Heisenberg Report

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:

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

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

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:

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

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”:

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

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

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:

Europe was not immune:

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

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:

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