Sweep Those Homes & Missiles under the Carpet 'cos Confidence is HIIIGH

On April 5, North Korea launched a long range missile and what happened? Markets rallied, even the Kospi & KRW rallied! I thought that was odd at the time but did note that risk assets only wanted to rally at that point. Fast forward 7 weeks and North Korea launch a couple of short range missiles and conduct a nuclear underground explosion. What happens? The markets pay far more attention this time. Equities fall a couple of % and KRW sells off too. Maybe there is a specific reason market cared more this time than in April but I don’t think so. I think the real reason is that the market is far more jittery in the last 10 days or so. The data have missed estimates and less bad is no longer necessarily good enough. That said, some genuinely better numbers are waaay better; see the reaction to the Consumer Confidence. Personally, as I’ve said before I think people are becoming desensitized to the bad news and this helps to buoy confidence numbers. No matter, the market has just bounced 2.5%, doing its best, first, but by no means last, impression of a yo-yo for the week.

$ and treasuries rallied today, until the confidence number that is, when they smartly executed an about turn This suggests to me that it was a risk aversion related move or shorts just taking profits after a very poor week for the Greenback. When that holds up and when it doesn’t seems to be pretty random these days as the correlation there between the $ and risk tolerance wanes.

Still, volumes are at about 70-80% of average today in equities depending on whom you speak to, so hard to read too much into things. Feels like it’s going to be a quiet week though, in spite of the heavy macro schedule which lies ahead.

PS…which of these surveys would u pay more attention to? Consumer Confidence where the sample of 5000 households are asked 5 questions and their answers can be: positive, negative or neutral…or the Case-Shiller which compiles data from across 20 major metropolitan areas in the USA?