Daily Stock Market Recap per ZH

S&P 500 Surges To New All-Time High Despite Wrecked Rate-Cut Hopes
FRIDAY, JAN 19, 2024 - 04:00 PM

'Good news' was initially 'bad news' for stocks to start the week, but as 'hard' data surged, 'soft' data slumped...



Source: Bloomberg

...but the strong 'hard' data prompted a biig (hawkish) repricing of rate-cut expectations (initial timing and velocity)...



Source: Bloomberg

...and stocks didn't care either way - we were getting to record highs on this large OpEx (Gamma unclench) no matter what. All the majors exploded higher today with Nasdaq the major winner on the week. Small Caps actually ended the week in the red (the 4th weekly loss in a row)...



The S&P 500 finally joined the Nasdaq at new record highs, surpassing its record high close (4796.6 1/3/22) and intraday record high (4818.6 1/4/22)...



Source: Bloomberg

2024 has been very good to L/S Hedge Fund managers, erasing (admittedly in our proxy index below) the ugly losses from December...



Source: Bloomberg

As their 'most shorted' stocks plunged non-stop - erasing the squeeze pain after the FOMC...



Source: Bloomberg

And MAG7 stocks ripped to new highs this week



Source: Bloomberg

AI leaders have dominated YTD, helped by a massive surge off Wednesday's opening lows...



Source: Bloomberg

Interestingly, while the anti-obesity drug names have outperformed YTD, this week saw both the GLP-1 winners and losers get punished...



Source: Bloomberg

Lower-quality stocks suffered this week and YTD...



Source: Bloomberg

US equity markets melted up in the second-half of this holiday-shortened week, completely decoupling from the Treasury market - which saw yields rocket back higher, roundtripping the post-FOMC move entirely...



Source: Bloomberg

Treasury yields were higher every day this week, with the long-end the laggard YTD (30Y +33bps, 2Y +16bps)...



Source: Bloomberg

The yield curve (2s30s) ended back in 'inverted' territory after bear-flattening this week...



Source: Bloomberg

The dollar ended the week higher - though saw selling pressure the last two days...



Source: Bloomberg

Bitcoin has been punched in the face at the cash equity trading open in the US every day since spot ETFs began trading. Today was different though as buyers appeared near $40k and bid the cryptocurrency back above $42k -practically unchanged on the week...



Source: Bloomberg

And while Ethereum also ended the week slightly lower, it held on to its massive outperformance relative to bitcoin last week...



Source: Bloomberg

Spot Gold prices ended the week lower but saw a healthy bounce off the $2000 level midweek...



Source: Bloomberg

Oil prices ended the week higher (yes, higher), but reverted back into the YTD range after breaking out yesterday...



Source: Bloomberg

Finally, be careful what you wish for on 'encouraging' hard-date signals being positive. The lagged effect of the unprecedented loosing of financial conditions is about to strike...



Source: Bloomberg

...and with it 'animal spirits' will be reborn - and the threat of re-inflation.

 

Small Caps Rip As Recession Risk Grows; Bonds Bid, Bitcoin Barfed
MONDAY, JAN 22, 2024 - 04:00 PM

With central bankers into their blackout windows ahead of the meetings, today was quiet on the macro side with US Leading Indicators the only stand-out, "continuing to signal underlying weakness in the US economy" as they said.

Most notably, they concluded:

"Overall, we expect GDP growth to turn negative in Q2 and Q3 of 2024 but begin to recover late in the year."

And that helped pull rate-cut timing hopes lower, with the odds of a March rate-cut down to just 40% (from practically 100% at their peak in December). Rate-cut expectations for 2024 also declined modestly...



Source: Bloomberg

And after last week's carnage, Treasuries were bid today with the belly outperforming...



Source: Bloomberg

But, in the face of weak economic data and a bid for bonds, oil rallied notably too - as the reality of Houtthi attacks continues to sink in - with WTI breaking above $75 (out of the YTD range) - back near one-month highs...



Bitcoin was clubbed like a baby seal, smashing down below $40k. Bitcoin found support at $39,500 and bounced off two-month lows...



Source: Bloomberg

Headlines about FTX selling (over the past couple of days, and apparently having finished), sparked some FUD - but its actually positive since as we tweeted earlier, this means the new ETF inflows are not simply recycled from GBTC...



After China's equity market collapse accelerated overnight...



Source: Bloomberg

US equities were mixed with Small Caps soaring on a big squeeze at the open but everything faded back during the day with the rest of the majors clinging on to positive gains. The last hour saw another big reversal smashing Small Caps up 2% on the day (up 3 straight days and the best day since mid-December)... with Nasdaq barely holding green.

The Dow and S&P 500 closed at new record highs...



Interestingly, the last hour melt-up was more driven by heavy put-covering flows (as calls actually saw negative delta)



Source: SpotGamma

'Most Shorted' stocks were ripped higher at the open - up 7% from Friday's lows to today's highs - but that momentum failed fast...



Source: Bloomberg

Magnificent 7 stocks extended gains at the open but selling pressure hit soon after, leaving them barely green on the day...



Source: Bloomberg

While the cap-weighted S&P 500 has continued to climb in the first three weeks of January, the equal-weighted index has dropped...



Source: Bloomberg

... as US treasury yields have backed up to 4.15%...



Source: Bloomberg

In other words, the year-to-date rally has been propelled by a handful of large-cap stocks whose momentum has rendered them largely immune - for now - to more prosaic concerns.

But for the majority of stocks in the index, bond yields still matter.

The dollar rallied relatively modestly on the day after opening weaker...



Source: Bloomberg

Spot Gold prices closed lower..



Source: Bloomberg

Finally, while LEI is screaming recession here, the lagged impact of the massive loosening of financial conditions seen in Q4 could be about to hit and lift macro data back rapidly stronger...



Source: Bloomberg

This is a problem - a re-emergence of economic 'animal spirits' is not what The Fed wants to see when they are still trying to tamp down inflation.

Simply put, the reflexive cycle of stronger stocks (on expectations of easier policy) driving financial conditions dramatically looser (doing The Fed's job for it), remove the need for actual rate-cuts from The Fed... and remove the pillar that is supporting the buying-panic in stocks... and around we go.

Be careful what you wish for...

 

Crypto Carnage Continues As Dollar Spikes, Yield Curve Steepens With 'Soft' Data Slumping
TUESDAY, JAN 23, 2024 - 04:00 PM

Richmond Fed manufacturing and Phuilly Fed services surveys both disappointed today - both signaling economic contraction, new orders declining, and employment pressures. The decline in business sentiment matches what we saw from New York last week and remains disconnected from the improvement we are seeing in consumer confidence...



Source: Bloomberg

...a product of the latter's likely focus on the stock market (and gasoline prices)... which was up again today (for the Nasdaq and S&P 500 hitting new record closing highs). Small Caps and The Dow ended the day red...



