Stocks Fly To Records, Global Risk Rally Continues As Bad Data, ‘Good’ Yellen Keep Hope Alive

And that’s the week ladies and gentlemen.

A dovish Yellen on Capitol Hill largely offsetting the rate hike from Poloz, a couple of ECB leaks to make sure the messaging is “just right”, and (another) miss on the CPI print which promptly pushed the odds of a September hike below 10%:


The S&P hit a record on this “sign-of-the-times-ish” headline: “Tepid Inflation Ignites Rally”…


The VIX is back to a 9-handle (of course)…


Yields plunged on Yellen’s prepared remarks and again on the CPI miss:


Gold rose to a two-week high:


Crude was its usual batshit crazy self with the now customary API/ EIA pump-n-dump/ dump-n-pump (the order depends on the week) on Tuesday/Wednesday, Goldman suggesting prices could fall below $40, the IEA revising up its demand forecast but painting a rather bearish supply picture and the rig count rising again. On the week, oil managed to end 5% higher:


Corporate credit is in a Teflon-ish word all its own (“honey badger don’t care”):


European stocks benefited from Yellen’s dovish lean, rising nearly 2%:


South Korean shares hit a record, buoyed by a BoK that’s on hold and more optimistic about the economy despite the threat of a mushroom cloud over Seoul:


The dollar sank to a 10-month low with Friday’s lackluster CPI and retail sales data exacerbating the decline. AUD and CAD both rose to highest in more than a year with the latter supercharged by Wednesday’s rate hike:



The dollar also fell against most of EMFX – obviously, lower yields in US ensured there was appetite for riskier currencies. The MSCI EM Asia Index was up over 3% on the week, posting gains every day. “The gain in Asian currencies this week has largely been due to the overall pullback in expectations on the U.S. dollar, not least of all due to Janet Yellen’s comments to Congress,” Julian Wee, a senior market strategist at National Australia Bank in Singapore noted.

Notably, the won put up one of its best showings since March. As noted above, BoK raising its economic growth forecast helped out a lot…


Emerging market equities had a good week as well for the exact same reason: dovish Yellen + lackluster US inflation data = lower US yields and a less aggressive Fed:


The message is loud and fucking clear: the vol. seller’s/ carry trader’s paradise and the risk party that’s made every homegamer with some SPY and QQQ look like a guru for the past eight years depends on DM central bankers staying some modicum of dovish. And on that score, bad data helps.

Now, get “jacked to the tits!!” for the weekend…


2 thoughts on “Stocks Fly To Records, Global Risk Rally Continues As Bad Data, ‘Good’ Yellen Keep Hope Alive

  1. The FED is very sorry for causing mucho multiple expansion. And the FED is terrified regarding the consequences of a weak stock market. We now need a model that puts a rational ceiling on this bad news bulls environment. The pathology exists right now, it is just a matter of time until (probably China catalyst) it manifests. I am amazed every day to hear ideas to stay long built on arguments that are essentially circular reasoning. And every day there is adequate profit in using very loose stops, looser by the minute. Just as we all are closer to death each day, so goes this scenario.

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