Morning 6-4

I Am back in the office so A bit out of Sorts so to speak. I will provide some commentary from other sources to get the morning started

First ECB surprised Markets by Adding 600 B Euros to its Bond buying program, thus now buying 26b euros of Sovereign bond weekly!

Bloomberg) — Recent price action has borne all the signs of capitulation, with equities defying gravity to rise in a straight line while latterly, a fixed income sell-off suggested a rotation out of safer assets. It’s hard to know if the process has run its course, but today appears to represent a pause in the proceedings at the very least. There is a caricature that this rally is being driven by stuck-at-home millennials spending their stimulus checks on Robinhood, but perhaps there is something to that. Recent Goldman research suggests that 13% of all option volume is now 1-lots, and yesterday represented the lowest single stock put/call ratio since 2014. At the very least, it seems reasonable to posit that there is a cohort of new market participants that don’t give a fig for fundamental analysis or valuation models, be they yours, mine, or Warren Buffett’s. As for today’s price action, the overnight circumspection is perhaps understandable given that Europe has assumed a mantle of leadership recently and today’s ECB meeting carries some uncertainty. How much will asset purchases increase and how long will they go on for? The consensus estimates are 500 billion and the middle of next year, but there is still some uncertainty. Add in the latest jobless claims figure (where a rise in continuing claims would surely disappoint the recovery narrative), and I suppose it makes sense to take a breather and wait to see how things pan out. To contact the reporter on this story: Cameron Crise in New York at

From Mizuho:

• Factoid of the day: This is going to go down as the greatest 50-day rally ever for the S&P 500 Index.Take note, the previous 7 other largest 50-day rallies saw stocks higher 6- and 12-months later every single time – LPL Research.

 • “V” recovery in stocks happening before our eyes, after the “experts” agreed on only one thing: that it would not be a “V-shaped” recovery. I like the Nike Swoosh shape as the shape of the economic recovery. Not quite a “V”, but certainly an optimistc one. Fiscal and monetary actions around the globe providing lots of liquidity. Today Chancellor Angela Merkel’s coalition agreed on an additional 130 billion-euro ($145 billion) stimulus package, topping expectations by 30% – Bloomberg. Including programs to guarantee company liquidity, Germany has made more than 1.3 trillion euros available, equal to 38% of 2019 GDP. U.S. junk bonds have gained more than 20% since late March, nearly $1 billion flowed into HYG alone yesterday. Very strong data beats around the globe, with Asia leading the way. The market always looks ahead to what’s next

• Hard to believe this given the dour US Q2 GDP projections (regional Fed tracking estimates for the Q2’20 change in real GDP average -42.4% q/q AR, down from -39.7% q/q AR last week), but the US Citi Economic Surprise Index broke into the GREEN yesterday, up a whopping 61.90 points to +8.00. The May ADP report wildly beat expectations. It has gone up 152 points in just five weeks! We a see similar gains in both the CESI Global index (five-week gain of 65 points to -14.40) and the CESI China index (239.4 point gain to 0.40). The Citi Economic Surprise Indices measure data surprises relative to market expectations. A positive reading means that data releases have been stronger than expected and a negative reading means that data releases have been worse than expected. Keep in mind that the May and June data haven’t been added to Q2 GDP regional Fed tracking estimates. These numbers will improve.

• For Wednesday, 6/3/2020, global equity markets increased $0.95 trillion, as the U.S. was up $0.45 trillion. From the 2/19/20 high global stocks are down $5.53tln (up $15.42tln from recent 3/23/20 low) and the U.S. is down $2.74tln ($9.00T).

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