For the 5th day in a row, 'most-shorted' stocks saw the same trading pattern - opening bid gap higher, immediate selling pressure into EU close, then another squeeze into the close highs...



Source: Bloomberg

'Magnificent 7' stocks were higher today but not convincingly - are we back in the 3 days up, 3 days sideways trend...



Source: Bloomberg

Treasuries were sold today, erasing yesterday's gains as the long-end underperformed (30Y +5bps, 2Y -1bps), leaving the long-end up on the week (while the rest of the curve is hovering around unch)...



Source: Bloomberg

...which left the yield curve (2s30s) bear-steepening back up to almost dis-inverted...



Source: Bloomberg

But crypto made the biggest headlines, tumbling below $39,000 at its lows today (from over $49,000 the day that the spot ETFs launched). But, it doesn't appear to be the ETFs that are driving it...



Source: Bloomberg

The dollar spike back to last week's 2024 highs today



Source: Bloomberg

The dollar's reversal low was at its 50DMA, and today's high reversal was at the 200DMA...



Source: Bloomberg

Gold ended the day higher despite the dollar gains...



Source: Bloomberg

Oil ended unchanged after WTI tested $75 intraday at the top of recent range...



Source: Bloomberg

Finally, Chinese authorities tried (and failed) again to put a floor under their wealth-destroying equity-market-collapse - jawboning a multi-billion-dollar buying package (that barely managed to get the broadest measures of Chinese stocks higher)...



Asian traders are at their wit's end:

“I have reached the stage whereby my confidence as a trader is lost,” Singapore Hedge Fund 'Asia Genesis' CIO Chua Soon Hock wrote in a letter to investors. Reflecting on the unprecedented moves for China stocks (down) and Japan stocks (up), Chua wrote January “has proven that my past experience is no longer valid and instead, is working against me.”

“I still do not understand the inconsistency of China policy makers not fighting against deflation,” the fund manager continued, adding that:

“I have lost my knowledge, trading and psychological edge... The principle of risk-reward for both the short term and long term has turned on its head."

Revolution through routed wealth (do nothing - or keep pretending to do something - and hope it bottoms out) or wrecked buying power (stimmy-driven rebound sparks surge in inflation) - either way, not a good horizon for Beijing.

 

Big-Tech Bid, Bonds & Bullion Battered As 'Better' Data Made Doves Cry
WEDNESDAY, JAN 24, 2024 - 04:00 PM

European PMIs screamed stagflation (weaker growth and rebounding prices) but US PMIs unexpectedly ripped (for all the wrong reasons - no longer lead-times are not a sign of demand outstripping supply, it's a sign of the shitshow in the Red Sea and storm-shutdowns in the US slamming supply chains).

Disruption-driven increases in supplier lead-times are not - we repeat not - a positive... After the debacle during the COVID lockdown supply-chain collapse (and soaring PMIs), you'd think they'd figured this shit out by now!!



Source: Bloomberg

But no one cared to look below the surface. That 'strength' sent rate-cut expectations (and the odds of a March rate-cut) reeling hawkishly lower...



Source: Bloomberg

Notably, the market's expectations for ECB cuts in 2024 has converged with expectations for The Fed (while BoE expectations are pushing notably hawkish)...



Source: Bloomberg

The hawkishness spread to bond-land (not helped by an ugly 5Y auction) with yields up across the curve (long-end underperforming 30Y +4bps, 2Y +1bps) after overnight buying...



Source: Bloomberg

The 5Y briefly broke down below 4.00% ahead of today's ugly auction but ended 11bps off the lows of the day...



Source: Bloomberg

And that sent bear-steepened the curve (2s30s), dis-inverting it once again...



Source: Bloomberg

And that lack of dovishness slammed gold back below its 50DMA ($2025)...



Source: Bloomberg

The dollar dived overnight buit was bid during the US session...



Source: Bloomberg

The higher yields hit stocks broadly speaking but traders sought the safe-haven of mega-cap tech, enabling Nasdaq to close green. The S&P barely held on to gains as Small Caps lagged (and The Dow closed red)...



'Most Shorted' stocks were clubbed like a baby seal today. This is the first day in a week that did not see an afternoon re-squeeze...



Source: Bloomberg

As MAG7 stocks ripped (NFLX) then dipped a bit...



Source: Bloomberg

Bitcoin managed gains, but was unable to hold above $40,000...



Source: Bloomberg

Oil rallied up to one-month highs, breaking out of its YTD range...



Source: Bloomberg

Finally, the big news overnight was China's surprise RRR cut (after it promised trillions of yuan in rescue for stocks the day before and banned short-selling the day before)...



Source: Bloomberg

...and while 0-DTE traders weren't playing along, traditional options traders were buying Calls (and covering puts) with both hands and feet today, with someone large stepping in around 1400ET...



Source: SpotGamma

So, is this the inflection point for China?

 

Bonds & Black Gold Bid, Big-Tech Skids As 'No Landing' Narrative Gores Goldilocks
THURSDAY, JAN 25, 2024 - 04:00 PM

Strong GDP growth (but cool inflation), strong new home sales (but cool home prices), strong labor market data (jobless claim rose but remain near multi-decade lows) all set the tone for the day as traders ignored weak National Activity data from The Chicago Fed, weak manufacturing data from The Kansas City Fed, and weak headline durable goods orders.

But, the macro surprise index is accelerating right when it is expected to as the lagged impact of the massive easing of financial conditions floods into the economy...



Source: Bloomberg

Additionally, a massive $81BN of liquidity was pulled out of The Fed's Reverse Repo facility today (after the surge in bill issuance), making a total of $460BN withdrawn from the facility in January so far - on track for by far the biggest monthly decline ever.



Source: Bloomberg

Interestingly, amid all that, STIRs shifted dovishly - with the odds of a March cut rising modestly and the size of 2024 cuts rising (perhaps ahead of tomorrow's pivotal Core PCE print)...



Source: Bloomberg

Treasuries were bid across the entire curve with the short-end outperforming on the day (3Y -7bps, 30Y -3bps), leaving just the long-end still higher in yield on the week...



Source: Bloomberg

The yield curve bull-steepened today, with 2s30s jumping to +7bps - its 'steepest/uninverted' since July 2022...



Source: Bloomberg

Nasdaq lagged on the day - thanks in large part to TSLA - as Small Caps outperformed. Everything closed green (even Nasdaq)... with a late-day meltup ahead of Core PCE...



This is the 5th record daily close in a row for the S&P 500

TSLA's tumbled over 12% for its worst day since 2020 to its lowest since May 2023...



TSLA weighed down The Magnificent 7 today, erasing most of yesterday's meetings...



Vol is extremely low ahead of tomorrow's Core PCE print (and next week's NFP), but the term structure does recognize it...



Source: Bloomberg

The dollar rallied during the US session, recovering from overnight selling pressure...



