Not much love for SPX sectors this week

not a surprise then to read that “according to BofA Investors pulled a massive $25.8 billion out of U.S. equity funds in the week to Wednesday, the third biggest outflow ever from the asset class, BofA’s weekly fund flow report showed on Friday.” Reuters I mentioned this briefly in my Morning outlook

Durable goods this morning received little attention, not much of a surprise. I prefer to look at the proxy for business spending Capital goods orders and shipments,they pulled back for second consecutive month after printing higher for 2 consecutive months. thus a choppy pattern of recovery.Below Shipments of Capital goods ex aircraft.

today’s trade so far sees a subtle rebuff of the Dollar rules all trade. yes stocks and Gold traded inversely to dollar moves but not with same momentum as earlier this week,The weak hands have folded possibly .Dollar sitting near session highs and Nasdaq now making new highs ,One day does not change a trend

 Sentiment Sour for Stocks, Europe A touch weaker than U.S

Week to date % changes:

• Dax -5.5
• Ftse -3.5
• Stoxx 50 -5
• Hang Seng -5
• CSI 300 -3.5
• SPX -3.3
• Nasdaq -2.1

No place to hide in metals from Weaker stocks as it is the Short Dollar Long everything else unwind,

Week to date changes:

• Gold -5%
• Silver -15.5%
• Platinum -10%
• Copper -5%
• LME nickel -6%

Dollar for the week +1.75 % if holds biggest weekly gain since spring. as usual treasuries doing nothing going no where and providing very little in the way of “information” for traders’ The Bond market is useless. from the FT more sings of Risk Off FT writes “Investors flee US junk bond funds as concern for the economy grows” as “the asset class suffers its worst weekly outflow since first wave of the pandemic in March”.    European banks Measured by stoxx 600 bank index probing all-time lows, no matter how you slice it Not good sign For the Economy when banks are weaker.  Per Bloomberg U.S. Stock Funds suffered the third worst outflow on record this week everyone running for the Exits!

Virus Data ITC Markets

• – UK Reports 6634 New Cases of Covid-19, vs 6,178 prev; UK testing is now double what it was when the last daily peak was reached.
• – Spain: 10653 Covid cases in the past 24hrs
• – Dr. Fauci: re covid-19, “there’s good enough data to say that aerosol transmission does occur”
• – ​France: Cases rise by 16096
• – CDC director Redfield: a covid-19 vaccine will likely not be widely available until summer or fall 2021. children are far down on the priority list, so they would not be offered the vaccine right away.

News:

• Trump: not sure the election can be honest; getting close to final choice on supreme court nominee
• – Pelosi: Democrats Ready for negotiations on stimulus 
• – Sources: Dems stimulus bill would be about $2.4Tn and would incl airline aid and new PPP funds
•  Quinnipiac Poll: Biden and Trump in statistical tie in Ohio  All from ITC markets

 From Mizuho” The past four days have seen the biggest strengthening of the dollar versus its peers since the March turmoil, as measured by the Bloomberg dollar spot index.”   The Euro touched a 2 month  low this morning even though German Business Climate, IFO touched a 7 month high of 93.4 even though strong it did miss expectations of 93.8..Speaking of Currencies Turkish central bank  surprised forecasters by raising  rates by 200 bps today in an attempt to  halt the depreciation of  her currency

 Year to date SPX is +.19% 3230 ish unchanged for the year Nasdaq +18.5% YTD

  A bit of Risk off continues for the markets, a possible shift from Buy the dips  to press the dips may be  occurring. Copper below support -1.9% today all markets or most markets were in sideways range for past month and it appears all are breaking out to the downside, Dollar to upside. Some flagging up a Powell comment from yesterday as another reason to worry in an answer to a question he said  that “We have done basically all of the things we can think of”  .More reliant on Fiscal stimuls  which likely isn’t coming anytime soon

