Can You Feel The Tension?

Wall Street did not follow Asia’s lead on Tuesday. Investors were perceptibly on edge amid more back-and-forth on tax reform and persistent questions about exactly what’s going to happen in the Mideast where we are one Nimr al-Nimr-style domino away from some kind of dramatic flare-up.

In the standoff between Riyadh and Tehran you can “feel the tension, down in your plums”…

 

Worst session for small caps since the day in August when everyone thought Gary Cohn was going to resign:

 

Speaking of small caps, Nick Colas doesn’t like what he’s seeing. “The weighting in technology in the large caps in the S&P 500 is 25 percent. It’s only 15 to 17 percent in the 600 and in the Russell,” he said Monday on CNBC’s “Trading Nation.” “You don’t have the same thing at all when it comes to performance. And, that’s one reason why small caps have done relatively not as well this year as the large caps.” That, Colas thinks, is the market’s “Achilles heel”…

Fifth straight day of lowest closing levels since 2007 for the 5s30s, which flattened again:

Here’s how Saudi stocks have traded in the three days since the purge:

I mean, obviously that’s intervention of some kind. Meanwhile, Alwaleed is having a rough go of it:

Oil wasn’t as eventful today as it was on Monday. Barkindo was on the wires with a couple of zingers. “I’ve not had any participating country that is violently objecting to extending the decision beyond March” the OPEC Secretary-General told reporters in Vienna, adding that the only thing in question now “is the duration of the extension.” But here was the punchline: “We are in the process of inviting other producers who have shown an interest in joining this noble global effort.” Got that? Driving oil prices higher is a “noble global effort”. API later. Oh, and it’s overbought:

The lira is back in the doghouse after a brief respite on Monday. You’ll recall that this now borders on the absurd. Friday saw the currency dip after October inflation data showed core CPI hitting its highest since 2004 and then fall some more on news Erdogan was mentioned by name in the Zarrab case. On Monday the CBRT stepped in to arrest the slide and then hours later there were signs of “progress” in the visa spat between Washington and Ankara. But whatever “progress” there was disappeared on Tuesday after Turkey denied reports that the U.S. had received “initial high-level assurances” that there are no additional local employees of the U.S. mission under investigation. Here is Turkey’s laughable reply to that:

Turkey is a state of law and our government cannot provide any assurances regarding files that are subject of ongoing legal processes.

There are too many jokes to count there, but suffice to say the lira is now worse off than it was on Friday:

The won is interesting. It’s now at a seven-month high versus the dollar, after rising overnight to the strongest since March 28:

Trump arrived in South Korea today and rattled off some uncharacteristically conciliatory remarks about Pyongyang. Kim, Trump said, “needs to come to the table and make a deal.” Given Trump’s Presidential track record re: dealmaking, you’d forgive Kim for being skeptical. Here’s a fun picture from Trump’s South Korea visit:

pic.twitter.com/FdzBMrdvzS

— Heisenberg Report (@heisenbergrpt) November 7, 2017

The Nikkei hit a fresh 146-year-high overnight, after rising for a 23rd day out of 25:

In Hong Kong, the Hang Seng is sitting at its highest levels in nearly a decade:

Tencent is helping that along, rising 8 straight days and tacking on 11% in the process:

Finally, a “subtle” reminder: