Thursday was all about people who might have gotten away with murder.
Haruhiko Kuroda and Mario Draghi
allegedly murdered two-way markets and as is abundantly clear from the following two headlines, they not only got away with it, but are in fact still at the scene of the crime:
- KURODA: BOJ WILL PERSISTENTLY CONTINUE POWERFUL EASING
- DRAGHI SAYS ECB TO STAY IN MARKET ‘FOR REALLY LONG TIME’
allegedly murdered two people and he was granted parole on Thursday after spending years in prison on a charge unrelated to the alleged murder.
Finally, Donald Trump
allegedly murdered democracy and today he found out that special counsel Robert Mueller is expanding an ongoing probe into that crime against America’s sacred institutions.
So how did markets react? Well, we’re glad you asked.
Stocks dipped on the Mueller headlines but quickly recovered and kind of limped higher after that:
Same story for the VIX, only in reverse of course and as usual, we ended up back comfortably at a 9-handle:
Tech stocks have now recouped the entirety of their June swoon and JPMorgan’s technical analyst thinks it might be make or break from here. To wit (via Bloomberg):
A 10-day rally in tech stocks has put the Nasdaq 100 back in a range that portended the June rout, and another failure to break out would suggest a decline of as much as 15% from current levels, JPMorgan’s technical analyst Jason Hunter wrote in a note.
- Setup would get “really dicey” if NDX rolls over in the 5,892-6,186 zone again as that signals a potential pattern of “an even broader bearish reversal”
- Worst-case scenario would indicate a drop to 5,000, a level where NDX broke out in early 2017
- Critical support levels include:
- 5,568 May low
- 5,504 Jun 2016 channel low
- 5,442-5,479 late-April gap/breakout area
Chipotle was under pressure again because apparently your Norovirus burrito now comes with a complimentary side of live mice:
The MOVE (Treasury VIX) hit a record low, which is just par for the course with all things vol.-related.
Oil fell, but note that Brent did manage to hit $50 for the first time in six weeks before meandering lower. As a reminder, crude has been supported this week by a report on reduced exports from Saudi Arabia and bullish inventory data.
“You’re getting a lot of positioning,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, told Bloomberg by phone. “Breaking $50 on Brent probably encouraged some people who’ve been long to say, ‘I think I’m going to take tomorrow off, so let’s just cash in and go home.'”
The euro was of course the story of the day in FX land, surging through its 2016 highs after markets ignored the ostensibly “dovish” Draghi:
That weighed on European equities which drifted lower after the presser:
Bunds were batshit as traders couldn’t decide whether Draghi was in fact as dovish as everyone claimed he was or, alternatively, as hawkish as FX markets suggested:
USDJPY fell on the Mueller headlines but bounced, tracking Treasury yields higher later in the day:
“Treasuries drifted lower from session highs into the close, prompted by poor 10Y TIPS auction and late USD/JPY gains moving the cross back to positive on the day; 10Y futures gravitated around 126 level (call strike where most open interest lies) ahead of Friday’s options expiry,” Bloomberg notes, recounting the day.
The dollar fell on Draghi, Mueller, Trump, policy uncertainty in Washington …. you fucking name it. Here’s where we are on that:
Gold rose because apparently, some folks think that a widening probe into whether the leader of the previously free world might have colluded with a hostile foreign power might portend trouble ahead (imagine that). Here’s the spike on the Mueller headline:
Finally, the big picture:
So that’s a wrap for Thursday.
We’ll leave you with the only visual you need…