Another day of this..

China was weak overnight after the World Trade Organization said China would ask for permission to retaliate against the U.S. due to its failure to modify anti-dumping methodologies.

 

Europe was mixed to lower across all the majors…


 

 

US Futures were weighed down by that until WSJ reported that Beijing was backing off on the tough talk and wooing US firms’ investment dollars, sending stocks soaring… with Nasdaq best…

 

However, gains for the day were pretty much capped at around the European close…

 

Tech stocks outperformed financials for the second day in a row…

 

But that is not helping the big banks as Goldman is now down 10 days in a row – the longest losing streak since the company’s IPO…

 

Treasuries sold off across the curve as U.S. equities rebounded from early lows. The belly led losses in the run-up to Treasury’s $35b auction of 3-year notes, which tailed slightly.

 

Benchmark 10-year yields rose to within a hair of 2.98%, touching the highest level in a month.

 

Meanwhile, traders are shifting to a more hawkish stance as the market’s expectations for rate-hikes in 2019 are now at cycle highs (+42bps) but still well short of The Fed’s +75bps dot plot expectation…

 

The Dollar Index ended the day practically unchanged after testing down to pre-payrolls lows intraday and bouncing…

 

Cryptos were broadly lower with Bitcoin managing to drop the least…

 

Spot the odd one out in commodity-land…

 

Crude rose the most in a week as Hurricane Florence threatened U.S. East Coast gasoline markets and sanctions began crimping Iranian oil exports. East Coast motorists may see “dramatic” spikes in gasoline prices, according to AAA, as mass evacuations stretch supplies and Florence’s heavy rains imperil major fuel pipelines.

 

Perhaps of most note in the commodity space is the divergence between copper and crude… both telling quite different stories about global growth…

Gold futures broke back below $1200 briefly but bounced…

 

But the biggest divergence of all is Gold/Silver which just reached its highest ratio since March 1995 (NOTE  – we appear to be at a historical resistance level)…

 

Finally, we note that the S&P 500 Index is on the verge of setting a new high for overvaluation. Its trailing 12-month price-to-sales ratio surged to 2.25 on Monday, the highest since the dot-com era. If you think it’s just the tech giants skewing the number, think again: The median PSR for index members is more than twice the level of the late 1990s.

And the end of last week showed a new cluster of Hindenburg Omens forming…

Probably nothing.

All it will take to topple this house of cards is a little tap on the brakes from an exogenous factor…





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