Business

Just when you thought it was safe to go short...

Yesterday stock prices here in the States did little other than mark time, and following the material selling earlier this week the fact that the best that the market could do was this is ominous indeed. We used the term “bear market” yesterday in our commentary for the first time in a very, very long while and we used it with intent, for in the past we’ve often said that we had turned “neutral” of stocks noting that in a bull market the most bearish position one can have is neutral.

 

Once upon a time there was a cute, if amusing and terribly disingenuous debate among those who have never actually traded but pretend to know finance, about what QE and "unconventional policy" actually was. "It's an asset swap" they said, "it's not printing money" they said.

Following last night's API-reported large draw in overall crude inventories (year-end and exports driven), DOE reports a 5.09mm draw (more than expectations of a 4.1mm draw but less than API's 5.6mm draw). However, Cushing inventories rose for the 9th week in a row (+917k) and more troubling for the future is gasoline inventories soared 10.58mm barrels - an all-time record (and distillates rose 6.31mm barrels). Crude prices already gave up their API gains and are tumbling back below $35 on this build news.

As goes US manufacturing, so goes US services. In a narrative-crushing print, US Services PMI dropped to 54.3 - the lowest since January 2015. Output and New business growth slumped to 11-month lows, optimism dropped, and input cost inflation continued to moderate as "suggests the pace of hiring has slowed since earlier in the year as businesses have become more cautious." Then, confirming  this plunge, ISM Services printed 55.3 - its lowest since March 2014 as unadjusted new orders collapsed to their lowest since February 2014.

But, but, but... it's not a market-driven only by The Fed, right?

All major US equity indices (except Nasdaq and its FANTAsy stocks) are now deep in the red since The Fed stopped QE3...

Since the start of December stock have been dumped...

But FANTAsy stocks are collapsing so far in 2016...

As once again, the S&P 500 catches down to The Fed's balance sheet...

But it's the fundamentals right?