The collision of global markets and social mood

Tuesday, February 7, 2017

Tuesday -- Spreads Spreading, Snap Snapping

S&P E-mini Futures:
Higher, but merely back to Friday's levels.

Have been monitoring Bitcoin lately as a proxy for China issues. This morning it's up over 2% coincident with China's foreign exchange reserves falling below $3 trillion for the first time in six years.

Doesn't mean the world is ending, but with the spread between French and German 10-year bonds continuing to rise, now at the widest since 2012, stress may be appearing.

Behold, even US swap spreads are surging again, now to their widest since June 2012. This is likely suggestive of a growing concern about the looming US debt ceiling deadline just five weeks away, and indicates bank counterparty/liquidity risk.

And Morgan Stanley recently shared a chart of another indicator of perceived credit risk, the 3-month Ted-Spread (3m LIBOR minus 3m T-Bills) in USD vs EUR, which doesn't look too clever.

Source: Morgan Stanley

Still, markets are green in Europe, and futures are higher here. Even with a stronger USD. So animal spirits may continue to run wild.

Really looking forward to the Snap IPO. Can't wait. Thinking it could be even better than the Alibaba Top.

Snap may debut with the highest price-to-sales ratio on record.

Hope so.

It's the USD today. Higher.

Trade-weighted dollar at new all-time highs.

Source: @capital_badger

Prices ripped higher yesterday on low volume. Now printing topping tails so far today. Looking more and more like cats bouncing.

WTI crude slightly lower but still hanging at highs. NG up over 1%.

Metals mostly red but gold trying to turn green.

S&P Outlook
On the lookout today for a failure above 2298.31 or, better yet, any new high above 2300.99 on weak A/Ds and any other weak internals that want to join in.

The action in ES futures thus far is unimpressive: a third day at the 2293.50 level and still showing hesitancy.

If price wants to poke through and rally, great. But it's looking tired.

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