Business

Since the end of 2013, US automaker stocks have dramatically underperformed the market.

This bewildered many as auto sales surged on the back of easy credit and the entire industry was proclaimed a great success. However, the reason for the underperformance is simple - stock investors discount the future and with a mal-investment-driven excess inventory-to-sales at levels only seen once before in 24 years, they know what is coming next.

That the world's largest hedge fund, Ray Dalio's Bridgewater, just announced the appointment of an hardware engineer, even one as enlightened as former NeXT and Apple executive Jon Rubinstein, should tell you all you need to know about what is really going on in the "market."

Full announcement from Bridgewater:

Jon Rubinstein Joining as a co-CEO of Bridgewater

Well we warned you. Bund yields were extremely optimistic about Draghis' bazooka.. and were disappointed.

As traders dumped their Bund bets so this has sent Treasury yields jumping to the highs of the day (compressing the UST-Bund spread by 12bps)...

as it appears Draghi has driven a great rotation (for now) into IG credit from Treasuries.

But it seems the flow has stopped (as yields leg higher)

The market's volatile swing are clearly too much for the central banker-incubating hedge fund known as Goldman Sachs, because just three days after Goldman said there has "never been a better time to buy S&P calls", when it said that "our GS-EQMOVE model estimates there is a 21% probability of a 5% up-move over the next month based on the current levels of S&P 500 Free Cash Flow yield, Return on Equity, ISM new orders and US Capacity Utilization"...

... moments ago the same Goldman announced that:

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

But you can't tame the monster of speculative, legalized looting and financialization.

Everything from iron ore to copper to the Baltic Dry Index to stocks to bat guano is rallying. The problem is not a single rally passes "the sniff test:" is the rally the result of changing fundamentals, or is it merely short-covering and/or speculative hot money leaping from one rally to the next?