Saturday, August 17, 2013

Bloodbath Coming? US Margin Debt Reaches ‘Danger’ Levels, China, Japan Lead Record Investor Flight From US Bonds, ‘Hindenburg Omen’ Looms Over S&P, Treasury Yields Keep Rising

Rates, Yen, And Another Fat Finger Trader All Moving Today’s Market

Investors euphoric as US margin debt reaches ‘danger’ levels
Fund managers are around the world are gripped by euphoria, convinced that America is in full recovery and Europe has overcome its debt crisis.
Bank of America’s monthly survey of investors showed a dramatic rise in confidence in August, with a net 72pc expecting growth to accelerate over the next year. It is the highest in reading since 2009.
Almost everybody expects bond yields to rise as deflation fears evaporate, with just 3pc still worried about the risk of an economic relapse. Managers have slashed their bond allocation to a 28-month low.

China, Japan Lead Record Investor Flight From US Bonds
China and Japan led an exodus from U.S. Treasurys in June after the first signals the U.S. central bank was preparing to wind back its stimulus, with data showing they accounted for almost all of a record $40.8 billion of net foreign selling of Treasurys.
The sales were part of $66.9 billion of net sales by foreigners of long-term U.S. securities in June, a fifth straight month of outflows and the largest since August 2007, U.S. Treasury Department data showed.
China, the largest foreign creditor, reduced its Treasury holdings to $1.2758 trillion, and Japan trimmed its holdings for a third straight month to $1.0834 trillion. Combined, they accounted for about $40 billion in net Treasury outflows.
http://www.moneynews.com/FinanceNews/china-japan-trasury-bonds-investor/2013/08/16/id/520728
Treasury yields keep rising 
http://www.marketwatch.com/story/treasurys-slide-ahead-of-housing-consumer-data-2013-08-16
 ’Hindenburg Omen’ looms over S&P 500 as stocks stall
A technical analysis pattern for stock traders has pointed to an impending crash in stocks, adding to an increasing chorus of voices that have turned bearish on equities for the second half of the year.
The “Hindenburg Omen” – named after the Hindenburg disaster of 1937, in which the Zeppelin airship Hindenburg crashed and burned – is once again hovering over markets, according to Ron William, founder and principal market strategist at RW Market Advisory.
“The S&P 500 has hit an all-time high not so long ago, yet a lot of the stocks within the S&P 500 are actually making their yearly lows, suggesting some internal weakness in the stock market,” he told CNBC Friday.
“[It's] maybe a good time to take profits within the market if indeed you see more downside risk coming up.”
http://www.cnbc.com/id/100967640


Investors Are Rotating Out Of The US And Into Europe
European equity funds just had their biggest week in more than two years, taking in $2.3 billion in new assets under management (AUM).

Curiously, in the same week, U.S. equity funds – which have seen robust expansion of AUM all year, including recent notable inflows of $2 billion a day at the beginning of July – got hit with their first outflows in seven weeks as investors redeemed $1.9 billion.
“Largest weekly inflows to European equity funds in more than 2 years ($2.3bn) confirms Europe back in fashion,” says BofA Merrill Lynch chief investment strategist Michael Hartnett.
Read more: http://www.businessinsider.com/investors-rotating-out-of-us-into-europe-2013-8#ixzz2c8bdUIid

Jim Paulsen: End of QE Could Be a Tonic For Stocks
Jim Paulsen, chief investment strategist of Wells Capital Management, is a contrarian when it comes to the end of the Federal Reserve’s quantitative easing (QE) program. Instead of it being the disaster for stocks that many predict, he says it could set the stage for a market liftoff to the upside.
http://www.moneynews.com/FinanceNews/Paulsen-QE-Fed-stocks/2013/08/15/id/520581

Jobs, Inflation Data Support Tapering of Fed Bond Purchases
The number of Americans filing new claims for jobless benefits fell to a near six-year low last week and consumer prices rose broadly in July, which could draw the Federal Reserve closer to trimming its massive bond buying program.
http://www.moneynews.com/StreetTalk/Jobs-Inflation-Federal-Reserve-Taper/2013/08/15/id/520548

Is Selling Bonds the Taste of Things to Come?
Treasury yields are on the rise as I have noted on numerous occasions recently.
The action has prompted the world’s largest hedge-fund manager, to throw in the towel on treasuries and inflation-linked TIPS.
….
What I do know is leverage works both ways. I also know that the Fed has so distorted the economic horizon that it is next to impossible to predict what’s coming down the pike.
Stocks, bonds, and commodities other than gold all rose in union over the past few years. My bet is on an unwinding of that trade.
Read more at http://globaleconomicanalysis.blogspot.com/2013/08/reflections-on-leverage-is-selling.html#buOb7xP1avow5vmL.99
Housing Starts Miss Expectations
http://www.businessinsider.com/july-housing-starts-2013-8?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheMoneyGame+%28The+Money+Game%29
CONSUMER CONFIDENCE UNEXPECTEDLY PLUNGES IN AUGUST
The headline index of confidence fell to 80.0 in August from July’s 85.1 reading. Economists had predicted a tick up to 85.2.
The sub-index of economic conditions fell to 91.0 from 98.6.
The economic outlook sub-index fell to 72.9 from 76.5.
Read more: http://www.businessinsider.com/umich-advance-consumer-confidence-august-2013-8#ixzz2c8o72b00

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