Stocks Retrace Putin Gains As Copper And Yen-Carry Crash

Stocks Retrace Putin Gains As Copper And Yen-Carry Crash

Just before the European close, copper prices on the LME (and US futures) began to crack on rumors that another China corporate had defaulted. This plunge was accompanied by a collapsed in AUD and rumors across desks were a levered fund unwind (which appears some China-commodity play) was responsible. While many would like to believe that fundamentals matter, today made it clear they don’t as AUDJPY weakness dragged stocks lower tick-for-tick. A brief moment of hope in the early-afternoon – where VIX was slammed lower as momentum away from carry was sparked  failed and stocks continued to slide, retracing a considerable amount of post-Putin gains. Bonds and gold were bid (after the latter suffered early) as WTI crude slipped back under $100 and copper was crushed.

AUDJPY led the S&P lower… (note the brief hope in blue) where stocks disconnected higher…

Which was driven by a slamdown effort in VIX (blue)

With AUD’s collapse starting as Europe closed along with Copper’s dive…

All major indices fell today – retracing much of the post-Putin gains…

Bonds remain discnncted from stocks thanks to the squeeze on Friday with payrolls – we suspect the bearish bias is being sustained thanks to the massive size of corporate issuance recently and need for rate-lock hedging by dealers…

Gold outperformed and caught back up to Putin levels but overall commodities suffered on the day…

FX markets have been domianted by AUD strength and JPY weakness since Putin but that is unwinding rapidly – note that the USD Index is now unchanged since Putin’s speech!

“Most Shorted” stocks are getting hammered relative to the market (which is thi new normal is worrisome as it provides more ammo for the next ramping leg.. until it doesn’t)…

Credit markets remain very skeptical…

Charts: Bloomberg

Bonus Chart: The hedge-fund hotel GSEs took it on the chin. Presenting – the Ackcat

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