While algos patiently await the only thing that matters for US stocks today which is Janet Yellen's testimony before Congress. expected to be released at 8:30 am (and previewed here), the rest of the world this morning is a hot mess of schizophrenic highs and lows.
With China offline for the rest of the week, global markets have found a new Asian bogeyman in the face of Japan which as reported last night saw its markets crash, and the Yen soar, showing that less than 2 weeks after the BOJ unveiled NIRP, yet another central bank has lost control.
The biggest event of the weekend, if not the month, was China's FX reserve outflow update, which at $100BN was slightly better than the $120BN expected (it pushed China's reserves to the lowest in nearly 4 years) but it was in the "no man's land" between the BofA best case scenario ($37.5BN), and the GS worst case ($197BN).
With faith in "growth" faltering and the momo leaders rolling over...
JPMorgan warns there are still worries for the bears in the intermediate term...
For the SPX overall the ceiling remains clear: since its hard to foresee sustained upside to either ’16 EPS ests (~$120 is best case for the SPX) or the multiple (16x) then any move towards the mid-1900s should still be faded.
After yesterday's torrid, chaotic moves in the market, where an initial drop in stocks was quickly pared and led to a surge into the close after a weaker dollar on the heels of even more disappointing US data and Bill Dudley's "serious consequences" speech sent oil soaring and put the "Fed Relent" scenario squarely back on the table, overnight we have seen more global equity strength on the back of a weaker dollar, even if said weakness hurt Kuroda's post-NIRP world and the Nikkei erased virtually all losses since last Friday's surprising negative rate announcement.