Small Caps 'Squeeze' To Pre-CPI Highs On Dismal Data; Bonds, Oil, & Gold All Bounce THURSDAY, FEB 15, 2024 - 04:00 PM A Japanese recession (and new equity market highs) and a UK recession (and rising stock market) and broadly crap US macro (and stocks soar) - we're sensing a pattern. 'Good' jobless claims data was not enough to deter the momo-muppets from the 'bad' retail sales data, and 'ugly' manufacturing print that all provided just the ammunition for bulls to hope for The Fed to rescue them sooner rather than later (and with more). March remains off the table but May is back up to a 33% chance of a cut and 2024 now back up to 4 rate-cuts... Source: Bloomberg Small Caps were up 2.5% today (as the Nasdaq lagged) pushing it well above pre-CPI levels. The Dow managed to get back to even from CPI... Source: Bloomberg Small Caps outperformed for the second day in a row, erasing all the relative gains of Nasdaq post-CPI... Source: Bloomberg ...thanks to yet more short-squeezing... Source: Bloomberg MAG7 stocks went nowhere for a second day... Source: Bloomberg But, ARM kept on keeping on... Source: Bloomberg Treasuries were bid again today (on the bad news) with yields down 2-3bps across the curve (with the belly a modest outperformer). The 30Y almost got back to unch from pre-CPI today before leaking back higher in yield... Source: Bloomberg The dollar dumped today, almost erasing all of the CPI spike.... Source: Bloomberg Bitcoin rallied up near $53k intraday but faded back to hold around $52k... Source: Bloomberg As ETF net inflows continued to grow (though did slow yesterday)... Source: Bloomberg However, Ethereum did extend its gains on more chatter about an ETH ETF... Source: Bloomberg Spot Gold prices broke back above $2000... Source: Bloomberg Oil prices rebounded strongly, erasing all of yesterday's losses... Source: Bloomberg Finally, Nasdaq is at its weakest relative to Small Caps since early Jan... Source: Bloomberg Double-top anyone? Time for a reality check? Source: Bloomberg Oh, and this is nothing... Source: Bloomberg RSI 99! WTF!
Bitcoin & Black Gold Bid As Stagflation Fears Wreck 52-Year-Old Equity Win-Streak FRIDAY, FEB 16, 2024 - 04:00 PM The S&P 500 was on course for its 15th positive week of the last 16, but a late-day sell-off spoiled the historic streak which hasn't happened since March 1972. Here's what that streak would have looked like... but no more! This occurred in a week that saw hotter-than-expected inflation (CPI and PPI), but weaker-than-expected retail sales, industrial production, and housing activity - which all sounds very stagflation-y. All of which pushed 'hard' data to its biggest weekly decline since the first week of October... Source: Bloomberg But, based on the lagged impact of the dramatic easing of financial conditions last year, we suspect this 'weak' week is a blip and economic 'animal spirits 2.0' continues for another month at least... Source: Bloomberg Rate-cut odds fell (hawkishly) this week with even June now only a 60% chance of being the first cut... Source: Bloomberg And the market is pricing a 50-50 chance of 3 or 4 rate-cuts for the year, sliding less-dovishly this week... Source: Bloomberg While stocks ripped back from the CPI puke on Tuesday, they were unable to build on gains... And that left Nasdaq the week's biggest loser, Small Caps the biggest winner while the S&P limped lower and The Dow clung to unchanged... After Tuesday's bloodbathery, the short-squeezers returned with avarice. But, today they seemed to run out of ammo as OpEx wiped away all the long gamma... Source: Bloomberg SMCI entered a bear market (down over 25% from its highs today)... MAG7 stocks ended the week lower, unable to re-gather any momentum from the CPI-spill... Source: Bloomberg Treasury yields were higher across the curve this week after hotter than expected CPI, jobless claims, and then PPI... Source: Bloomberg But, as the chart above shows, the short-end notably lagged, leaving the yields curve to an ugly bear flattener. The 2s30s curve is back at its most inverted in 2024... Source: Bloomberg Mortgage rates surged back up to two month highs... Source: Bloomberg The dollar ended the week higher, but barely, after giving back all the CPI spike gains... Source: Bloomberg Bitcoin rallied (8%) back above $52,500 this week (its highest since Nov 2021), the fourth straight week of gains for the largest crypto currency... Source: Bloomberg On the heels of over $2BN of net inflows into spot bitcoin ETFs this week... Source: Bloomberg Notably, bitcoin ETFs have seen almost $5BN of net inflows since inception and during that time, Gold ETFs have seen net outflows of over $2BN... So it's not a total surprise that gold ended lower on the week, even though it bounced back notably above $2000 (spot) after the CPI clubbing... Source: Bloomberg Oil prices rallied for the 4th week of the last 5, with WTI back above $79 and it highest close since the first week of November... Source: Bloomberg Meanwhile, this happened to XOM... Source: Bloomberg And don't expect gas prices to help CPI anytime soon (or Biden's re-election hopes)... Source: Bloomberg Finally, the most important single-stock earnings print in years is imminent. We are of course talking about NVDA. The current skew for the stock's options is pretty balanced between upside and downside, but as the chart below shows, in the last week, upside (calls) have been aggressively bid... Source: Bloomberg As Goldman's Brian Garrett noted, with an 11% implied move, the quantum of market cap priced for gain or loss is equivalent to stock number 37 in the SP500 ($200bn+). Monday is a market holiday, so at least stocks won't actually trade higher that day, but next week promises to be another fun one.
