As we stand at the threshold of what may be an extremely volatile, 3-day holiday weekend, the "markets" thus far today have been mostly unchanged and listless. Enjoy the relative quiet while you can as the volatility will very likely ramp up as we head toward Thursday's close.
So, what should we talk about today? Maybe...
- The arrival of "nuclear sniffers" on Okinawa? https://www.stripes.com/news/nuke-sniffer-aircraft-arrives-on-okinawa-as-tensions-rise-on-korean-peninsula-1.463108#.WO46CVLMz-Z
- How about the icy reception for Tillerson in Moscow? http://www.zerohedge.com/news/2017-04-12/russia-slams-absurb-trump-demands-warns-tillerson-dont-strike-syria-again
- Maybe Trump's unscheduled phone call to Xi overnight? http://www.cnn.com/2017/04/12/politics/trump-xi-phone-call/
- We could double-back to yesterday's discussion of the PM gold fix "anomaly". http://www.zerohedge.com/news/2017-04-12/something-strange-happened-during-yesterdays-london-pm-gold-fix
Meh. Maybe we'll save all those things for another day. Instead, let's start the day with another visit to the ruins of GAN2017. Just think of the cozy, 8-figure salary and bonus I should have earned this year working from some massive Bank. I mean, seriously! Our forecast of anti-GAN2017 sure is beating the living daylights out of the forecasts of all the lapdogs and message-pumpers that formulate sell-side "analysis". This little thing I found at ZH follows the theme. Recall that is was just three months ago that EVERYONE was expecting "the bond bubble" to finally burst in 2017. Uh-huh...not so much: http://www.zerohedge.com/news/2017-04-12/socgen-final-purge-all-bearish-bond-sentiment-may-cleansethe-market
And where are rates this morning? Still perilously perched at critical support near 2.30% in the 10-year and 2.90% for the Long Bond.
Anyway, getting back to the rather mundane start to your Wednesday. This seems almost akin to everyone taking a breath before things get crazy tomorrow. We should expect a slow ramp-up of activity, volume and volatility as we go through the day and then Thursday should be pretty exciting/interesting as the world attempts to position itself ahead of a three-day, market holiday weekend where just about anything could happen. Maybe all will be well and nothing will come of the Nork's Sunday observance of PapaKim's birthday. Maybe everything will calm down and next week will be back to business as usual. Maybe not. And it's into that uncertainty that positions will be squared ahead of tomorrow's close.
And one more thing...and maybe it would be better to discuss this in today's podcast...I found this interesting article at ZH earlier. It notes the recent disconnect of the S&P from the VIX. That's curious because we all know about the daily HFT influence of the VIX and the USDJPY on "the stock market". See here: http://www.zerohedge.com/news/2017-04-12/what-happens-next
Well, what's doubly curious is that this seeming VIX disconnect comes at a time where we've already observed a clear, long-term USDJPY disconnect. Recall that in February of last year, the "stock market" was ready to move sharply lower with the tumbling USDJPY when suddenly it diverged. And this divergence began the same day that Mother held secret, unscheduled phone conversations with Count Draghi of the ECB and Carney of the BoE. As a reminder, note how things have changed in the 14 months since:
For today in CDG, we look to be safe in our efforts to post two, consecutive closes north of both the 200-day MA and the downtrend line from last July's price peak. However, as you no doubt know by now, it ain't over till it's over so anything can happen. However, given the geopolitical uncertainty, it's hard to imagine a scenario where we get smashed back down over the next six hours. Instead, CDG looks to make even higher highs above $1280 with the next target being the level we've told you for weeks was attainable once the 200-day was broken...$1300.
And for CDS, the simple goal remains a move to new 2017 highs. This requires a Herculean effort due to the incredibly extended CoT and open interest structure, which remains at or near ALLTIME highs.
OK, before we close, two items I just saw on Twitter. One, it is being reported that Putin has, in fact, met with Tillerson today. Look for some headlines over the next few hours. And two, it looks like even more pressure is building in the preparation for possible strikes on Lil Kim: https://www.theguardian.com/world/2017/apr/12/japanese-warships-join-us-fleet-north-korea