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    NASDAQ - time for watching that lower part of the trend channel and the 21 day moving average

    Tech continues losing momentum...

    NASDAQ - time for watching that lower part of the trend channel and the 21 day moving average
    Refinitiv

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    Greece's armed forces placed on high alert after Turkey's incursion Greek waters.

    "Greece will ask for an emergency meeting of the EU Foreign Affairs Council as tensions with Turkey over maritime borders increased after Ankara sent a survey ship south of Kastellorizo."

    As we have noted earlier things are heating up in the Mediterranean. Risk for further escalation.

    https://www.ekathimerini.com/255702/arti

    Long/short ration in FANG has come down a lot
    Long/short ration in FANG has come down a lot
    JPM Prime Brokerage
    Corona cases surpass 11 million globally with US, Brazil and India as largest origin of new infections
    Refinitiv
    Who has bounced back... and who hasn't
    Who has bounced back... and who hasn't
    Long View
    Cross-asset comparison of yield per unit of risk

    Interesting chart from Bofa.

    Cross-asset comparison of yield per unit of risk
    Bofa
    Positioning: 7 reasons to be worried

    1. highest net buying in US equities since the sell-off (early march)

    2. "Fear" has not closed this low since the Corona crisis peak..VIX and V2X implosion feeding through the system.

    3. JPM Prime Brokerage: Net Exposure: Level at 99%-tile since Jan-2018.

    4. GS Prime Brokerage: Net leverage at 77.4% (99th percentile)

    5. Put/call ratio at extreme

    6. major positioning unwind / killing of generals. Tech+MoMo+Growth+SaaS - the absolute leaders of this rally - up against some serious selling

    7. Cross-asset price action showing major reversals (silver, gold, bonds)

    Lagarde keeps on printing

    Total assets rose by another €24.5bn

    Lagarde keeps on printing
    Bloomberg
    Korea's Kospi best world best performing (after Argentina) since covid lows

    Active handling of covid spread could have an effect.

    https://www.bloomberg.com/news/articles/

    Korea's Kospi best world best performing (after Argentina) since covid lows
    Bloomberg, David Ingle
    Flying high over China sky

    China domestic air traffic growth surged to positive territory.

    China domestic capacity has returned to 2019 level

    Flying high over China sky
    highest net buying in US since the sell-off

    Getting long at the top.

    Remember various Prime Broker data over the past few days showing 99-percentile net long positions across absolute return community

    highest net buying in US since the sell-off
    JPM PB
    Hydrogen - the long term future

    "The falling costs of renewables and the decline in fuel cell costs will make hydrogen increasingly competitive. We expect the cost of green hydrogen to fall to less than US$2/kg by 2030, equivalent to US$1/gallon gasoline. We expect an 80% decline in fuel cell costs over the next decade to US$30/kW as the industry scales up, which will make heavy goods vehicles (HGVs) powered by fuel cells more competitive than diesel trucks by mid-2020s. Hydrogen will play a key role in decarbonizing space heating, power, industry, chemicals, and other hard-to-abate sectors, given its versatility as a fuel. Fuel cell and electrolyzer manufacturers plus renewable (Solar and Wind) energy producers are the most direct ways to play the hydrogen revolution. Some industrial gas companies will also have high leverage to hydrogen growth. Oil & gas producers, gas utilities, and automotive manufacturers will be disrupted by the growth in hydrogen"

    Hydrogen - the long term future
    Sanford Bernstein
    Big bank problem in little China

    It is not only in EU and US that banks under-perform.

    Top 4 Chinese banks are gradually falling apart.

    Some of them already down almost 50% since their 2018 peak

    Significantly diverging from overall Chinese equities & its currency.

    The global growth engine has reached credit exhaustion

    Big bank problem in little China
    Crescat
    Breakevens repricing, but still below 2%

    Breakevens have repriced higher vs. cyclical equities in the US, but remain well below 2%

    Breakevens repricing, but still below 2%
    Goldman
    You can still panic and lend money to Austria for 100 years at 0.6%...
    You can still panic and lend money to Austria for 100 years at 0.6%...
    Refinitiv
    Safe assets are not repricing growth higher
    Safe assets are not repricing growth higher
    Goldman
    GS Sentiment indicator: stalling at average
    GS Sentiment indicator: stalling at average
    Goldman
    No more ETFs for Fed
    No more ETFs for Fed
    CreditSights/Market watch
    SPX gamma index vs S&P

    Much lighter gamma compared to February, note the smaller bubbles.