Source: Bloomberg

Bitcoin went sideways again today hovering around $40,000...



Source: Bloomberg

...as GBTC outflows shrank again...



Gold went sideways today, testing up to $2025 intraday before fading back...



Source: Bloomberg

Oil prices well and truly broke out of their recent rangebound trading bracket with WTI ripping up to almost $78 - its highest since 11/30 (when OPEC+ failed to impress with its announcement of additional - voluntary - production cuts...



Source: Bloomberg

WTI tested all the way up to its 200DMA today...



Source: Bloomberg

Finally, as Goldman's Lee Coppersmith noted today, the dichotomy between the first half of February and the second half from a seasonal perspective is dramatic to say the least...



For those worried about any froth in the US markets, the last two weeks in February are historically the worst 2 weeks of the year.

Given how well markets followed the historical analog last year, it’s something to have on the radar.

 

Bond Yields, Bitcoin, & Black Gold Bounce As Economic 'Animal Spirits' Wreck Rate-Cut Hype
FRIDAY, JAN 26, 2024 - 04:00 PM

While the micro (earnings) has been more mixed (NFLX/IBM good, INTC/TSLA bad), the macro has been a one-way street of 'no-landing-narrative' awesomeness this week...



Source: Bloomberg

But that shouldn't be a surprise since we warned that the lagged impact of the massive loosening of financial conditions was set to ignite 'animal spirits' - and with it, the end of any "soft"-landing narrative with the potential for re-acceleration of inflation...



Source: Bloomberg

...and that has pushed rate-cut expectations lower (hawkishly), with a 45% chance of a cut in March and 133bps of cuts in 2024 (down from 85% and 165bps just over a week ago)...



Source: Bloomberg

Do investors really expect The Fed to cut with GDP (and PCE) expectations surging once again?



Source: Bloomberg

Today's oil trading was extremely technical as a first surge perfectly tagged the 200DMA, prompted a run-stop sell-down, then a rebound back off $75 sent WTI back to the highs...



The growthiness and ongoing shitshow in the Middle East pushed WTI to its best week since September, with its highest weekly close since the first week of November.



Source: Bloomberg

Bitcoin ended the week higher too, surging back above $42,000 today after an almost endless stream of selling since the spot ETFs were unleashed...



Source: Bloomberg

We note two things in crypto-land:

1) GBTC outflows are slowing...



and 2) all the selling in the underlying bitcoin has been focused (since the ETFs began trading) during the US equity trading session... Is that constant pressure about to abate?



US equity markets rallied on the week once more - ignoring higher yields, lower rate-cut expectations - as Small Caps outperformed (following a very similar pattern every day) while The Dow and Nasdaq lagged (though still closed green on the week)...



The S&P 500 (cash) tried and failed 3 times this week to close above 4900 as heavy gamma turned it back each time...



Energy stocks soared almost 5% on the week while Consumer Discretionary was the biggest loser...



Source: Bloomberg

Don't forget - the mega-cap tech names report in the next week...



Treasury yields were all up today but mixed on the week with the long-end underperforming...



Source: Bloomberg

Which meant the yield curve (2s30s) steepened on the week (4th weekly steepening on the last 5), closing back above zero once again...



Source: Bloomberg

Gold (spot) went nowhere on the week, hovering around $2020...



Source: Bloomberg

And the dollar also ended very modestly higher on the week with some good chop midweek around The ECB...



Source: Bloomberg

Finally, "you are here" in the dotcom meltup analog...



Source: Bloomberg

With The Fed confirming the end of its BTFP facility (and RRP withdrawals accelerating), March is lining up for something big (especially if The Fed doesn't cut as so many hope).

 

Stocks, Bonds, Bullion, & Bitcoin All Rip As Catalyst-Heavy Week Begins
MONDAY, JAN 29, 2024 - 04:00 PM

Quiet macro day today a collapse in Texas Manufacturing the only significant domestic data (but Treasury's QRA, part 1 the most noteworthy ahead of tomorrow's actual announcement), and that was evident in rate-cut expectations being hugely unchanged...



Source: Bloomberg

And the lack of news was enough to allow a 'buy all the things' narrative to continue with Treasury's QRA suggested lower supply expectations.

Bonds were bid across the curve with the belly outperforming (short-end least bought)...



Source: Bloomberg

Gold rallied back to the highs after the QRA...



Source: Bloomberg

...as the dollar declined...



Source: Bloomberg

Bitcoin ripped higher, topping $43,000 back at two-week highs...



Source: Bloomberg

As GBTC outflows are trending lower and Friday saw net inflows...



Source: Bloomberg

And of course, stocks drifted higher all day - as they do - but then jumped notably higher on the AQR supply report...



Source: Bloomberg

With MAG7 stocks accelerating after the AQR up to new record highs...



Source: Bloomberg

And 'most shorted' stocks were squeezed hard (up to last week's highs)...



Source: Bloomberg

Of course, with everything else rallying, there had to be something to sell... and it was crude oil (because, yeah, the middle-east is much calmer today)...



Source: Bloomberg

And finally, Nasdaq melted up even more today, but the rest of the week has plenty of hurdles...



Source: Bloomberg

Will the Dotcom bubble analog hold for a dip to be bought?

 

Yields JOLTed Higher, Stocks Lower Ahead Of Fed/Treasury
TUESDAY, JAN 30, 2024 - 04:00 PM

Higher-than-expected job openings from the JOLTS survey lifted bond yields (optimistically) today but the real story was in the quits - which dropped to pre-pandemic levels (suggesting "workers' willingness of ability to leave jobs" is considerably lower (i.e. labor market not strong). You can decide which is more 'real'.

Home price appreciation slowed, according to Case-Shiller; but consumer confidence ripped with 'current conditions' hitting the highest since pre-COVID-lockdowns.

The short-end underperformed with notable bear flattening in the curve. The long-end actually rallied on the day (30Y -4bps)...



Source: Bloomberg

In the meantime, 'soft' survey data continues to trend lower as 'hard' economic data is reignited...



Source: Bloomberg

... by the massive loosening of financial conditions...



Source: Bloomberg

But most notably, this is where the week gets really exciting with tonight's GOOG/MSFT earnings, tomorrow's Treasury AQR details, then FOCM and so on.

The Dow managed gains on the day with the S&P 500 unchanged while Nasdaq and Small Caps in the red...



Source: Bloomberg

...as MAG7 stocks faded (on AAPL shipment anxiety), erasing all of yesterday's gains...



Source: Bloomberg

The vol market is pricing some 'uncertainty' in the next few days then a return to the usual...



Source: Bloomberg

Yesterday's manic meltup squeeze was erased in 'most shorted' stocks after it tagged last week's high stops...



Source: Bloomberg

Bitcoin extended yesterday's gains, holding around $43,500, but Ethereum surged back above $2350...



Source: Bloomberg

...after the smallest GBTC outflow since 'day one' of the ETFs (and highest net inflow in two weeks)...



