Authored by Jim Strugger of MKM Partners
Death by Theta
Even the most skeptical among us have to be impressed by the rip higher in U.S. equities over the past week. Absent an obvious positive catalyst, the S&P 500 Index (SPX, 2090.10) jumped 2.5% after flirting with lows since March and a potential test of the 200-day moving average.
Submitted by David Stockman via Contra Corner blog,
There has never been a more destructive central banking policy than the Fed’s current maniacal quest to stimulate more inflation and more debt. That’s what is killing real wages and economic vitality in flyover America - even as it showers prodigious windfalls of unearned wealth on Wall Street and the bicoastal elites who draft on the nation’s vastly inflated finances.
Last November, capital markets were discounting a rate hike five months later, based on Fed Funds futures. Same story today. Last November, the S&P 500 was trading near 2100. Same story today. Last November, VIX levels were around 14. Same story today. Last November, instead of waiting five months, the Fed hiked rates one month later; the S&P dropped by 10% over the next eight weeks... And as BofAML's Savita Subramanian warns, hiking during a profits recession usually hasn't ended well.
In a world where fundamentals don't matter, everyone's attention will be on Janet Yellen who speaks at 1:15pm today in Harvard, hoping to glean some more hints about the Fed's intentionas and next steps, including a possible rate hike in June or July. And with a long holiday in both the US and UK (US bond market closes at 2pm today), it is no surprise overnight trading volumes have been dreadful, helping keep global equities poised for the highest close in three weeks; this won't change unless Yellen says something that would disrupt the calm that’s settled over financial markets.
Submitted by Lance Roberts via RealInvestmentAdvice.com,
Autos Send Economic Warning
Over the last year, or so, as economic data has materially weakened along with corporate earnings and profitability, one of the primary arguments against an “economic recession” has been the strength of automobile sales. I do not argue this point.