The collision of global markets and social mood

Friday, September 11, 2015

Friday -- PPI, Record VIX Longs

S&P E-mini Futures:
Down in choppy trade.

PPI numbers just came out. It's a tale of two sides.

Zero Hedge --
"The 0.9% year-over-year rise in PPI Final Demand ex Food & Energy is the hottest since March and notably above expectations. While the headline PPI Final Demand YoY has not risen for 8 months, surging prices for chicken eggs (+23%) and apparel (+7%) in August made up a considerable part of the inflation index move and bond yields and stocks are leaking lower on the news ahead of next week's FOMC meeting."

Marketwatch -- "U.S. producer prices flat in August on lower gas costs"

Zero Hedge has a tendency for hyperbole and for viewing everything as potential fodder for higher gold prices, while Marketwatch seems to fall in line with whatever current narrative is going around.

Maybe let the markets decide.

Very flat day thus far in FX with CHF weakness the only standout.

These seem a bit perkier since the PPI readings, which could suggest the market is not concerned about "hotness."

WTI crude continuing to slide, down nearly 3%.

Low volume pullback in copper. Gold and silver treading water. Little movement.

S&P Outlook:
This is my favorite chart today. It's from Dana Lyons @JLyonsFundMgmt. It goes a long way toward describing the mismatch between the VIX index and ETFs such as UVXY & TVIX.

I won't go so far as to say Dumb Money, but I will comment that it felt like a lot of buyers of leveraged VIX ETFs came in late. The chart above could reflect the need for those funds to buy VIX futures and options in order to fulfill their 3X performance mandates. As such, without a considerable rally above 2000, it is doubtful the ETFs will represent "good buys" for a while.

Still thinking the 1920 area may represent the next buy opportunity on the S&P cash.

Elsewhere, high above us, the new moon is this Sunday.

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