Source: Bloomberg

The dollar ended marginally lower on the day but was mostly directionless...



Source: Bloomberg

Gold (spot) surged up towards $2050 as the cash equity market opened this morning, only to fall back down to a modest gain after JOLTS...



Source: Bloomberg

Oil prices ended higher with WTI bouncing off $76.00 up to $78...



Source: Bloomberg

Finally, it's the same this time...



Source: Bloomberg

Just ask JPMorgan...

 

Stocks, Bond Yields, & Bullion Puke After Powell Pummels Dovish Dreamers, Assails AI
WEDNESDAY, JAN 31, 2024 - 04:00 PM

'Soft' survey data continued its trend weaker...



Source: Bloomberg

And NYCB shit the bed...



Source: Bloomberg

Which is probably why The Fed culled the sentence: "The U.S. banking system is sound and resilient" from its statement!

Not a good look.

BUT... The FOMC statement was a total hawkgasm...

And the market's initial reaction followed that guidance. Then the idiot algos bid stocks back to the highs of the day after Powell said he had "confidence" in inflation coming down (but missed the bit about him saying he needed more confidence).

Powell appeared subliminally aware of that and curb-stomped any dovish hope with the following triple-whammy:

• *POWELL: DON'T THINK IT'S LIKELY FED WILL CUT IN MARCH
  
  
• *POWELL: MY GUESS IS PRODUCTIVITY MAY GO BACK TO WHERE WE WERE
  
  
• *POWELL: PLANNING TO START IN-DEPTH BALANCE SHEET TALKS IN MARCH

So, no March cut, AI gains are temporary, and QT ain't coming by March.



The doves cried...

March rate-cut odds tumbled and expectations for 2024 total cuts declined notably...



Source: Bloomberg

And the stock market went wild (as evidenced by the swings in TICK). Initial jerk lower (as selling hit in the statement) held until the presser and algos went crazy with a massive buy program... which was then crushed by a just as massive sell program...



Source: Bloomberg

Small Caps were the day's biggest loser (down 2.5%!), with The Dow the least ugly horse in the glue factory. The S&P and Nasdaq were ugly...



As 'most shorted' stocks were clubbed like a baby seal. A close up on the day's actions shows the algos doing their best to ignite a squeeze... then failing dismally...



Source: Bloomberg

And MAG7 stocks were monkeyhammered (MAG7 basket's worst day since Dec 2022)...



Source: Bloomberg

Interestingly, 0-DTE traders fought The Fed all afternoon, with positive delta flow unable to lift stocks..



Source: SpotGamma

Treasury yields were down on the day with the short-end outperforming. The early gains on flight-to-safety bids on NYCB (and weak ADP) were largely erased by the hawkish Fed...



Source: Bloomberg

The 10Y Yield pushed back up to 4.00% towards the close but then yields puked to the lows of the day in the last few mins...



Source: Bloomberg

The yield curve (2s30s) bull-steepened on the day, back up near dis-inversion...



Source: Bloomberg

The dollar had quite a day with a plunge early on weak ADP and NYCB's collapse. But then screamed up to the highs of the day



Source: Bloomberg

Gold was the mirror image of the dollar, ripping higher on flight-to-safety demand as NYCB imploded, then dumping back as a hawkish Fed spoiled the party...



Source: Bloomberg

Oil prices accelerated lower today on weak data, a crude build, and hawkish Fed with WTI back below $76..



Source: Bloomberg

Bitcoin ended lower - following the same kind of chaotic swings in the FX and gold...



Source: Bloomberg

And finally, we are seeing a return to notable net inflows into Bitcoin ETFs...



Source: Bloomberg

...as GBTC outflows appear to be dwindling.

 

Stocks Soar Amid Hopes Regional Bank Crisis Will Lead To Early Rate Cut, More Fed Easing
THURSDAY, FEB 01, 2024 - 04:00 PM

Another rollercoaster day for stocks.

Following on the biggest drop for the S&P since September thanks to Powell unleashing Hawk Hogan during his presser, stocks - which had managed to regain about a third of the drop overnight - started the day off on the back foot, dropping to session lows early in the session as the regional banks crisis threatened to spread out of control as multiple small banks tumbled high-single and double digits.



However, then the market quickly remembered that it was precisely the bank crisis last March that sparked a powerful Fed response (BTFP), and a violent rally, and we got the same thing today as stocks slingshot sharply higher closing 1.1% higher...



... with the meltup paradoxically also spreading to the KRE regional bank index, as the very catalyst for the meltup reversed and also rose in an example of absurd market reflexivity.



While banks have struggled, one can't say the same for tech, which has levitated since the open, and is well on its way to erasing all the losses during Wednesday's drubbing...



... although a lot will depend on what AMZN, AAPL and META report after the close.

Until then, however, everyone is enjoying today's relief rally (relief from what exactly?) and even though we have seen a veritable rollercoaster in March rate cut odds in the past 48 hours...



... all sectors green except energy...



... which was hammered by various fake news reports out of Al Jazeera that an Israel-Hamas ceasefire is imminent (it isn't), which was enough for CTAs to resume shorting on overdrive, and sending oil sharply lower...



... and even though Al Jazeera deleted the original report, the shorting CTAs were still too powerful and ended up pressing shorts all day to send WTI down almost $3 for the day.

Elsewhere, as stocks rose, yields tumbled, with the 10Y plunging as low as 3.815% before reversing modestly, with the move focusing on the long-end...



... while the dollar reversed an earlier attempt to move higher after a very strong ISM report, which the market quickly ignored as attention shifted to the nascent round two of the banking crisis and the inevitable rate cuts...



... as well as the sharp drop in the Fed's reverse repo which assures that tapering of the Fed's QT is fast approaching...



... which may explain why both gold and bitcoin closed the day near session highs as attention turns to today's mega earnings and tomorrow's jobs report, at which point we start everything from square one.

 

Mega-Cap Tech Melts-Up Moar Despite Powell Punch-In-The-Face & Regional Bank Rout
FRIDAY, FEB 02, 2024 - 04:00 PM

First things first, economic 'animal spirits' are back baby... and we know why (as we noted for months, the lagged effect of the massive loosening of financial conditions is now hitting and NOT doing The Fed's job)...



Source: Bloomberg

But, away from The Fed's Tyson-esque punch in the dove's face, it was all about 'The Magnificent 7' - the basket of 7 stocks soared to new highs this week...



Source: Bloomberg

But the 7 is now 4...



Source: Bloomberg

As job gains... and productivity gains... and AI... and stuff... trumped a hawkish Powell and anything-but-soft-landing/goldilocks jobs data - that sent rate-cut expectations lower...



Source: Bloomberg

Meanwhile, the bank crisis is back as Regional banks suffered their worst week since May 2023...



Source: Bloomberg

As 'whack-a-mole' has begun again among the most levered...



