Submitted by Tyler Durden on 05/31/2012 16:29 -0400
CDS
Central Banks
Copper
Fail
International Monetary Fund
Reality
SPY
Well, they sold in May but did they go away? If today is any guide, they did as the swings across asset classes intraday were very reminiscent of 'death rattles' with trading scenarios becoming more and more binary and more and more extreme. Into the US macro data this morning risk assets in general were behaving in a synchronized manner. As the dismal data hit, it got wild with gold and stocks gapping down and Treasury yields crashing lower (10Y 1.53 handle!) only to be saved around the European close by chatter of IMF aid for Spain (funded by the selling of unicorn tears) at which stocks erupted (and while bonds, the USD, and Gold also reacted - they were far more muted). The afternoon was quiet until stocks had a mind of their own and went on a stop-hunt up to yesterday's late day highs (and that magical 1315 level) - pulling well away from any other asset-class reality - only to fail dismally, ending with an abrupt tumble back to sanity (just slightly in the red for the day) grabbing VWAP into the close.
The signals were everywhere that risk was not 'on' no matter how hard stocks tried with high-yield credit (most notably the ETFs) surging and purging ending with a terrible dive (after popping up to VWAP after our earlier note) on heavy volume. Financials outperformed on the day - though late day gave some back - ending the month down dramatically (MS/JPM -22%).
Gold remains the winner on the week (though down 0.6% - which still beats USD's 0.8% gain effect) as Copper and Silver have recoupled around -2.5% on the week and WTI is just terrible -4.75% at $86.50. FX markets were quiet this afternoon but EURUSD remained near its worst levels and JPY continues to strengthen. Treasuries bounced off record low yields but 10Y and 30Y remained around 17bps lower on the week.
VIX broke above 25 and below 23 to end unch at around 24%. Heading to tomorrow's NFP (and today's month-end) seemed to make many nervous and the swings were extreme in many assets but at the end of the day stocks remain notably rich relative to credit (and TSY's) view of the world and even more so relative to broad-risk assets.
Stocks (blue) tried and failed again to pull away
http://www.zerohedge.com/news/market-fails-zucker-gullible-traders-end-day-stop-hunt
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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