The simple – and only – answer, is of course central banks. But for those who need a more “nuanced” answer to present to their portfolio managers who are watching this market move in stunned silence, here is JPM’s Adam Crisafulli with the full breakdown of today’s latest 1% move higher.
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Market update – the SPX opened flat-to-up small but caught a lift around ~10:30amET, around the time DJ reported on a MDLZ bid for HSY (which would be a >$20B deal) and this WSJ Italian bank article hit (http://goo.gl/R6UccS), while Carney’s prediction of BOE easing later this summer isn’t hurting (although the BOE was widely expected to enhance accommodation in the coming months). Also at 12pmET Bloomberg reported on how the ECB was considering easing its QE criteria to account for the expanded pool of bonds w/yields below the deposit rate. Beneath the surface sentiment is increasingly cautious, with most investors anticipating the resumption of selling once we get past month/quarter-end (nearly no one thinks stocks will get off “this easy” from the referendum decision last week). Other than the MDLZ/HSY news, Italian bank noise, and the Carney remarks, narrative-shifting news was pretty minimal over the last 12-18 hours. The UK political dynamics are interesting but Boris Johnson wasn’t the PM front-runner even before today and regardless it will likely be a few more weeks at least before the next British leader is known (and the triggering of Article 50, if it comes at all, won’t occur until 2017 at the earliest). The China CNY Reuters article created initial anxiety (as CNY depreciation was the catalyst behind the Aug and Jan/Feb swoons) but stocks (esp. in the US) seem less sensitive to this topic (the issue isn’t so much the absolute CNY level but instead pace and this is something China’s leadership appears to now appreciate).
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