Source: Bloomberg

But, away from the bank crisis (just ignore it, right), Apollo's Slok notes, there are several current themes in markets

1. Soft landing/Goldilocks priced in everywhere, but probability of hard or no landing is not zero

2. Supply of US Treasuries growing, and Treasury auctions are getting more and more attention

3. Extreme concentration in S&P 500 driven by growing AI bubble

4. China slowing driven by deflating housing bubble, falling exports, and demographic headwinds

5. Germany in trouble because of China slowdown, costly energy transition, and housing disinflation

By the end of this week, 1 is dead, 2 is serious, 3 is worse, 4 remains a problem, and 5 is even uglier.

But none of that matters to tech which soared for the 13th week in the last 14 as Nasdaq rallied 1.5% this week. Small Caps were only index of the majors to close red...



MSFT is now bigger than AAPL, and AMZN is now bigger than GOOGL...



Source: Bloomberg

Today's gain for META is the biggest single-session market value addition, eclipsing the $190 billion gains made by AAPL and AMZN in 2022...



Source: Bloomberg

Treasury yields all exploded higher today, with the short-end underperforming (2Y +17bps, 30Y +10bps) leaving the 2Y the only part of the curve higher on the week...



Source: Bloomberg

With the 10Y Yield back above 4.00% by Friday's close...



Source: Bloomberg

And a big flattening of the yield cure (2s30s) back into inversion (erasing all the steepening from the Dec FOMC)...



Source: Bloomberg

Thanks to a huge surge in the dollar today, the week ended green for the greenback...



Source: Bloomberg

Bitcoin was higher on the week, chopping around the $43000 level...



Source: Bloomberg

Notably, Bitcoin ETFs have seen net inflows for the last 5 days...



Source: Bloomberg

Gold ended the week higher, despite a big drop today, erasing yesterday's gains...



Source: Bloomberg

Oil prices ended the week lower (last week's outsized gain completely erased). This was the worst week for WTI since early October...



Source: Bloomberg

And finally, as one wise prognosticator noted.

Market is soaring because AI hasn't displaced any jobs.

Market is soaring because every tech company is betting AI will displace millions of jobs.

And so, 'you are here'...



Source: Bloomberg

...just remember, this didn't end well last time.

 

Bonds, Bullion, Banks, & Bitcoin Battered As "Good News Is Bad News" Again After Powell
MONDAY, FEB 05, 2024 - 04:00 PM

Hotter than expected Services surveys - with a big jump in prices - was just the good news the market did not want to hear. Though no ZeroHedge reader should be surprised by this resurgence in economi 'animal spirits' - it is merely the lagged response of an economy that was fed a massive loosening of financial conditions late last year...



Source: Bloomberg

As we saw a lot of last year: bad news is good and good news is bad, at least when it comes to trading a soft landing and the odds of rate-cuts in the short-term tumbled...



Source: Bloomberg

Unsurprisingly, this morning's data, Chair Powell's comments, along with the strong payrolls report, generally strong macro data points, and largely constructive earnings reports we have seen recently, are all combining in a step higher in 10-year UST yield, breaking out decidedly above 4.00%...



Source: Bloomberg

The entire curve was higher by 11-15bps today...



Source: Bloomberg

And higher rates hammered stocks...until they didn't. Stocks initially puked, only to revert dramatically higher (with Nasdaq getting back into green). Small Caps were clubbed like a baby seal today, as was The Dow, while Nasdaq couldn't quite hold green into the close...



...thanks to a notable short-squeeze off the initial dump lows...



Source: Bloomberg

Interestingly, 0-DTE traders tried twice to fade the gains in stocks...



Source: SpotGamma

Regional bank stocks closed red again with NYCB hammered...



NVDA extended its insanely vertical recent rise after Goldman upgraded the AI giant. This pushed the RSI to massively overbought at 85...



Source: Bloomberg

Recently, bonds and stocks have been moving very differently. Today saw bond yields and stocks close at their highs of the day...



Source: Bloomberg

Here's why...

With bond-stock correlation crashing to its lowest level in months...



Source: Bloomberg

The dollar extended gains today, rallying up to its 100DMA to its highest in 3 months (after bouncing off its 50DMA and breaking thru its 200DMA)...



Source: Bloomberg

Gold slipped to one week lows, but spot found support at $2020...



Source: Bloomberg

After falling back into January's range, oil managed small gains today with WTI testing above $73 briefly...



Source: Bloomberg

Bitcoin surged overnight, back above $43,500 before plunging back to earth after headlines about bankrupt crypto-lender Genesis Trading filed a motion to liquidate over $1.6 billion in crypto...



Source: Bloomberg

Ethereum outperformed Bitcoin today, trading up to $2300...



Source: Bloomberg

Finally, is the market pricing in a Trump victory?



Source: Bloomberg

Based on Goldman's Republican winners vs losers basket performance, it appears stocks are moving in sync with Trump's odds.

 

Bank Blow-Up 'Butterflies' Spark Bid For Bonds, Bullion, & Bitcoin
TUESDAY, FEB 06, 2024 - 04:00 PM

No major macro today but more jawboning overnight from Beijing sparked some global gains in stocks.

China Small Caps were up 7% (but put in context, not so impressive)...



However, today's biggest newsmakers was FedSpeak, Yellen yellin', and bank blow-ups...

Take your pick:

The Good: KASHKARI: 3M, 6M INFLATION RATES 'BASICALLY THERE' AT 2%; WE DO NOT THINK ABOUT POLITICS NOR UPCOMING ELECTION

Bad: MESTER: EXPECT FED TO GAIN CONFIDENCE TO CUT 'LATER THIS YEAR', DON'T FEEL THERE'S ANY NEED TO RUSH RATE CUTS, NO URGENCY TO SLOW PACE OF BALANCE-SHEET REDUCTION NOW

Ugly: YELLEN SAYS INCENTIVES TO MOVE AWAY FROM DOLLAR EXIST, NATURAL SANCTIONED COUNTRIES TRY WORKAROUNDS ON DOLLAR; BUT UNAWARE OF ANY DEEP THREAT TO THE DOLLAR

But ugliest of all was the regional banking system.

The KBW Regional Banking Index is down 15% from its December highs (which had basically run all the way back up to the pre-SVB levels) but down 12% in the last 5 days...



Source: Bloomberg

A few desks claimed that NYCB is 'idiosyncratic'...

*NEW YORK COMMUNITY BANCORP SINKS 22% TO HIT LOWEST SINCE 1997



...but to be frank, that's just bullshit. It just happens to be the first domino to fall...



Source: Bloomberg

With bank bewilderment building, traders bid for bonds (with the short-end outperforming 2Y -8bps, 30Y -5bps). However, yields are still higher on the week...



Source: Bloomberg

Bullion was also bid, with spot gold prices testing $2040...



Source: Bloomberg

And so was black gold, with WTI back above $73...