    SPX gamma index vs S&P
    Spotgamma
    Greener future post covid?

    In a new research report CITI shows that less international trade will damage global growth very substantially and while it may have a positive impact on the environment, it is relatively small compared with the economic cost of weaker productivity. A persistent substitution of corporate travelling with virtual meetings will have a negative impact on the global economy and a slightly positive impact on the environment, although not being a game-changer.

    CITI equity research
    Crashing MOVE index killed VIX

    Could small rising MOVE revive VIX?

    Watch these two closely here.

    Crashing MOVE index killed VIX
    Refinitiv
    Russell - back as (short term) king

    On Aug 3 we suggested one should start looking for laggards. We wrote;

    "Russell - chasing laggards time (1)?

    Reigniting momentum after being stuck for weeks..."

    Since then sleepy Russell is up 7.5% and is now "well above" the 200 day moving average. We are keeping this relative long laggard, but laggards are laggards for a reason...

    Russell - back as (short term) king
    Refinitiv
    Commodity open interest is back to pre-COVID levels

    ~$885bn, +$30bn WoW. This is the largest weekly increase in two months driven by precious metals and energy prices, and the weaker USD.

    Commodity open interest is back to pre-COVID levels
    JPM
    Recent gold "pros" have put money where their mouth is - GLD volumes have been "healthy"

    Today will be the biggest down candle in a while, at least for now.

    Recent gold "pros" have put money where their mouth is - GLD volumes have been "healthy"
    Refinitiv
    Value: the rumors of my death have been greatly exaggerated
    Value: the rumors of my death have been greatly exaggerated
    Refinitiv
    High yield refusing to join S&P
    High yield refusing to join S&P
    Refinitiv
      Positioning: 7 reasons to be worried

      1. highest net buying in US equities since the sell-off (early march)

      2. "Fear" has not closed this low since the Corona crisis peak..VIX and V2X implosion feeding through the system.

      3. JPM Prime Brokerage: Net Exposure: Level at 99%-tile since Jan-2018.

      4. GS Prime Brokerage: Net leverage at 77.4% (99th percentile)

      5. Put/call ratio at extreme

      6. major positioning unwind / killing of generals. Tech+MoMo+Growth+SaaS - the absolute leaders of this rally - up against some serious selling

      7. Cross-asset price action showing major reversals (silver, gold, bonds)

      Russell - back as (short term) king

      On Aug 3 we suggested one should start looking for laggards. We wrote;

      "Russell - chasing laggards time (1)?

      Reigniting momentum after being stuck for weeks..."

      Since then sleepy Russell is up 7.5% and is now "well above" the 200 day moving average. We are keeping this relative long laggard, but laggards are laggards for a reason...

      Russell - back as (short term) king
      Refinitiv
      US 10 year - just when everybody saw the break down lower, yields decided reversing higher...last at 0.595%

      Is that a take out of the negative trend line?

      US 10 year - just when everybody saw the break down lower, yields decided reversing higher...last at 0.595%
      Refinitiv
      Positioning: getting the longest at the top...

      JPM Prime Brokerage: Net Exposure: Level at 99%-tile since Jan-2018.

      GS Prime Brokerage: "Net leverage at 77.4% (99th percentile)"

      Although not high in "absolute" numbers - it is noteworthy that HF positioning finally is at a 30m extreme....

      GS and JPM
      QQQ - trend channel remains intact, but is this losing momentum?

      No worries as long as the 21 day moving average stays intact, but unless we take out new highs immediately, this could lose some momentum for the short term .

      QQQ - trend channel remains intact, but is this losing momentum?
      Refinitiv
      Right tail by the master of tails

      Just a gentle reminder of the great chart Chris Cole posted in late July...