 Markets

 Silver -3.5% Gold -.5%,Platinum -1.7%,European Bourses sideways to lower, Nasdaq -.95%,Spoos -.3%.Roller coaster Nat gas continues today +5%  as  a bit below possibly much below temps blanket eastern half of country according to 6-10 forecast. Weekly jobless  claims unchanged from last week markets paying little attention  Nasdaq -14% over last 3 weeks  sentiment is changing . Numerous fed speakers again today .. FTSE -1%,Stoxx 50 -.7%

News

• !  JPMorgan is nearing an agreement to pay a fine of about $1 billion to settle civil and criminal charges that its traders rigged futures and securities markets, wrapping up several investigations into whether they manipulated prices for metals and Treasury securities. The proposed agreement wouldn’t jeopardize JPMorgan’s ability to operate in certain markets, a person familiar with the matter said.  WSJ
• https://cnn.it/2G1599V

Spoos and Nasdaq below yesterdays lows with a bit of momentum,Dollar index easing higher no sustained push. But we look at other crosses peso -2.8%,Brazil -1.8 ,Rand -1.7%,JPM Latin American Currency index -1.5% Risk being shed.

Another example of worries is the Credit suisse Fear barometer ” From Bloomberg

Fear gauge continue to price in more worries moving forward.Something has changed whether it is realization that no new stimulus is coming or proximity to eelction but fear is in the air and Risk is being taken off the table

 A bit Of Virus News…

• Johnson & Johnson to test single-shot coronavirus vaccine on 60,000 people in phase-3 trials … Pharmaceutical giant Johnson & Johnson (J&J) has begun the phase-three trials of its single-shot coronavirus vaccine candidate -BBG
• Goldman, HSBC Halt U.K. return to office   BBG
• Wisconsin added to Illinois travel order of 14-day quarantine
• 27 states have shown an increase in the 7-day average of new confirmed cases since Labor Day BBG

Chart of the day 10-year treasury yields weekly close only chart, for 6 months yields contains in 20 bps range .77 to .54 its just crazy

 Dollar sideways to higher this morning, DXY closed above top of the range let’s see if this gives the bulls the upper hand in the short term. Not helping the Euro …The IHS Markit Eurozone Composite PMI decreased to 50.1 in September from 51.9 in August, below forecasts of 51.7. The reading points to a near stalling of the economy as rising coronavirus infections and ongoing social distancing measures curbed demand, notably for consumer-facing services (Trading Economics) even though the manufacturing PMI was reported a bit better then consensus…… More positive Dollar news “The USD also gained some further ground against many emerging market currencies yesterday, rising by over 1% against the Brazilian real and almost 2% against the Mexican peso. For now, at least, those moves have only reversed part of the prior gains the EM currencies made in August. (macro markets daily) Dollar higher again today against both of these.  Per Mizuho the gap between spot and front Month VIx is at that widest since 2012 Stocks a bit higher, metals lower copper gold and Silver. Lumber Limit Bid premarket watch dollar

News:

• No govt shutdown as Congress passes a stopgap funding bill
• A total of 29 Wild boars have the pig Virus but no domestic pigs
• China’s imports of pork in August doubled from a year ago to 350,000 tons, but the imports slowed from the previous month’s record of 430,000 tons, according to customs data

Some people on twitter I believe talking about this, 30 day Correlation Spot Gold and bitcoin correlation

Goldman Sachs Financial Conditions Index,recall the FOMC comments on financial conditions and does not like Them to tighten

Chicago Fed Financial Conditions index,it too turning higher

Euro Area Bloomberg Financial Conditions Index sideways,toppy

Why the relentless selling in October gas and now November? One reason is the Decrease in LNG exports,to do Multiple storms in Gulf. below is All U.S. LNG exports on a daily chart

From Morgan Stanley.

