A big week for the markets, rather understatement, the S&P500...

  1. 5,208 Posts.
    lightbulb Created with Sketch. 1008
    A big week for the markets, rather understatement, the S&P500 scored 150 pts gain or almost 5% during the week at 3194 to close just 5.8% or 200 pts from its all time pre-crisis high. It has even taken out its 4 March resistance. The Dow was almost 1000 pts higher overnight but closed with a gain 829 pts at 27111. And of course the Nasdaq hit all time highs intra-day. All in response to a 13% unemployment rate that is vastly superior to an expected 20% , but there have been scepticism on the accuracy of the number and you wonder if the POTUS administration has resorted to similar China tactics on creative accounting.  

    It is what it is and market punters, traders and investors long in the game wouldn't care either way as it is a win. Except just remember my swine flu analogy - pork buyers are returning back to now pay a higher price for pork after swine flu has subsided (although still lurking) compared to when the swine flu never existed, yes market participants are buying Nasdaq and soon the S&P500 at higher prices than before we had (1) the COVID19 pandemic in US, (2) well and truly in the midst of the biggest economic crisis globally (measured by unemployment , GDP and the quantum of central bank balance sheet expansion aka money printing and Government stimulus) and (3) an all time low in US-China relations that does not augur well for geopolitical stability going forwards and (4) a barking mad President threatening to use force on its own people (pot calling the kettle black on HK) as social unrest continues. The macros are terrible , the micros are too in relation to valuation metrics, earnings except for price action and market exuberance and momentum.

    So what stocks prospered overnight? Royal Caribbean Cruise +23%, Occidental (energy) +33%, American Airlines (+11%), Boeing (+11%) United Airlines (+8%), oh yay yippee unemployment isnt so bad, it is only 13% we can now fly cruise and consume more oil , the economy is coming back , huh? America is burning, COVID19 is still a big issue and spreading and a large part of American consumers and businesses are on economic life support!

    So these are signs of real danger ahead - in such times, the last 5-10% is IMO for others to make, market participants can remain in to gain the remaining balance of gains to offer , risking exposure and being locked in to a swift and brutal disorderly selloff from largely amateur market participants stampeding to exit when the day arrives.   

    We just saw how gold and silver, which is counter trade to equities, fell sharply to an intra day low of $1672/oz before recovering to close at $1688 and silver just above the crucial $17.50 level. Since Monday is a public holiday, we would have to see how precious metals perform Monday night to determine if there is follow through selling. I suspect the inverse correlation with equities would be the trend now. So for contrarian investors, provided gold remains above $1650-1680 and does not crater down, it may be an opportunity to toe dip into the sector for an exposure as a hedge against the prospect of equities meltdown after this melt up, although staying largely sidelined remains my preferred option at this point. I remain concern about a sudden disorderly fall from here that affects all asset classes in an indiscriminate way for a short period of time.

    If there was one thing to expect in 2020, it is to Expect the Unexpected.

    Stocks Soar To Record Highs Amid Bond Bloodbath, Momentum Massacre

    by Zero Hedge
    Fri, 06/05/2020 - 16:01


    This was a big week for markets.
    Trannies were up over 10% on the week, Nasdaq lagged by "only" gaining 3%...

    Nasdaq 100 and Composite hit record highs, S&P is less than 1% away from green YTD...


    Source: Bloomberg

    Stalingrad & [email protected]_Poor


    #ShortSellersLivesMatter

    435
    1:39 AM - Jun 6, 2020
    Twitter Ads info and privacy

    91 people are talking about this


    Dollar is down 10 days in a row, biggest weekly drop since March and biggest 3-week drop since Oct 2011...

    Source: Bloomberg


    Cryptos ended the week higher led by Ethereum...

    Source: Bloomberg
    Commodities were mixed with Crude and copper soaring as PMs tumbled (despite the weak dollar)...

    Source: Bloomberg
    And finally, "SURPRISE!" - The Citi US Macro Surprise Index exploded in its v-shaped manner today after the stunning (birth/death adjustment-enabled) jobs beat...

    Source: Bloomberg
    And while May was the month of overnight gains, June has seen the market rise during the night... and day...


 
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.