Russell 2000

Authored by David Stockman via The Daily Reckoning,

Just call it Peak Crazy and move on. There is absolutely no reason for the stock markets to be at current levels, let alone melting-up day after day. The fact that this is happening is a measure of how impaired capital markets have become as a result of massive central bank intrusion.

The robo-machines and day traders keep buying the dips because that has “worked” for the last 100 months. There is nothing more to it than residual momentum.

In light of today's euphoric market reaction, which has seen the VIX plunge by over 3 vols, or 20% lower, to just over 12 and sent both the Nasdaq and S&P higher by 1% on relief that there were no mushroom clouds of the weekend, the jury is out whether last week's sharp risk off, short-vol mauling will persist or be just another BTFD opportunity. But while last week's tension may already be forgotten, some disturbing trends persist.

Blame The Russians, The Chinese, The North Koreans, and The Welsh... but not The Fed...

Overnight saw more China turmoil.. (MSCI China ETF saw its biggest drop since Brexit)

While hard data has been hovering at 2-year lows, soft data has been rebounding recently... until today - The ISM Services index saw its steepest m/m decline this month since the financial crisis.

Mueller headlines spooked stocks at the end of the day but the machines had one message for investors...

From Art Cashin of UBS:

We've noted over the last two weeks that the Dow Industrials have been diverging from most other indices and particularly the Dow Transports. An important part of the divergence has been the relative narrowness of the rally in the Dow. In today's WSJ, Justin Lahart took note of the narrowness: