After sliding to 3 month lows on "car cartel" concerns yesterday, European stocks have rebounded after three days of declines, while oil extended gains after Saudi export cuts, with Brent rising above $49 and WTI just shy of $47. Asian stocks fell while S&P futures rose 0.2% to 2,473, putting yesterday's GOOGL drop on plunging Costs-Per-Click in the rearview mirror.
In a mixed session, which has seen Asian stocks ex-Japan broadly higher, the European Stoxx 600 index dropped as much as 0.6% after data Markit PMI data signalled euro-area economy grew in July at its slowest pace in six months while carmakers extended declines on continued concern about antitrust collusion in the industry. Germany’s DAX Index was hardest-hit euro-area benchmark, down as much as 0.8%. Autos continued to be the worst-performing sector on the Stoxx Europe 600 after EU and German regulators said they are studying possible collusion among German automakers.
In the latest Sunday Start report from Morgan Stanley's Andrew Sheets, the bank's chief cross-asset strategist looks at the current state of the market - "the S&P 500, Russell 2000 and NASDAQ have hit all-time highs. Volatility has plunged back down near all-time lows. Credit is tighter and yields have been stable" - and asks the same question posed by virtually everyone else in recent weeks : "what rattles this market. What breaks the egg?"
Authored by Peter Tchir via Brean Capital,
VIX ETFs and ETNs
We take a deeper dive into the strange world of VIX ETFs and ETNs. We take a quick look at the incredible short interest in both the long VIX products and the short VIX products. This massive short interest in both long and short products seems unique to the VIX world (it reflects a re-balancing trading strategy that works in the VIX space because of the high volatility of the VIX products) (VIX ETFs seem to run 5 to 10 times the realized volatility of the S&P 500).
Having previously exposed the greatest trick the market has pulled on Biotech investors in the past - What Is The PE Of The iShares Biotech ETF? It Depends On Whether You Read The Fine Print - it appears investors need another lesson in reality versus perception.
As Horizon Kinetics puts it so eloquently - It’s One Thing to Not Know, It’s Another to Be Told What Isn’t So