Business

From 720Global

Below are 22 troublesome facts explaining why the herd may, in fact, have it wrong.

Equity/Bond Valuations

WTI prices kneejerked higher after last night's yuge crude inventory draw reported by API but prices have leaked lower into the DOE print. Expectations were for a 4th straight weekly draw in crude (thanks to robust refining activity) were confirmed with a 7.2mm inventory drop (less than API's 10.2mm), and Gasoline also saw a major draw (as opposed to API's build). However, exuberance in WTI is not evident as Lower 48 production surge above 9mm barrels for the first time since July 2015.

API

Unlike the June Fed meeting, the FOMC announcement at 2pm today is expected to be an uneventful affair: as DB's Jim Reid pointed out earlier, "given its late July and given the Fed will likely announce an end to balance sheet reinvestment in September (starting from October), this could be a relatively dull meeting."

After disappointing existing home sales (following a notable drop in homebuilder confidence), new home sales modestly disappointed in June (610k vs 615k exp) with a small downward revision to May...

(the 3rd downward revision in the last 4 months).

Perhaps more notable is the 3% drop in median home prices YoY following a big downward revision in May (from record $345,800 to $324,300).

Via Global Macro Monitor,

“History doesn’t repeat itself but it often rhymes.” –  Mark Twain (maybe)

We have been speaking a lot about how the liquidity in the market today is different than in the past.   The chart below reflects this better than anything we have seen.