 (BN) Morgan Stanley Warns Nasdaq 100 May Fall More Than 20% From
 Peak                                                          
More importantly, hedge funds have stayed “decidedly” long tech
and growth stocks, Wilson said, citing the firm’s prime        
brokerage data. While the conviction partly reflects the       
outsize returns from internet and software companies, it also  
highlights the danger should sentiment start to sour, he said. 
Despite this month’s retreat, the Nasdaq 100 is up 24% for the 
year, compared with a gain of less than 1% for the S&P 500.    
Many of those funds “are letting it ride,” Wilson wrote. “That 
may come into play and provide some fuel for this correction to
go a little further than most are expecting.”

 Impressive Nasdaq rally into the close yesterday, just when you think the fat lady is going to sing, bulls stage a comeback!  For a definition of cyclical stocks I will use the materials ETF XLB  it has been on impressive bull run over last 3 months as hopes and or  realization for an economic rebound were being priced, yesterday that changed.XLB dropped 3.8% biggest loss since early June, one day correction  or worries that a new stimulus round is unlikely? hmmm

  From Mizuho Watch this space. This is the first sign of real risk aversion in riskier US credit since June. Investors pulled more than $1 billion yesterday from the biggest junk-bond ETF, BlackRock’s $27.8 billion fund that trades as HYG. It is the biggest daily withdrawal since February, and one of the bigger ones in the fund’s history. Junk-debt spreads (LF98OAS Index) stayed consistent through recent jitters in big tech, but the threat of no extra fiscal support, paired with growing political uncertainty, pushed spreads wider yesterday, to a two-month high

 Powell testifies along with Mnuchin  in 9;30  in front of Congress it appears some of his comments are already leaked  Powell to say  “more stimulus needed to prevent long term economic damage”  and path ahead continues to be highly uncertain”- BBG shouldn’t be a market mover we have heard it all before nothing new.

New restrictions in UK Likely to last 6 months and told people to work form Home if possible. Restaurants, bars and pubs to offer table service only, partial reopening of sports stadiums suspended these restrictions will last 6 months.

 Tesla is a having a battery day.  A copy of apples iPhone day?  Musk did come out and say do not expect any of this new technology to be available till 2022 stock a bit disappointed down 2% pre cash open

Lumber back at limit down offer This morning….  macro views “HOUSING MARKET SLOWING? — Pantheon’s Ian Shepherdson: Pantheon Macroeconomics. “We remain bullish on the near-term outlook for the housing market, but momentum in the mortgage applications numbers has faded a bit in recent weeks. If this continues, it will signal a flattening in home sales towards the end of the year.” -Politico

 Was yesterday a correction or a start of a new trend? for the most part Markets sideways last month awaiting election results, new stimulus measure but now the Animosity in congress is growing. A New threat of Govt shutdown further strains relation on capitol hill, it will be a tumultuous few week. Watch natgas as the past few days have a been one of the strongest liquidations moves, I have seen, take no prisoners as longs liquidate or roll into back months.

A few comments regarding European economy From Morgan Stanley

“Euro Area | Softer data, slower recovery “we expect this weeks PMI data to weaken but hold above 50, indicating continued recovery at a modest pace.

UK Data-wise, following a strong summer, we expect data to slow into the autumn. September PMIs should decline sharply, although remain at an elevated level.

From raboBank “With central bank’s having come to the rescue in March, the fact that the US has failed to get the virus under control while many countries that were successful in bringing cases down to manageable levels, including Britain, are now very clearly entering the so called second wave of infections paints a bleak picture as regards global growth.”

A proxy for Asian Economy’s ,South Korean Exports reported late last week “

Korea’s September first 20 days exports have softened somewhat. However, this does not reverse the recovery trend in exports under way since early May. (Morgan )

With the chances of A another round of Fiscal stimulus fading fast some look to the Fed to fill the need, the Fed will not do anything in near term so to stay out of political fray, but comment from Dallas President Kaplan shows that the Fed may be in no hurry to increase bond buying regardless of politics “Asset buying at this point may do more to stimulate financial markets than then it helps the real economy,” Mr. Kaplan said. “I’d rather get to where the issues are, which I think are to encourage passage of more fiscal policy, health care protocols, and then go to areas of the economy where there isn’t good access to credit” as a way to help the recovery, he said-WSJ