What a crazy day. I don't have much time so just a few notes around today. The market soared as investor's continue to increase their appetite for risk. The dollar traded all over the place as rumors swirled around the usage of the US dollar as a carry trade currency.
On the downside, treasuries COLLAPSED as the Fed announced a whopping $200 billion in new debt sales over the next week or so! Yields soared as a result. The 10-year closed with yields a hair below 3.70 which is up about 15 basis points from yesterday.
After hours we saw a bear trifecta. Microsoft, American Express, and Amazon all disappointed on the earnings front. This is the danger of buying into this market after such a huge moves folks. Stocks become priced for perfection, and the companies tend to sell off if they just meet expectations or beat by a penny like Amex and Amazon did today.
The parabolic move up in the market has been quite a thing to watch.
The NASDAQ has traded higher a whopping 12 straight days. The last time we saw a move like this was 1992. This is unbelievable considering the health of the economy. Something tells me a lot of this was short covering. I think many bears have been starting to hop in short at these levels only to get burned and quickly cover.
I expect a pretty sharp correction tomorrow after such poor earnings after hours. The market is ripe for a pullback. Microsoft missed badly. Business and consumer sales were very slow. Top line revenue missed by over a billion dollars.
Should we be surprised considering the health of the consumer?
It's all about the treasury sales next week. The stock market could get overwhlemed if we can't find buyers for all of this treasury debt. There is only so much money folks. We can't expect equities and bonds to rise at the same time when we have $200 billion in paper to sell in the credit markets.
Something has to give. Will it be stocks or treasury yields? Possibly both?
The plot thickens.