's JOLTS report even if it refers to July. This report has shown great tightness in labour markets of late with quits rates around record highs and vacancy yields at records low. Elsewhere on employment, Thursday's jobless claims will be interesting with Federal UI benefits ending this week for all states. As such we could see a bigger decline in initial claims, though such a fall may wait for another week. As of mid-August, there were still 9.2mn people collecting either PUA or PEUC, most of whom will lose all income support in the coming weeks. While this may provide some relief with respect to the labor shortage it could also leave some light on income which may impact consumption.

Back to central banks the most interesting outside of the ECB will be the RBA tomorrow where our economist (link here) is expecting that they will reverse their taper decision, and announce that they’ll continue to purchase government bonds at the current average pace of A$5bn per week, rather than tapering to A$4bn per week.

Asian markets have started the week on the front foot with the Nikkei (+1.80%), Hang Seng (+0.51%), Shanghai Comp (+1.02%) and India’s Nifty (+0.47%) all gaining ground. The Kospi (-0.04%) is flattish. US and Euro Futures are pretty flat. Elsewhere, Brent crude oil prices are down -1.12% after Saudi Arabia slashed crude prices for Asian buyers, raising the prospect of competition between OPEC+ producers to gain/maintain market share.

Turning to the latest on the pandemic, Italy’s Public Administration Minister Renato Brunetta said that the country will decide by the end of September whether vaccines will become mandatory for all people aged 12 and over. The law will be passed if the country hasn’t reached a vaccination level between 80% and 90%. Here in the UK, the government will decide by the end of September on whether to make it mandatory to provide vaccine certification for entry to large venues where infection risk may be higher. The UK Vaccines Minister Nadhim Zahawi further said that the government hasn’t yet decided on whether to roll out vaccines to healthy 12- to 15-year-olds, but if the move does go ahead, then parental consent would be needed.

Recapping last week now and global markets saw some divergence as ECB members grew more hawkish and Fed officials stuck to their more dovish tones, with economic data partially reinforcing both views. US equities finished the week just off their highs with the S&P 500 just worse than unchanged (-0.03%) on Friday but finishing up +0.58% over the course of the week. There was a shift to defensives and growth stocks with the NASDAQ gaining +1.55% last week (+0.21% Friday) while cyclicals, such as US banks (-3.69%), were on the back foot. European equities, which are more cyclically focused, underperformed as the STOXX 600 ended the week marginally (-0.09%) lower after Friday’s -0.56% loss.

The divergent central bank tones was most apparent in sovereign debt performance. US 10yr Treasury yields ended the week up +1.5bps, most of that coming on Friday’s +3.9bp gain despite a weaker-than-expected employment report as markets looked at other aspects of the report and ahead to the upcoming supply outlook after the holiday weekend. On the other hand, hawkish comment ahead of the ECB meeting saw bond yields in Europe move higher across much of the continent, with those on 10yr bunds (+6.2bps) reaching their highest level in over 6 weeks. Peripheral bonds in southern Europe sold off similarly, with 10yr Italian (+7.4bps), Spanish (+4.2bps), Portuguese (+5.0bps), and Greek (+8.9bps) yields all climbing.

Outside of the employment report on Friday, global composite PMIs for August slowed from the previous reading, but remained in strong expansionary territory in Europe and the US. The final Euro area composite PMI was down 0.5pts from the initial reading at 59.0, while Germany’s figure fell 0.6pts to 60.0. Meanwhile the US saw the composite PMI stay at 55.4, which is the lowest reading in eight months as the pace of growth seems to have definitively peaked back in May. The US ISM services PMI fell 2.4pts to 61.7 last month while the commentary continues to highlight supply chain disturbances and labour shortages. Finally, Euro Area retail sales for July showed a -2.3% slowdown (0.0% expected), after the previous month was revised up 0.3pp to 1.8%. The drop is reflective of the surge in cases at that time due to the delta variant.

Tyler Durden Mon, 09/06/2021 - 08:14

Articles

Mining battery metals from the sea floor – could it soon be a low-impact reality?

Low-impact sea mining could become a reality for one ambitious company with the arrival of a 228m ship in Rotterdam … Read More
The post Mining battery…

Share this article:

Low-impact sea floor mining could finally become a reality for one ambitious company with the arrival of a 228-metre ship in Rotterdam earlier this week, heralding a critical milestone in its plans to become a producer of battery metals sourced from the deep ocean.

Named the Hidden Gem, the vessel is the key to The Metal Company’s (NASDAQ:TMC) vision of developing the world’s largest source of battery metals from the ocean floor with commercial production plans targeted for 2024.

TMC’s strategic partner, Allseas, will be converting a former deep-sea drilling vessel into a subsea mining vessel, retrofitting the ship with equipment to gather polymetallic nodules on the seafloor within contract areas held by TMC in the Pacific Ocean’s Clarion Clipperton Zone (CCZ).