Source: Bloomberg

And crypto was bid.

Yesterday saw the 7th straight day of net inflows to Bitcoin ETFs...



Source: Bloomberg

...and Bitcoin rallied today, but only modestly and within its recent range...



Source: Bloomberg

...but Ethereum surged up to $2375...



Source: Bloomberg

...with the ETHBTC pair rallying back above FOMC spike highs to two-week highs...



Source: Bloomberg

Big-tech actually had a down-day today (but rates were lower...). Small Caps were best (Short squeeze) and The Dow and S&P managed gains with a late-day surge...



MAG7 stocks drifted lower today...



Source: Bloomberg

After topping 85 (RSI) on the 'overbought scale last night, NVDA dared actually decline today (but not before it topped $700 overnight)...



But 'most shorted' stocks were squeezed hard from get-go (supporting small caps despite the bank bloodbath)...



Source: Bloomberg

Finally, as a reminder, Small banks are proper fucked without The Fed's (soon to be killed) BTFP bailout facility (red line)...



Source: Bloomberg

...and one can't help but notice the burgeoning balance sheet of the big banks - willing to scoop up small banks with the FDIC's help?

Don't believe us? Here's Jay Powell on Sunday:

"We looked at the larger banks' balance sheets, and it appears to be a manageable problem. There's some smaller and regional banks that have concentrated exposures in these areas that are challenged.

...

There will be expected losses.

It's a sizable problem... it doesn't appear to have the makings of the kind of crisis things that we've seen sometimes in the past.

I don't think there's much risk of a repeat of 2008. I also think, you know, we need to be careful about making proclamations about the.. future.

...

There will be certainly be some banks that have to be closed or merged out of, out of existence because of this. That'll be smaller banks, I suspect, for the most part.

You know, these are losses. It's a secular change in the use of downtown real estate. And the result will be losses for the owners and for the lenders, but it should be manageable."

Do you feel lucky, punk? Picking the right regional bank that will be bought before it's closed under FDIC?

 

Big-Tech & Bitcoin Bounce, Regionals Red As Flotilla Of FedSpeak Hints 'Higher For Longer'
WEDNESDAY, FEB 07, 2024 - 04:00 PM

The buyers are back in banks and big-tech today despite an avalanche of hawkish talk from Fed speakers. An ugly consumer credit print at the end of the day offset the fact that the US trade deficit narrowed last year by the most since 2009 as the value of imported goods declined and the services surplus increased.

The algos only had one think in mind - S&P 500 hitting 5,000... and they managed to get to 4999.89 before the front-running failed.



Nomura's Charlie McEllifgott noted that "large investors including real money, continue to indicate they are being forced to ‘grab into’ beta through futures and/or index options upside.”



But, the narrative is clearly being shifted back to 'higher for longer'.
Six Fed speakers today - all saying the same thing - don't expect cuts any time soon...

• KUGLER: MAY BE APPROPRIATE TO HOLD TARGET RANGE STEADY AT CURRENT LEVEL FOR LONGER
  
  
• KASHKARI: WE CAN TAKE TIME TO ASSESS DATA BEFORE CUTTING; SEE 2-3 CUTS THIS YEAR AS APPROPRIATE RIGHT NOW
  
  
• BARKIN: "IN THE WORLD OF ELEVATED UNCERTAINTY,... IT'S A REASONABLE IDEA TO BE PATIENT"; LOW RESPONSE RATES, REVISIONS MAKE YOU WARY OF DATA
  
  
• COLLINS: THERE IS A RISK THAT INFLATION PROGRESS STALLS, REASONABLE CHANCE RATES SETTLE HIGHER VS PRE-PANDEMIC

Yesterday we had:

• KASHKARI: "WE'RE NOT ALL THE WAY THERE YET" ON INFLATION
  
  
• MESTER: EXPECT FED TO GAIN CONFIDENCE TO CUT "LATER THIS YEAR"; POLICY IS IN A GOOD PLACE, MISTAKE TO CUT RATE TOO SOON

And that followed Powell on Sunday who very clearly confirmed that 'higher for longer' view (no matter what 60 Minutes editing/voice-over said).

As Goldman Sachs' Nelson Armbrust noted:

"The economy is stronger than expected, consumption is solid and jobs are very strong.

Personally, I have a hard time going along with the narrative of multiple cuts this year with the data at hand. Rates normalization just for the sake of it doesn't seem enough for me.

If the economy can sustain higher rates, it might be positive to have more room to cut in the future in case the economy needs a boost."

Of course, all that hawkishness hits the fan if a bank or two collapses...

• COLLINS: OVERALL, I SEE BANKS AS WELL-CAPITALIZED
  
  
• KASHKARI: WE'RE WATCHING CRE VERY CAREFULLY, CRE ISSUES APPEAR LIMITED TO INDIVIDUAL BANKS
  
  
• REMACHE: FED TO WATCH MONEY MARKET CONDITIONS AS RRP USE FALLS

And today was all about NYCB (which is/was the 35th largest bank in the US) as it oscillated from total failure to heroic resurrection...



But some context might help...



Source: Bloomberg

The overall Regional Bank index rebounded solidly (but we note that we have seen this kind of rebound three times now in the last week and we're still a lot lower)... but ended the day lower...



Source: Bloomberg

But the regional bank rebound, and FedSpeak, sent rate-cut expectations (hawkishly) lower...



Source: Bloomberg

Nasdaq outperformed on the day, followed closely by the S&P 500. The Dow managed solid gains but Small Caps battled 'unch' in the last hour (and lost)...



The Mag7 soared to new highs today, up 13.5% from January 's lows...



Source: Bloomberg

...as the NVDA soared back above $700 again (up $50BN today)...



Nasdaq's gains relative to Small Caps have pushed it back up to a notable level...



Source: Bloomberg

Before we leave equity-land, with the S&P within an inch of 5,000 and record-er highs, the last time the S&P 500 was at this record high, in Jan 2022, 77% of names were above their 10DMA, 73% above the 50DMA, and 76% above their 200DMA...



Source: Bloomberg

This time, only around 40% of names are above their 10DMA, less than 60% above their 50DMA and less than 70% above their 200DMA...



Source: Bloomberg

As @JasonGoepfert noted on X, "Since 1928, that's only happened once before: August 8, 1929."

Stocks rallied even with yields being higher today - despite a strong (record size) 10Y auction. The roller-coaster day left yield sup only around 2bps on the day across the curve but 30Y is lagging on the week...



Source: Bloomberg

Bitcoin rallied today, back above $44,000 at one-month highs...



Source: Bloomberg

...after the 8th straight day of net inflows into bitcoin ETFs...



Source: Bloomberg

Amid all the moves in other assets today, the dollar went absolutely nowhere...



Source: Bloomberg

Gold spiked amid bank chaos early on (above $2040) but ended unch...



