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#Stocks – $NYCB $8304 JP
#Macro – $SPX, $DXY, #RATES
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It was a boring day on the surface, mostly inverse to yesterday. Today, the S&P 500 was flat nearly all day but managed to see most of its gains of 20 bps come in the final 5 minutes of trading.
The VIX was also down today, and the implied correlation index was up, not something we have seen generally, and it is really suggestive that the volatility dispersion trade is not working. Generally speaking, when the VIX goes down, one really needs the IV of the stocks in the S&P 500 to go higher. But with the correlation index going higher today and the VIX going down, it implies that the IV of the stocks went down too, which they did except for Nvidia.
The other interesting thing was that today’s 1-week 50 Delta S&P 500 option was higher, which was surprising, to say the least.
The HYG is at an important spot and has an interesting pattern. Is it either a broken triangle or a potential triple top? Not sure; I think we need confirmation of what is going on, and if the case that rates are going higher, one would expect the HYG to drop below $76.50
I guess what is odd is that while all of this is going on, regional banks are struggling again. They are being led lower by New York Community Bank, which fell 24% today and was battered over the last few days after having larger-than-expected loan loss provisions for its commercial real estate portfolio.
This follows the massive drop in Japanese-listed and traded Aozora Bank (8304 JP), which also increased the loan loss provision for loans tied to, you guessed it, its US commercial property loans.
Maybe it is just by chance that two banks on opposite sides of the world are having issues with US commercial real estate; I do not know. But I’d think that Treasury Secretary Yellen saying that she has concerns about US commercial real estate probably doesn’t help.
I guess why I bring this up is because I am surprised to this point to see credit spreads on the CDX High Yield Index, kinda chillin’
So, going back to the HYG ETF, it is probably worth keeping an eye on that.
Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.