The Hidden Gem. Pic: Business Wire

These potato-sized polymetallic nodules contain high grades of critical minerals such as nickel, manganese, copper and cobalt, which are integral to the manufacturing of electric vehicle batteries and other renewable energy technologies.
 

Enough to power 250 million EVs

Back in April 2020, TMC acquired its third seabed contract area to explore for polymetallic nodules from Tonga Offshore Mining Limited (TOML), which opened it up to a further 74,713km square block of exploration rights.

The third contract area comprises an inferred resource of 756 wet tonnes of polymetallic nodules, meaning its expanded footprint now contains enough nickel, copper, cobalt and manganese to build more than 250 million electric vehicle batteries.

Speaking to the TOML acquisition, TMC’s chairman and CEO Gerard Barron said the project will enable The Metal Company to bring more critical minerals to market to break through the bottleneck and shift away from fossil fuels.

“Our research shows that ocean polymetallic nodules can provide society with these metals at a fraction of the environmental and social impacts associated with land-based extraction.”

Pic: Supplied

 

Environmental concerns about sea floor mining

The environmental concerns which surround mining of the ocean’s floors are well documented, with several jurisdictions and regulatory bodies imposing bans and strict regulations on subsea mining due to the lack of understanding around the environmental impacts and growing fears about the irreversible effects these practices may have on the fragile ecosystems that we know very little about.

Many scientists believe that far more resources have been spent researching ways to mine the ocean floor rather than studying the impact this type of mining might have on the underwater environment.

TMC, however, believes that the Hidden Gem subsea vessel, which will deploy a 4.5km riser to collect the nodules off the seafloor without drilling, blasting or digging, can avoid much of the environmental disturbance associated with traditional sea floor mining methods.
 

Past failures

Planning to mine the oceanic crust’s wealth of mineral resources is a well-trodden path that’s seen many companies fail to deliver on their promises of production due to regulatory and financial hurdles.

Companies such as Nautilius and its high-grade Solwara 1 copper-gold project off the PNG coast is one recent example.

Nautilius had plans to turn its Solwara 1 project into the world’s first underwater copper-gold mining operation but wound up delisting from the TSX and going bankrupt in 2019.

The Canadian company had developed three undersea robots to mine hydrothermal vents on the ocean floor before funding issues became a problem midway through construction.
 

On the road to meeting deep-sea battery metals goal

There are examples of successful mining ventures in the ocean such as in Indonesia’s tin industry, diamond extraction in Namibia, and gold mining off Alaska’s coast, however these ventures are often heavily scrutinised by environmental lobby groups and constantly face the risk of being shut down due to increasing global environmental awareness and a trend towards greener policies from the governments who licence them.

While there is still plenty of obstacles and work to be done, TMC, with the help of Allseas and their new vessel, which is expected to be the first ship classified as a sub-sea mining vessel under American Bureau of Shipping, are much closer than many of their peers to realising the goal of supplying the market with battery metals from the seafloor.

The post Mining battery metals from the sea floor – could it soon be a low-impact reality? appeared first on Stockhead.

Continue Reading

Energy & Critical Metals

Pilbara Minerals’ Ken Brinsden on that record-breaking lithium auction and why high pricing is ‘expected to persist’

Pilbara Minerals sold an 8,000t spodumene cargo on the spot market for a record $US2,240/t. Where do prices go from here? … Read More
The post Pilbara…

Share this article:

Last week, the share price of Aussie hard rock lithium miner Pilbara Minerals (ASX:PLS) hit an all-time high off the back of its second Battery Material Exchange (BMX) auction.

The miner sold an 8,000t spodumene cargo on the spot market for an extraordinary $US2,240/t, essentially doubling the $US1,250/tonne received via the inaugural auction held late July.

This is a record price for spodumene concentrate — far above the peak at the last price cycle in 2017/18, where the highest spodumene price reached $US1,000/tonne.

The first PLS auction price (green cross below) was so far outside the trendline it caused the average price to spike in July.

BMX #2 will have an even bigger impact.

While the super high price can be partially attributed to the relatively unique and competitive form of sale (open auction), it also verified what has long been suspected – there is not enough lithium being produced to meet current demand.

Good news for miners.

Pilbara Minerals managing director Ken Brinsden says significant participation in the first round of the BMX auction, combined with lithium chemicals pricing continuing to accelerate, meant the company was always confident of strong response in the second auction.

“We were optimistic it would be a healthy price and well bid. That was certainly the case,” Brinsden told Stockhead.

“As to the final price – look, we were probably a little surprised as to where it landed.”

While a date has yet to be set, Brinsden expects at least one more BMX auction before the end of the year.

“We would say the lot size would not be much different – 8,000 to 10,000t, up to a maximum of 15,000t,” he says.

“What it boils down to is the restart of the Ngungaju operation because that’s where the volumes for the spot market will come from.”

The restart of the ‘Ngungaju’ facility at Pilgangoora — or the former Altura operation – is a very important part of the business.

At full capacity that plant should be about 200,000t of uncontracted spodumene concentrate by about the middle of next year.

“It will be about 30% of our underlying production from Pilgangoora,” he says.

