Stocktoberfest Kicks Into High Gear
Equities start the day lower as Stocktoberfest kicks into high gear. I love October, if you’ve been with me for the past few years you know I think Halloween is the last great holiday. It’s not as sold out as Christmas, you don’t have to deal with as much family as Thanksgiving, there aren’t as many amateurs as New Year’s Eve, and let’s face it, the Fourth of July really only has fireworks. Halloween is pure, a chance to dress your kids up like Captain America or Ariel and watch them skip around eating candy. It’s also the perfect opportunity to see who remains a kid at heart. If a person hates dressing up for Halloween then they’ve lost their childhood forever, which is kinda tragic really. Anyway, as you can tell there was no incremental news overnight. Is the government still closed? Yep. At this point I imagine Republicans want to go for the whole tamale and wrap a CR with a Debt Ceiling thing. Fine, whatever floats your boat, just hurry up and get back to work. We have veterans breaking down barriers to see the WW 2 monument before they die (who are being threatened with arrest if you can believe that). Is this where we want to be right now? Total amateur hour. Oh and Syria, in the middle of a full blown civil war with bombs and guns, is still paying their workers (HT BBC on that one). Ugh.
After the open we continued lower on no real news. This is what happens when headlines run a market, you get crazy price action that makes absolutely no sense. Up 80bps yesterday? Down 80bps today (0.80% for those of who you don’t care for wall street speak. Hey what’s gamma doing right now? Is the market short gamma? Where can I hedge these deltas with my gammas so I don’t lose all my theta. Ridiculous. Kind of like this parenthesis where I ramble too much. Moving on). ADP came out this morning (because it’s a private survey) and showed us the same exact thing we’ve known for 3 years: 160k jobs. That’s right, the jobs data has been the same for 3 years now, how about we stop pretending its good or bad. It’s the same. SAME. Like all these recaps SAME! Wait. We managed to bounce off 1,680 in the morning and ended up at 1,689 by lunch. Not bad. Why the intraday bounce? Well I think all that negative gamma in the Nikkei mixed with sharp convexity in the 2s10s spread made for a positive sentiment shift among those trading risk reversals (no reason. None at all. Man is it quiet in the market right now). Hey did you know Tom Clancy died today? Tragedy. Make sure you send out a ping in remembrance. One ping only please.
After lunch we nearly touched unchanged as the market continues to say “I don’t care” to Washington. Notable winners? GPN (all time breakout), THC, ADSK (man those auto sales were great right?), MOS, and CLF. Losers: EA, BAX, COG, UTX, and TSLA (Baird downgrade to Neutral and a car fire. Maybe the flux capacitor fell below 1.21 jigawatts?). We closed JUST shy of green numbers in what I’d consider a STRONG day for price action. 1 hour into the day we were sitting on the lows, ready to puke stocks like a bad horror movie. Instead we fought it off, showing a resilience I thought absent. Good sign people, good sign. Any kind of positive headline or politician speak and this market will be up 1% in a straight line. Bring it on!
Final Score: Dow -39bps, S&P500 -7bps, Nasdaq +1bps, Rus2k -45bps.
- If you aren’t reading Costa during the shutdown you are missing all the info. Check out his AMA on Reddit
- Why exactly are markets ignoring Washington? This author has the perfect explanation: “It is only when the risk of an extreme event starts to appear very large over a fairly short horizon that they are willing to incur the costs of taking out insurance. Since many investors think in a similar manner, a tipping point is reached, and there is a sudden shift in the price of risky assets. This then triggers momentum trading, which can exaggerate the move in the same direction. Wild swings replace smooth adjustments, and these swings can appear irrational to outsiders” Spot on. Right now we are nowhere near that.
- Any parents up in here? I know you feel me on this one.
- You gotta be kidding me, really. Come on.
- Buy the Shutdown, sell the settlement? Mr. Goepfert’s takeaway: “While there was some consistent weakness around the shutdowns, ironically the worst of it tended to hit in the week after they were resolved.”
- This is a thing? Where? In vegas?
- That’s how you complete a 2pt conversion.
- Every Friday is Jeans Day at Barclays? What? “The bank has recently put in place a policy of super-casual Fridays. Jeans, T-shirts, and even sneakers are acceptable on Fridays, according to people who work for the bank (and spoke on the condition of anonymity because banks keep everything top secret, even stuff like the rules of permissible footwear).” Wonder what the people there think about it? “It's a complete slap in the face to Erin Callan's personal shopper at Bergdorf," one former Lehmanite at Barclays said. Awesome quote.
We’ll end tonight with a good old fashioned Fail video. This one has a lot of fail in it. The Fail is strong with this one (and the pain too, ouch).
Have a good night.