Enis’s Macro Wrap – Testing Patience

by Enis August 3, 2012 7:35 am • Commentary

I have to admit that I’ve been surprised by the resilience of the major indices following the policy announcements of the past 2 days.  The markets are bouncing this morning ahead of the payrolls number on little news (media says “reassessment” of Draghi’s comments, but that is a flimsy explanation).  Having said that, many stocks are closer to making new lows than new highs (IWM acting much weaker than SPY), so maybe the market still playing a bit of 3 card monti.  I am going to be patient with most of my positions.


  • Asia closed mostly in the red with the exception of the Shanghai, which seems to beat to its own drum these days
  • Risk-on started in earnest after the European open, with the Euro Stoxx 50 trading up as much as 3% from starting close to flat.  SPX futures indicated up about 1%
  • European banks (up 5%), after leading yesterday’s down move (down 6%), are leading today’s up move, and 10 year Italian and Spanish yields are retracing half of their move higher yesterday
  • Dollar and Treasury bonds are broadly lower.  Correlation between the 2 has been especially high in the last 3 months.
  • Commodities mostly higher with the exception of the grains and natural gas
  • PG reported better than expected earnings, but lowered its forward outlook.  Stock is trading around unchanged.  LNKD up 7% after beating on revenues and revenue guidance