      Right tail by the master of tails
      Artemis Capital Management
      How Europe’s pandemic response reduced market uncertainty

      Excerpt from the working paper, "Volatility indices and implied uncertainty", on new VIX type of indices for measures of European government bond futures (Bunds, BTPs, or OATs), which do not yet exist, and also show a number of practical ways how to measure bond market uncertainty from option prices. (ESM)

      "The eruption of the Covid-19 pandemic resulted in large market movements, as investors feared the financial and economic consequences of the crisis. A swift European policy response restored market confidence, and data from the fixed-income options market has vividly demonstrated this return to stability.

      Streamlining the implied uncertainty into a single measure, new volatility indices from option prices on German, French, and Italian government bond futures provide insights into investor sentiment and forward-looking market uncertainty in the underlying European sovereign bond market."

      The easier read,

      https://www.esm.europa.eu/blog/how-europ

      as well as the more technical paper by Jaroslav Baran and Jan Voříšek,

      https://www.esm.europa.eu/sites/default/

      How Europe’s pandemic response reduced market uncertainty
      ESM
      GDP/QE - go figure

      QE is not generating "much" GDP but certainly has delivered a lot of joy for the top 1%.

      GDP/QE - go figure
      St Loius Fed/Confoundedinterest
      VIX - can't see the wood for the trees?

      VIX drifting lower while VXN pushing higher recently. If things go properly "dynamic", big books will need to hedge big positions, and for that purpose, only VIX can help you.

      VIX looks relatively "cheap" here...

      VIX -  can't see the wood for the trees?
      Refinitiv
      It's all about the dollar (3)...in pricing of fear as well

      We have been arguing for VXEEM to "must" trade above VIX recently. This is occurring today for the first time in a while.

      We see EM volatility as too low relatively speaking despite the recent uptick.

      It's all about the dollar (3)...in pricing of fear as well
      Refinitiv
      It's all about the dollar (2)

      Watch your EEM here as it approaches the 21 day moving as well as the longer term trend. Note how the entire EEM bull started when the DXY reversed (inverted).

      The DXY is one thing, but EEM also got the Trump news regarding Asian tech companies going today.

      It's all about the dollar (2)
      Refinitiv
      Turkish lira as the Euro canary?

      1, Europe is much more exposed to Turkey than the US, especially Germany has a large relative exposure.

      2, EM "feeds on" cheap USD liquidity and currently more USD are being withdrawn from US Treasury than printed by Fed (via Nordea)

      3, Turkey is a hue tourist country....and despite everything cheap again, the industry is dead.

      4, As TME has been pointing out for the past week, European banks hold some Turkish exposure...people often talk Unicredit etc, but the main exposure is with BBVA

      Euro vs TRY
      Turkish lira as the Euro canary?
      Refinitiv
      Turkish lira collapse continues - not great for the Euro and very bad for some European companies

      Nothing new to TME readers, but BBVA is feeling the pain from Turkey via its stake in Garanti Bank. BBVA owns 2093700000 shares of Garanti, just below 50%.

      Add to this the exposure in Spanish imploding economy (IBEX can't catch a bid) as well as big LatAm exposure, and you understand why BBVA remains our favourite way to play the Turkish situation.

      BBVA vs TRY inverted
      Turkish lira collapse continues - not great for the Euro and very bad for some European companies
      Refinitiv
      Trump, Tencent and unintended consequences

      Recent action by Trump is spilling over to Asian tech with many tech names down big: SMIC -8%, ZTE -3.5%, Xiaomi -3.7%, Tencent -5.7%, Alibaba -3.5%.

      Tech has been the main driver of the equities melt up, but tech is also sensitive to politics and regulation. Below is the chart of NASDAQ and the relatively new HK tech index (the index was just recently launched, but long history exists as the underlying component have traded on main markets before).

      HSTECH has been much stronger than NASDAQ this year (second chart in percent).

      It would be ironical if Trump derailed the tech bull just in time for the elections....

      (cick arrow to change chart)

      HSTECH vs NASDAQ
      Trump, Tencent and unintended consequences
      Refinitiv
      HSTECH vs NASDAQ percent
      Trump, Tencent and unintended consequences
      Refinitiv
      Freshly updated Fed BS - pretty much unchanged
      Freshly updated Fed BS - pretty much unchanged
      Refinitiv
      NASDAQ "VIX", VXN, was bid today despite the index rallying, watch this closely....

