A Truly Taxing Day.

I’m not going to sugar coat it: all kinds of shit went wrong on Thursday.

Stocks managed to get off the lows but the tax overhaul plan/bill released by Senate Republicans rattled everyone on a day when no one needed to be rattled. The problems really started on news the corporate tax cut might be delayed and you can see when that started to make the rounds:

Tax

Taxes

Bank stocks were hit again, and from where I’m sitting, this looks like 8 out of 9 sessions in the red:

KBE

The five-day nosedive for the S&P Regional Banks index sums to something like 5%, the worst 5-session decline since March.

KRE

Meanwhile, the junk bubble looks like it’s (finally) bursting. Mom-and-pop high yield has fallen for seven straight sessions and is now below its 200-day MA:

JNK

Up until today, a notable disconnect was developing between stocks and junk:

HYSpreadVsStocks

Jeff “The Truth” Gundlach appeared as his Twitter self (as opposed to his real self or his hologram self) to tell you who’s telling lies and who is telling “truths”:

This is the worst week for HY since “fire and fury”:

HYG

And as Bloomberg’s Dani Burger (now the “best Burger in London”) notes, volume is jumpin’ off the hinges:

HYGVol

In another testament to the risk-off tone, the franc had its best day versus the dollar since September 8:

USDCHF

Hilariously, that comes on a day when Thomas Jordan was out saying the usual, namely that the franc is overvalued and by God he will lean against that if he has to. “It’s still highly valued,” he said in Frankfurt on Thursday, adding that “we’re prepared to intervene in currency markets if necessary.”

Crude was higher as no one knows what comes next in the Kingdom. “The news out of Saudi Arabia has really added to that bullish bias to prices,” Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle, told Bloomberg, adding that “you’ve got speculators who have been continuing to push their bullish position and that news flow — fear of conflict with Iran, Saudi Arabia, the Yemen issue — continues to underscore this market.” On the week:

WTI

Europe was not immune:

Europe

Turkey was hit for a third day as the Borsa Istanbul’s 3-day loss is now at 3.5%:

Turkey

And of course it all started overnight in Japan, where the previously invincible Nikkei suddenly plunged – thankfully, it recovered by the close but the damage to sentiment was done:

Nikkei

Summing up, consider this the bat signal for Kuroda – Peter Pan has been summoned…

Signal

 

Advertisements

3 thoughts on “A Truly Taxing Day.

  1. “Meanwhile, the junk bubble looks like it’s (finally) bursting. Mom-and-pop high yield has fallen for seven straight sessions and is now below its 200-day MA”

    In the interest of accuracy, whatever that’s worth anymore, of which I am painfully aware, JNK at a close of $36.51 is NOT below the 200-day simple moving average of $36.23 (the 200 DEMA is a $36.15).

    The 20 DMA has not yet even crossed below the 50 DMA – close, but no cigar – which would be the point at which anyone really starts paying attention. My puts on HYG did get some traction, finally, but nowhere near anything that would be considered commensurate with any kind of widespread concern. Why is this no big deal yet? It’s no big deal because thus far, junk spreads have only widened maybe 10 bps in the past week – still just noise.

  2. According to my charts the 200SMA is currently at 37.03 so the price is well below it. I’ve also got the 20SMA crossing the 50SMA on Tuesday (7th) and yesterday the 20SMA crossed below the 100SMA.

Leave a Reply to therealheisenberg Cancel reply