“Those tonnes are well positioned to feed the emerging spot market.”

 

A maturing lithium market

Brinsden says the Pilbara Minerals would consider having other lithium companies use the BMX platform “because we advocate for greater transparency in pricing”.

The contract market — where most tonnes are sold — has traditionally been very opaque, with prices determined behind closed doors.

This, amongst other things, makes it harder for aspiring miners to get finance.

“Greater volumes in the spot market makes sense because it represents a step toward the maturity of lithium markets,” Brinsden says.

“Greater transparency is going to translate to greater, more definitive pricing outcomes, the potential for futures markets, hedging instruments – all the financial tools being built around the industry that support the flow of capital.

“That is very natural, and it happens in the growth of just about every commodities market.

“Lithium raw materials won’t be any different.”

 

The lithium price boom ‘expected to persist’

This high pricing is fundamental, Brinsden says.

“It’s all about the next round of incentive pricing to attract capital to lithium raw materials supply,” he says.

“That is what is going to be required to grow the pool of producers to support this pretty significant global demand.”

Solving the lithium shortage isn’t as easy as turning on production.

“In the hard rock space – at least as it relates to merchant spodumene supply – the next available [production] uplift besides us is probably late next year at the earliest, I would say,” Brinsden says.

Australia’s next miner is shaping up to be Core Lithium’s (ASX:CXO) ‘Finniss’ project in the NT, which is targeting first production in the second half of 2022.


 

That is why tightness in the market is expected to continue.

And while one cannot say that the market price for spodumene is now ~$US2,000/t — when the majority of spodumene supply is currently being shipped for between $700/tonne and $1,100/tonne – it does demonstrate that more is needed, Benchmark Mineral Intelligence analyst George Miller says.

“Spodumene prices such as this indicate that converter margins are being passed upstream to where the tightness is in that market — spodumene supply,” he says.

“Feedstock inventory with many spodumene converters is either non-existent or quickly dwindling.

“Meanwhile, very little additional tonnage [will] come online in the near-term as a result of underinvestment and low prices within the lithium industry over the past three years.”

 

The post Pilbara Minerals’ Ken Brinsden on that record-breaking lithium auction and why high pricing is ‘expected to persist’ appeared first on Stockhead.

Continue Reading

Precious Metals

Soaring Stocks Shrug Off Debt Ceiling Doubts As Taper Tantrum Sparks Bond Bloodbath

Soaring Stocks Shrug Off Debt Ceiling Doubts As Taper Tantrum Sparks Bond Bloodbath

Since The FOMC released its hawkish statement, the dollar…

Share this article:

Soaring Stocks Shrug Off Debt Ceiling Doubts As Taper Tantrum Sparks Bond Bloodbath

Since The FOMC released its hawkish statement, the dollar is down modestly, gold has been monkeyhammered, bonds have puked, and stocks have soared...

US equity markets rallied overnight then tumbled on Evergrande headlines early in Europe's day that SOEs are preparing for the developer's collapse. Weak jobless claims sent stocks down another leg ahead of the US cash open, but once the bell went off, algos were buying stocks with both hands and feet and ripped everything higher (Small Caps outperformed as Nasdaq lagged). This chart shows the major US equity's performance since 1400ET (FOMC statement) yesterday...

...hawkish Fed, weak claims data, ugly PMIs, Evergrande offshore bond default, debt ceiling & stimulus size doubts... BTFD!!! (Simplfied as 'bad news is good news' for stocks again!)

All the major US equity indices broke back above key technical levels...

Energy and Financials are the best performers in the last two days with Utes the only sector underwater...

Source: Bloomberg

All except Nasdaq are now green on the week...

As real rates spiked dramatically higher, value stocks (Russell 2000) outperformed growth (Nasdaq)...

...and as the chart below shows, if rates continue here then big tech will be a big underperformer...

Source: Bloomberg

And while stocks were incessantly bid, elsewhere there was pain as Powell hinted at 'cutting the rope'...

The dollar plunged back to yesterday's lows after spiking on the Fed statement...

Source: Bloomberg

Yields exploded higher today as a mini-taper-tantrum begins...

Source: Bloomberg

Steepening the yield curve, erasing most of yesterday's flattening...

Source: Bloomberg

30Y Yields could not push past critical resistance though...

Source: Bloomberg

As the market prices in a full rate-hike by the end of 2022...

Source: Bloomberg

Crypto rallied notably off yesterday's lows with h Bitcoin extending gains after Twitter announce its BTC tips feature...

Source: Bloomberg

Gold was clubbed like a baby seal today (even as the dollar dropped)...

Oil surged once again, with WTI back above $73 (and Brent closed at its highest since Oct 2018)...

Finally, did no one actually notice that Evergrande did actually default on its offshore dollar bond today?

Source: Bloomberg

We guess everyone was too busy buying US stonks and Evergrande equity... because, well who the f**k knows anymore.

Tyler Durden Thu, 09/23/2021 - 16:00
Continue Reading

Trending