Source: Bloomberg

Oil prices drifted gently higher today after big product draws



Source: Bloomberg

US NatGas prices dropped below $2 for the first time since Sept 2020...



Source: Bloomberg

Finally, Powell and Biden may have a problem soon as wholesale gasoline prices are 'high', suggesting pump prices are going to be heading up soon...



Source: Bloomberg

...must be those greedy 'Big Oil' execs again!!

Oh, and while you're celebrating, this analog just keeps chugging along...



Source: Bloomberg

But hey, the nice people on CNBC said 'buy stocks, this ain't anything like 1990!'.

 

Massive Short-Squeeze Sends Small Caps Soaring; Big-Tech Skids, Bitcoin & Black Gold Bid
THURSDAY, FEB 08, 2024 - 04:00 PM

Jobless claims just won't quit and were enough to send Treasury yields higher today after ARM and DIS earnings' blast-offs last night.

Rate-cut expectations drifted lower still (hawkish)...



Source: Bloomberg

But stocks hit a new record high...



Source: Bloomberg

The S&P 500 hit 5000.4 intraday... thanks to a miraculous sudden huge buy program in the last few seconds...



Source: Bloomberg

No, 'banking crisis 2.0' is not over. NYCB dumped today...



...and the overall Regional Bank index went sideways...



Source: Bloomberg

Today saw small caps rip higher while the rest of the majors trod water (at a very marginal new high for S&P)...



This was the second-best daily RTY-NDX outperformance in two months, which happened to occur at a critical resistance level...



Source: Bloomberg

It's been quite a wild ride this week for the RTY-NDX pair - whipsawing from one side to the other... PRESUMABLY tomorrow brings a big Nasdaq outperformance day...



Source: Bloomberg

ARM was up 50% (yes 5...0)... lol



Source: Bloomberg

DIS rallied over 11% on the day, to one-year highs...



Source: Bloomberg

MAG7 stocks drifted very modestly lower on the day...



Source: Bloomberg

Amid a massive short-squeeze...



Source: Bloomberg

Treasury yields were higher on the day (despite a strong 30Y auction), with the belly (5-10Y) underperforming (2Y +2.5bps, 10Y +6bps, 30Y +4bps).



Source: Bloomberg

Even though the 30Y auction was solid, yields pushed up to two week highs...



Source: Bloomberg

Bitcoin surged back above $45,000 today...



Source: Bloomberg

...after yet another strong day of net inflows to spot bitcoin ETFs...



Source: Bloomberg

...and bitcoin notably outperformed ethereum today...



Source: Bloomberg

The dollar jumped higher on the strong claims data...



Source: Bloomberg

Gold ended the day practically unchanged (despite the dollar strength), after diving to $2020 and finding support...



Source: Bloomberg

Oil prices surged today with WTI back above $76, erasing the drop at the end of last week...



Source: Bloomberg

Finally, all eyes remain on tomorrow's CPI revisions and next Tuesday's January CPI print. With S&P vol skews at near-record lows...



Source: Bloomberg

...what could go wrong?

 

Bitcoin Blasts Off As 'Euphoric' Stocks Do Something They Haven't Done In 52 Years...
FRIDAY, FEB 09, 2024 - 04:00 PM

The S&P 500 closed above 5,000 for the first time ever...



...only 39 more green candles to go until the election...



Source: Bloomberg

The S&P 500 jumped 5,000 faster than any other 1,000-point milestone (which of course makes some sense given that they are smaller and smaller percentage changes).

It took 719 sessions for the index to set its latest 1,000-point milestone, much shorter than the 1,227 trading days it needed to get from 2,000 in 2014 to 3,000 in 2019, Bloomberg News reports.

That compares to the 4,168 sessions from 1,000 in 1998 to 2,000 in 2014.

However, as Bloomberg notes, it may take time for the index to settle above 5,000, if history is any guide.

For example, after breaching 2,000 in 2014, the SPX hovered around that level for the next three weeks, only to retreat in the five weeks that followed.

A similar trend can be observed in 2019, when the index crossed 3,000. After rising more, the SPX fell and hovered below it for many weeks after.

...and the S&P 500 is up for 14 of the last 15 weeks for the first time since March 1972...



But, while the S&P 500 is now up 4% from its prior record closing high in Jan 2022, so is Bitcoin; and the dollar is up 8%... and gold up over 12%. The loser in those two years are bonds which are down over 9%...



Source: Bloomberg

Small Caps were the biggest winners this week - amid a constant short-squeeze - followed by Nasdaq (and the S&P), while The Dow ended the week unchanged....



'Most Shorted' stocks ripped higher this week, up over 6% (biggest squeeze in two months)...



Source: Bloomberg

Regional Bank shares ended the week lower, but well of the mid-week lows...



Source: Bloomberg

MAG7 stocks soared for the 5th straight week...



Source: Bloomberg

NVDA just kept on doing what it does...



Source: Bloomberg

...with its market now approaching that of AMZN and GOOGL...



Source: Bloomberg

Tech stocks soared despite yields rising significantly...



Source: Bloomberg

...with the belly of the curve underperforming on the week...



Source: Bloomberg

Rate-cut expectations dropped significantly on the week (with the odds of a March cut below 20% and less than 5 overall cuts now priced in for 2024)...



Source: Bloomberg

Bitcoin soared back above $48,000 - erasing the 'sell the news' post-ETF declines - at its highest 'close' since Dec 2021...



Source: Bloomberg

...thanks to the ongoing net inflows into spot ETFs (which in aggregate are now above $2.1BN)...



Source: Bloomberg

The dollar was basically flat on the week, holding gains from last Friday's post-payrolls surge...



Source: Bloomberg

The dollar's modest gains were gold's modest losses on the week...



Source: Bloomberg

Oil prices rallied back this week with WTI back above $77 intraday, erasing last week's punishment...



Source: Bloomberg

Finally, 'tick tock'...



Source: Bloomberg

NVDA earnings? Bank crisis? CPI re-ignition? Animal-Spirits 2.0?



Source: Bloomberg

March is gonna be lit...

 

0DTE Punters Pump And Dump Momentum Stocks As "Parabolic" Tech Hits An Airpocket
MONDAY, FEB 12, 2024 - 04:17 PM

For a few hours there it seemed like the "market" was about to blast off in a carbon-copy replica of the dot com bubble.

With futures opening flat after Asia was closed for trading and with most traders sitting on the sideline ahead of tomorrow's CPI print, it didn't take long for the algos and the 0DTE crew to take control of market flows and promptly lift the Mag Seven (or rather the Mag AI since most of the 7 participants did not take part in today's meltup and instead of was just the AI names) to new all time highs with the liftathon however fizzling the moment Europe closed. And then in the early afternoon, the party suddenly ended with a whimper, when two two consecutive dumps in 0DTE sparked an initial retracement of all gains and subsequently pushed it to session lows...



... which also triggered the biggest sell program of the day, as seen in the TICK puke just after 2pm.



