The collision of global markets and social mood

Monday, April 13, 2015

Monday -- China, Druckenmiller, Million Dollar Cars

ES Futures:
Coming off Friday's high but looking corrective.

Stanley Druckenmiller is basically all the *news* I care about, except maybe the China trade figures which showed exports plunging after which Chinese shares hit seven-year highs.

Reuters reported that China's exports fell 15 percent y/o/y in March while imports contracted at their fastest rate since May 2009, and that economists had forecast a 12 percent increase in exports.

Druckenmiller gave some startling figures during an interview in Florida. Some of my favs:

"80 percent of today's IPOs are unprofitable when they come out. The only other time we've been at 80 percent or higher was 1999."

"In 2006 and 2007, which I think most of us would agree was not a down period in terms of speculation, corporations issued $700 billion in debt over that two-year period. In 2013 and 2014 they've already issued $1.1 trillion in debt, 50 percent more than they did in the '06, '07 period over the same time period. But more disturbing to me if you look at the debt that is being issued, Kenny, back in '06, '07, 28 percent of that debt was B rated. Today 71 percent of the debt that's been issued in the last two years is B rated. So, not only have we issued a lot more debt, we're doing so at much less standards."

"Another way to look at that is if those in the audience who know what covenant-light loans are, which is loans without a lot of stuff tied around you, back in '06, '07 less than 20 percent of the debt was issued cov-light. Now that number is over 60 percent.

Quality & standards going down the tubes while debt is skyrocketing...

Social Mood:
...which is probably why Bloomberg (one of the few times I've read it since its candy-coated redesign) recently thought it perfectly normal to present

where they noted that almost all luxury automakers have a vehicle that breaks the $1,000,000 mark, while completely missing the social mood aspects which are screaming e x t r e m e.

USD got above 99.80. New highs are high odds now. Timing uncertain. But ironically Bloomberg bolstered the case presented here Friday of the USD being a massive carry beneficiary. Their reporting put a number on it -- $9 trillion.

30s pressuring the 162'08 swing point.

Crude continues to hold up. NG looking bouncy but may still need some time.

Gold. Back below 1200.

S&P Outlook:
Friday may have been the start of a tepid attempt to test the volume shelf at 2111. But ticks and A/Ds were no help. Wave structure didn't help, either. Regardless, the index made progress and closed above the 78.6% level.

At this point a weak new all-time high could be a blessing and a curse. VIX term structure, at least, is saying to be ready.

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