Wait, That's Not Supposed To Happen...

Well, that was interesting. Stocks fell hard. Bond yields spiked. And the U.S. dollar got crushed. While this may sound like just another round of algo-induced hysteria, the bottom line is this is not supposed to happen. In other words, stocks, bonds, and the dollar don't all fall at the same time.

For those of you keeping score at home, the S&P 500 fell 1.44% yesterday, the Dow dropped 252 points, and the NASDAQ fell 1.67%. Then the yield on the U.S. 10-year bond rose by 0.15%. While this may not sound like much, the move represented a 7% increase in yield - in one day. And the U.S. dollar fell 3.1% against the euro, which was the biggest one-day decline against the euro since March 2009. Ouch.

According to WSJ, this was the first time since 1999 that the S&P 500 index and the dollar each dropped at least 1% and the 10-year Treasury yield rose at least 0.1 percentage point - all on the same day. So, no folks, Thursday's action was not just another day at the office.

Draghi Disappoints

The reasoning behind the wild market gyrations appears to be two-fold. First, Super Mario (aka ECB President Mario Draghi) failed to deliver the goods at yesterday's ECB meeting. The market had expected a 20 basis point reduction in rates (technically, we're talking about the rate charged to banks for parking funds at the ECB), and it only got 10 bps.

Next, the market had expected a significant increase in the ECB's QE program. Instead it got a milk toast response. As such, disappointment was the word of the day.

The big concern here appears to be that Mario Draghi may have lost his touch in terms of being able to build a consensus for his plans within ...

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Back To The Bankers...

In light of the fact that yesterday's shootings in San Bernardino do not appear to be an ISIS-related terrorist attack (at this time), the markets have turned their attention back to the matters at hand this morning. And in short, ...

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The Indicators Tell Us To...

I don't know about you, but I tend to find it difficult to refocus on the business at hand after Thanksgiving. After all the feasting, the family gatherings, and the football, it is all too easy to lose sight of ...

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A Market That Doesn't Go Down On Bad News...

On one hand, it would be easy to argue that stocks are currently consolidating the gains from October's joyride to the upside. The S&P 500 is back to within spitting distance (i.e. 2%) of its all-time high and after a ...

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Macro Musings and The Big Bond Bear

Ever since the Credit Crisis calamity that occurred between late-2007 and March 9, 2009, a great many investors have begun to embrace a macro approach to the markets. From a big picture standpoint, the idea is to take a stance ...

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Even The Indicators Are Confused

Good morning. Some say the stock market is a discounting mechanism for future expectations. Others suggest it is an example of crowd psychology in motion. So, given that the market appears to once again be "stuck in the middle with ...

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Did Stocks Rally For the Wrong Reason?

Good morning. Don't you just love this game? The very moment the price action begins to make sense - bam! - Something happens that causes traders to reverse course in a big way, leaving many scratching their heads in the ...

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The Very Best Way To Invest In This Market Is...

Good morning. On a personal note, let me begin this morning's missive by saying that France is one of my favorite places on the planet. And while my wife and I are not "city people," Paris is always on our ...

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Once Again, It's Time To...

Well, here we go again. Just when you thought that the bulls were back in charge and the favorable seasonality was going to cause Christmas to come early this year to the corner of Broad and Wall, the worry returns. ...

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Back To The Valuation Argument

I spent the first half of the week at a conference for financial advisors. So naturally, the state of the stock market came up in conversation a time or two. But instead of espousing my views on the market, more ...

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Moving Toward The Launch Pad

Friday's jobs report appears to have been a game changer. Just about the time everybody on the planet had decided that Yellen & Company didn't have the data it has been looking for to begin raising rates this year (with ...

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Key Question: Are Stocks Being Efficient or Noisy?

Yesterday morning, we played devil's advocate and began looking at reasons why stocks might be ready to go the other way - at least in the near-term. The thinking is that since stocks have been stuck in a trading range ...

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