The mini vortex first pushed such parabolic tech bubble names as ARM (which is so clearly and grotesqsuely manipulated by SoftBank again, one has to an en even greater moron than the SEC not to notice it), NVDA and SMCI to new all time highs, before an air pocket emerged, sending both names well in the red for the day before the dip buyers made another appearance.



The continued meltup in the AIvantgarde names was enough to briefly push NVDA market cap above that of AMZN, and is now breathing down GOOGL's neck.



In the end, however, the attempt to force another all time high failed, and even though spoos earlier hit a new all time high of 5,066 they closed down 0.1%, with the Nasdaq also sliding to close 0.4% lower.



And speaking of ARM Holdings, its its latest 29% meltup has now brought the 3 days surge to 93%.

• *ARM SOARS 29% TO BRING THREE-DAY JUMP TO MORE THAN 93%

And visually.



For those confused, the move is nothing more than another gamma squeeze orchestrated by SoftBank, the same trader who famously sparked the market-wide Gamma squeeze of the Nasdaq in the summer of 2020.

To be sure, if the market is about to crack, and Goldman warned over the weekend that that may indeed be the case as there are quite a few disconnects below the surface..



... we may have a long way to drop as the coming 30% drop in Momemtum would claim quite a few "AI" names.



The rest of the market was rather boring, with rates virtually unchanged, as the 10Y closed at 4.17%, flat on the day...



... and FX was even more boring with the BBDXY also flat.

The only notable outlier was crypto, with bitcoin surging above $50,000 for the first time since Dec 2021 and even Ether finally preparing to break out...



... as all those shorting the cryptocurrency via futures get REKT.

 

Magnificent Sellin'
TUESDAY, FEB 13, 2024 - 04:00 PM

To set the scene for today's carnage, we give you POTUS...

So, with that said, a hot CPI print was all it took to steal the jam from this melt-up-market's donut of exuberance.

The deer is back!



Small Caps collapsed - crashing almost 5% (worst day since June 2020). The S&P was down 2% - its worst day since Dec 2020 (worse than Feb 2023's SVB crisis drop). Some late-day profit-taking painted some lipstick on this pig of a day...



'Plot Twist' as Hugh Hendry said: "This is me hearing about today’s inflation print...My biggest takeaway from aujourd’hui is that we just made next month really blinking important. "

"We were ripe for a pullback, right?" said a CNBC anchor, in some odd way trying to soothe investors.

Some L/S hedge funds had a good day as their shorts crashed (but their longs were not happy, and it's been a bloodbath for them in the last week. However, we suspect this was as much about degrossing, closing longs and shorts, as any actual wins...



Source: Bloomberg

'Most Shorted' stocks plunged over 6% - the biggest decline since June 2022...



Source: Bloomberg

The 'Magnificent 7' stocks puked at the open, dup-buyers stepped in (as they do), but were then clubbed like a baby seal. This was MAG7's 2nd worst day since October...



Source: Bloomberg

ARM was hammered...



But, of course, NVDA escaped with barely a fleshwound as panic-buyers stormed back in after the initial plunge...



Who could have seen this resurgence in inflation coming?

Well, we've been warning about 'Animal Spirits 2.0' for weeks as the lagged impact of the massive loosening of financial conditions last year flows wondrously into the real economy and lifts all economic expectation boats...



Source: Bloomberg

CPI's hot, too damned hot! And being too hot, marked the death of hope for March rate cuts, forget May rate-cuts, at the moment the first cut is priced-in for June... and as of today's less than 4 rate-cuts for the whole of 2024 (in fact just a 50% chance of 4 cuts, conditioned on 3 cuts). As a reminder, in mid-January (a month ago), the market was pricing in 170bps of cuts in 2024, now its half that...



Source: Bloomberg

Treasury yields exploded higher after the CPI print (after bonds were aggressively bid into the print)...



Source: Bloomberg

...led by the short-end (2Y +17bps, 30Y +8bps) ...



Source: Bloomberg

The yield curve bear-flattened dramatically (2s30s -8bps) to its most inverted in six weeks...



Source: Bloomberg

And as bond prices plunged, the dollar soared, breaking above its 100DMA to its highest since November...



Source: Bloomberg

Gold puked back below $2000, erasing all the gains since the December FOMC...



Source: Bloomberg

Oil prices rallied today, with WTI back above $78, breaking above its 100DMA and 200DMA (first time breaking above 100DMA since July 2023)...



Source: Bloomberg

Messrs Biden and Powell have a problem - pump prices are about to soar...



Source: Bloomberg

Bitcoin ended lower (after reaching $50k yesterday) but found serious support around $48,500 - quite impressive given the monkeyhammering that mega-cap tech got...



Source: Bloomberg

As Bitcoin ETF net inflows continue hot...



Source: Bloomberg

Finally, as a reminder, skews had collapsed to pre-volmageddon levels into this sudden narrative collapse...

VIX spiked up to almost 18 today...and 68% of Gamma is wiped away tomorrow in VIXperation.



Source: Bloomberg

That's a big 'unclench' from here.

 

Traders Fall Bank In Love With Stocks & Bonds After Terrible-Tuesday, Bitcoin Breaks Above $50k
WEDNESDAY, FEB 14, 2024 - 04:00 PM

A quiet macro day allowed a post-VIXperation market room to do what it does best, 'sell-vol, and bid stocks' as the US majors did their best to erase yesterday's ugliness and VIX puked back to a 14 handle.

Because, well why not... love is in the air...



VIX actually began to puke right after the cash close last night...



The Nasdaq rallied back into the green post-CPI and the S&P 500 got close, Small Caps are still laggards but made up a lot of ground from Terrible Tuesday...



'Most Shorted' stocks recovered more than two-thirds of yesterday's losses...



Source: Bloomberg

Magnificent 7 stocks rebounded but only modestly (only around 30% of the drop from Monday highs)...



Source: Bloomberg

Treasuries were bid today with the short-end outperforming (2Y -9bps, 30Y -2bps), recovering some of yesterday's losses...



Source: Bloomberg

Given the exuberance in bonds and stocks, we note that rate-cut expectations barely budged with June still the most likely timing for the first rate-cut...and the market is still pricing in less than 4 rate-cuts this year.



Source: Bloomberg

The dollar gave back some of the gains from yesterday too...



Source: Bloomberg

Gold went nowhere today, stuck below $2000...



Source: Bloomberg

Oil slipped back after a large crude build reported today...



Source: Bloomberg

Bitcoin soared back above $52,000 today for the first time since December 2021...



Source: Bloomberg

As Bitcoin ETF inflows hit a new high since inception (now almost $4 billion since inception)...



Source: Bloomberg

Finally, one more leg higher in NVDA?



Source: Bloomberg

And if NVDA goes, all the king's horses and all the king's men fall...



Source: Bloomberg

...that's too easy, right?