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Copper Hits New Low, Bonds In Focus; What Happened In China With All Eyes On Russia?

Brian Shepard
mts marketrecap 330 300x207 Copper Hits New Low, Bonds In Focus; What Happened In China With All Eyes On Russia?

Collective Intelligence!

Copper hit a new low in China Thursday morning which is giving global equity markets concern about growth.
Japan also got hit hard and fell down 2.6%, while most bourses in Europe are down over 1%…peripherals are wider. The risk is wider.
Treasuries are benefiting in front of the 10-year auction this Thursday. We are also seeing short-term resistance at 2.69 and support at 2.82. Overnight, there were numerous articles on bond bubbles, from the Jeff Gundlach. He offered several pieces that spoke of “junk” being absurdly priced and “lofty junk prices that could lead from a debacle.” Gundlach’s stories are ones I have yet to read, but I know that many of his written pieces state that fixed income prices could go down 25%.
Add in the absurd pricing and trading of Puerto Rico Wednesday and we should expect more to chop this Thursday. As an old colleague once said to me: “liquidity always tops solvency, in the short run.” As many of us read the new Fannie May/Freddie Mac proposal from the Senate, in my opinion, it is absolutely absurd.
Why do the professionals there think that there will be private capital that will step into the role of the government guarantee at the lowest mortgage levels in decades is not thought out? One couples that with the biggest players in mortgages (the Fed) over the next five years, and they are sure to be winding down after they finish tapering.
Whatever premise the professionals from “Fannie” and “Freddie” are thinking about won’t work. Also, if they go down this chosen path, within the next three years, homeowners will have another housing problem that will be the catalyst for the next major correction. For now it’s back to drawing board please!  ~Andrew Brenner~ 

Snippets: The June contract is front month on the opening – welcome to rollover!

Setting the overnight Globex pace: (07:07am)  In Asia, 10 of 11 markets closed lower: Shanghai Comp. -0.17%, Hang Seng -1.65%, Nikkei -2.59 %.  In Europe 11 of 12 markets were trading lower: DAX -1.47%, FTSE -1.07%. Chatter continued to point to Chinese growth, copper and throw in the 3-day crude retreat of $5 on the same slowing concerns. We believe money is being reallocated from commodity to commodity, rotation even parking some in the safe-haven treasuries.

Sam_Easley (08:25) like i told you monday while everybody is all focused on crimea the smart money the real money and the smart guys are focused on the fact that chinese company bonds have defaulted for the first time in 3,000 years. it will not go unnoticed.

william_blount (08:39) GAP, WEEKLY PIVOT, SPOT, PRIOR CLOSE

THEN – read the PS in the PRE-MRKT COMMENTARY (MTS posts WB’s commentary daily post RTH’s open on Twitter as Numbahs) — that is your 1870 stuff. ps. first resistance will be the last hour high 1868 to the 1870.1 daily PIVOT – IF the BULLS get something going; however, they don’t accomplish bo-diddley unless they convert 1873.5.

Today started with 273k ESH and 800 SPH traded on Globex, ESH trading range was 1857.25 – 1866.50. Yesterday’s regular trading hours (RTH’s), pit session trading range was 1863.10 – 1881.80 before settling at 1865.20 down 12 handles. Weak but quiet overnight session.

Today’s RTH’s, pit session, gapped 6.5 lower to 1858.20 – 1859.50 and traded an intraday low of 1854.20, taking out the five-day low during the first 30 minutes.Volume was upticking during the decline mts2 (09:01) 550k e-minis traded – 41k spreads. Crude was also sharply lower adding to this week’s losses, down $1.50, testing 98.50 area. Sam_E (09:21) bloomberg. test strategic release (see link below) of 5 million. i wonder how many sob’s knew that yesterday. parker (09:21) all of them – 60 mln barrels was good for $10. So, we can see that as one wheel turns – other wheels turn in kind. Thus, the money being moved, rotation throughout the playing field – some risk taken off here and more there only to be added to that sector today. The treasuries up for the third day in a row.

Today, following a number of Ukraine headlines about both arms and troops undertaking more war games, some late shorts in the equities went up in flames as other shorts covered some profits. There was a temporary scare that an explosion in Manhattan, NYC, was terrorist-related, but that was quickly dispelled as a construction-related gas leak/explosion. Following that news the equities stepped right up to an intraday high of 1868.50 before dying on the vine during the midday between TRADINGDATA (10:31) WB’s daily pivot 1870.10 & wkly pivot 1865. By 10:00 the morning gap was closed as the equities were going green across the board into the European close. The e-mini’s were approaching 1mil traded in the opening 2-1/4 hours.

Going into the last hour of trade, the futures were knocking on minor support levels as the volume had noticeably slowed. Following a retest / hold of the midday low at 1863 area, the sideways to higher grind was on. The MrTopStep imbalance Meter, MiM, showed a small imbalance of $140M to the sell side before flipping to $430M (average) to buy going into the close as the futures double-topped at the morning high of 1868.50 area. On the cash close the futures were trading 1867.80 before settling at 1867.70, up 2.5 handles on the day. Volume of 1.65M e-minis traded.

Economic calendar: http://www.investing.com/economic-calendar/

Bogle: Stocks May Drop 25 Percent, But Still Make Sense Long Term

Here’s the official announcement of the U.S. oil release from the Strategic Petroleum Reserve:  http://1.usa.gov/1iAHb2w