Dow Fails To Hold 23,000 As Yield Curve Carnage Continues

The Dow is now up 17% YTD - crushing bonds and bullion - NOTE everything changed when China’s central bank decided that it would remove a reserve requirement for financial institutions trading in FX forwards for clients by cutting it to zero from 20% currently..

 

But let's not spoil the party!

Dow 23,000...

 

1200 points in 27 days...

 

The Dow is now the most overbought in 8 months (and the past three times, the rally has stalled)...

 

We have never seen a divergence between VIX and The Dow this wide for this long...

 

Additionally, as BofA notes, the S&P 500 has only traded 1% or more in either direction 8 times so far in 2017, tied with 1965 (full year) for the third  fewest in history.

The only years with fewer moves in excess of +/-1% were 1964 (3 times) and 1963 (6 times).

For comparison the most +/-1% moves occurred during the height of the Great Depression in 1932 (181 times), and the most in recent history was during the GFC in 2008 (134 times). The above stat is yet another striking depiction of today’s historic low vol environment.

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Anyway - moving on from all that malarkey.

Small Caps and Trannies were notably weaker today as The Dow did what it does...

 

VIX was very illiquid again and actually rallied along with stocks today... Dow was ramped back to 23,000 once again into the close but failed to hold it...

 

Small Caps stumbled notably today...(worst day in 6 weeks)

 

This is the widest divergence between stocks and vol since the 2015 China deval collapse...

 

PG&E soared after headlines about arrest in the CA wildfires BUT then dropped when clarified as a different arsonist..

 

NFLX was a big 'sell the news' event...

 

Banks had an ugly after a hopeful pre-market earnings from MS and GS...

 

And finally started to rollover as the yield curve collapse continues...

 

Treasuries were mixed today with the long-end rallying but short-end seing yields rise further with yet more dramatic curve flattening...

 

The bond market bloodbathery continues to crush the dreams of the 'recovery-hypers'...

 

FX markets were volatile today...

 

With a big reversal in the dollar...

 

As the Peso and Loonie dumped early on NAFTA disagreements then surged after NAFTA negotiators claimed "success" in round 4...and talks will extend beyond 2017 deadline

 

Gold and Silver were lower today...

 

WTI and RBOB both gained ahead of tonight's API data (WTI barely but RBOB solid)

 

Finally - for good measure - 'Industrial' Production remains well below 2014 highs... but the 'Industrial' Average is soaring to new record highs...

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