      ...as it has led to corrections earlier this year

      NASDAQ "VIX", VXN, was bid today despite the index rallying, watch this closely....
      Refinitiv
      Still not a believer in the NASDAQ 2009 analogy?

      It seems it is never too late for this one....

      Still not a believer in the NASDAQ 2009 analogy?
      Refinitiv
      Ideally we would hit a little extreme greed before any meaningful pullback...
      Ideally we would hit a little extreme greed before any meaningful pullback...
      CNN
      Here is your bear - Turkey ETF, TUR, down almost 18% in nine sessions
      Here is your bear - Turkey ETF, TUR, down almost 18% in nine sessions
      Refinitiv
      What if everything is not awesome in Europe and it spills over?

      Everybody has been cheering the great EU package, but equities continue trading with poor momentum. Eurostoxx 50 is not trading well, but more importantly, markets such as MIB and IBEX continue trading poorly, and these are the markets supposedly "bailed out" by the great package.

      Note that SX5E "VIX", V2X, has moved higher recently, while VIX has been moving lower.

      Watch this closely, as volatility tells the truth...

      What if everything is not awesome in Europe and it spills over?
      Refinitiv
      Who needs puts?

      One thing is sure, not many like outs, which has been the right trade so far, but going forward things could be different.

      Weekly put call ratio in crash mode...

      Who needs puts?
      Tradingview
      Sucking risk premium out of the market - US credit protection and VIX making new post Corona lows

      One of our summer ideas has been for volatility to drift lower and eventually reach "good" levels where interesting long vol trades can be set up for what we believe will be a highly "dynamic" autumn session.

      Post the most recent expiration, dealers have become long gamma and moves are getting tighter, just in time for vacations. We expect this dynamic to continue for longer, eventually leading long gamma crowd to decide puking vols. This is getting closer and closer. Ideally, we would need the VIX guy proclaim VIX is dead...for us to get really triggered.

      (click arrow on chart to see SPY gamma)

      CDX IG vs VIX
      Sucking risk premium out of the market - US credit protection and VIX making new post Corona lows
      Refinitiv
      we trade close to max long gamma
      Sucking risk premium out of the market - US credit protection and VIX making new post Corona lows
      Spotgamma
      Buffett the (always) winner?

      Mike Mayo outlining his bullish call on banks;

      “We think that bank stocks have the potential to increase by 50% over the next 18 to 24 months,”

      If this happens, Berkshire should be a winner. The recent surge in Apple has practically brought BRK to being a "tech specialist". If you add a possible surge in banks, Buffett surely looks in a good position.

      Mayo also says;

      "“Banks are experiencing four 100-year events at the same time. The decline in the net interest margin, the worst in 100 years. The decline in traditional banking revenues, the worst in 100 years. The decline in total revenues, the worst in 100 years, and the build up of reverses has been the highest in history,”

      Full Mayo interview via CNBC,

      https://www.cnbc.com/the-exchange/

      BRK vs BKX
      Buffett the (always) winner?
      Refinitiv
      SLV - dare not to say it, but is this a hanging man candle?

      We would need a confirmation candle as always. Volumes are absolutely impressive during this parabolic move...and the RH crowd is adding to this winner.

      (click arrow on chart to toggle).

      SLV - dare not to say it, but is this a hanging man candle?
      Refinitiv
      SLV - dare not to say it, but is this a hanging man candle?
      Robintrack
      Apple - the definition of parabolic

      As we noted yesterday, the stock trades some 45% above the 200 day moving average. BofA outlined a few great risk points earlier today (see feed).

      Yes, the story of Apple is great, but there are risks of course.

      Apple volatility remains elevated, and for the "must be long Apple stock"crowd, overwriting calls makes good sense here (Apple is JPM's top overwriting candidate at the moment).

      3 months 105 calls offers some 4% premium.

      (click arrow on chart for scenario analysis of short 460 October call)

      VXAPL remains elevated.
      Apple - the definition of parabolic
      Refinitiv
      Apple - the definition of parabolic
      Refinitiv