Dismal Data Sends Stocks To Record Highs As Short Interest Collapses To 2007 Lows
Overheard everywhere today...
Stocks (Dow and S&P) hit record intraday highs... (must mean everything is awesome, right?)
Overheard everywhere today...
Stocks (Dow and S&P) hit record intraday highs... (must mean everything is awesome, right?)
Earlier in the week we noted the 'odd' surge in downside protection demand even as tech stocks were soaring, and now JPMorgan is noting the S&P has shifted to a large 'negative gamma' underhang which "could boost volatility if we were to sell off."
As Bloomberg notes, options markets suggest a lack of confidence in the rally. Traders are piling into downside hedges on every uptick in prices...
And JPMorgan derivatives desk writes:
While JPM was quick to provide all the favorable data in its earnings presentation (and not so favorable when it comes to the sharp drop in its markets sales and trading division) one thing was conspicuously missing: the slide on "Mortgage Banking And Card Services" which has traditionally been part of the bank's earnings presentation and was certainly featured prominently last quarter.
KKR has just published their 2017 mid-year economic outlook and it includes some rather dire predictions for the U.S. economy. Among other things, KKR predicts a U.S. recession by 2019 and a massive cycle of millennial deleveraging after a huge expansion of consumer credit in the form of student and auto loans.
Before getting into the details, here's a chart depicting how KKR sums up the macro picture. In short, pretty much every major economic growth and asset valuation metric in the U.S. is flashing red warning signs relative to historical norms.
Did Janet Yellen really reverse so fast?