Bonds, Bullion, & Big-Tech Fear Bid, Stocks Skid Ahead Of NVDA's Big Day TUESDAY, FEB 20, 2024 - 04:00 PM After yesterday's holiday - to celebrate dead (or nearly dead) presidents? - US markets stumbled to start the week (ahead of NVDA's big earnings announcement tomorrow after the close). NVDA vols are a little 'bid' let's say (with an implied move of +/-11% or a $200BN range of outcomes)... Source: Bloomberg That helped drag Nasdaq's 'VIX' up to its highest since early November (but note that S&P 'VIX' remains below last week's highs and Small Caps 'VIX' is at its highest since May 2023).... Source: Bloomberg Oddly, the media were not quite as fast to squawk about the fact that NVDA's market cap fell back below that of AMZN and GOOGL's... Source: Bloomberg What little macro data there was today disappointed (Philly Fed Services deeper into contraction, and LEI's declining worse than expected for the longest streak since 'Lehman')... Source: Bloomberg That lifted expectations for 2024 rate-cuts very modestly... Source: Bloomberg Small Caps were the ugliest horse in today's glue factory and the Dow the prettiest - though they all closed red. With about 30 mins left in the cash session, everything shit the bed (for no obvious HL-driven reason), which dragged the S&P and Nasdaq down further (but that was quickly bid back up)... MAG7 stocks broke down, out of their flag pattern from last week... Source: Bloomberg 'Most Shorted' stocks also tumbled... Source: Bloomberg Treasuries were mixed (mostly bid) with the long-end underperforming, 2Y leading. Notably, bonds were bid all night and thru to the European close... Source: Bloomberg The dollar dumped today, erasing all the post-CPI gains... Source: Bloomberg Quite a ride for crypto today with BTC hitting $53,000; getting slammed back down to below $51,000; only to ramp back up above $52,000 and end the day green... Source: Bloomberg BTC ETF volumes were notably higher (with BTCW and HODL jumping bigly)... Source: Bloomberg Ethereum outperformed Bitcoin, topping $3,000 once again... Source: Bloomberg Oil prices declined today with the front-month WTI back with a $77 handle... Source: Bloomberg Gold extended its post-CPI-plunge rebound, erasing all the losses... Source: Bloomberg Finally, deja vu all over again, anyone? Source: Bloomberg Did NVDA just go thru the same pre-ordering, panic-bid-esque behavior we saw in 2021 as the COVID lockdowns (supply bottlenecks) and crypto/gaming demand accelerated?
Late-Day FOMO-ing Lipstick Rescued Market Pig Ahead Of Jensen's Big Night WEDNESDAY, FEB 21, 2024 - 04:00 PM No notable macro today, but we did note that mortgage applications crashed after rates pushed back above 7%... Source: Bloomberg But the FOMC Minutes and NVDA were all she wrote and the former was more hawkish than expectations and the latter spooked a few traders after recent networking/chip earnings (CSCO, PANW, AMD). Yes, that is Plao Alto -30% (and NVDA saw some 'profit-taking')... Source: Bloomberg Stocks were sold as Europe opened and then Small Caps and Nasdaq were sold through the US open. The 'hawkish' FOMC Minutes spoiled the party and sent all the US majors lower but with 30 minutes to go, a wave of FOMO buying panic hit the market... Source: Bloomberg ...which squeezed shorts... Source: Bloomberg ...and 0-DTE malarkey helped... ...AND that lifted The Dow and S&P all the way to green on the day and pasted lipstick on an otherwise pig of a day for Small Caps and Big-Tech... As VIX was curb-stomped late on, just like it was at the cash open... Source: Bloomberg Weakness from an ugly tail at the 20Y auction was exaggerated after the Minutes showed a Fed much more fearful of cutting rates too soon than being low too long, and that sent rate-cut expectations for 2024 even lower (back to 50-50 chance of 3 or 4 cuts, CPI lows)... Source: Bloomberg ...and yields up uniformly around 4bps across the whole curve. That pulled all yields higher on the shortened week... Source: Bloomberg 10Y Yields are at their highest since Thanksgiving. Are stocks starting to catch down to bonds' reality? Source: Bloomberg The dollar chopped sideways but ended lower on the day... Source: Bloomberg Gold mirrored the dollar and closed unch... Source: Bloomberg Bitcoin fell back to $51,000 today (yesterday's lows) amid quite a swing-y week... Source: Bloomberg Oil prices ended higher on the day with WTI testing back up to $78 ahead of tonight's API data... Source: Bloomberg Finally, Nvidia or not, US tech stocks are expensive... Fwd P/Es are at their highest since 2002... Source: Bloomberg Good luck tonight.
'Everything Is Awesome', Right? THURSDAY, FEB 22, 2024 - 04:00 PM It's not the economy, it's Nvidia stupid! With $2 trillion market cap in its crosshairs, NVDA stock soared today, extending overnight gains after beating-and-raising again... Adding the most market cap in a single-day ever - up $277BN... That is 2 Goldmans, half a JPMorgan, or a whole Netflix or Adobe added in a day. MAG7 stocks added over $500BN today to a new record high, second only to 11/10/22's explosion higher driven by AAPL... Source: Bloomberg And all that market cap gain was driven by a $2.1BN 'guide-up' on Q1 revenue. And as goes NVDA, so goes the entire stock market with Nasdaq leading the charge (up 3%) and the S&P up over 2%. Small Caps lagged with a mere 0.75% gain... YTD, AI 'winners' are up 19% and AI 'losers' are down over 3%... Source: Bloomberg Interestingly, despite the surge in the indices, 'most shorted' stocks ended unchanged... Source: Bloomberg And we also saw 0-DTE traders aggressively fade the uptrend late on... Source: SpotGamma But NVDA prompted panic-bids in a lot more stocks - SMCI was the most ridiculous example back up to $1000... Elsewhere, US macro was positive with initial jobless claims tumbling and existing home sales rising (though admittedly less than expected). But, as we noted, the economy doesn't matter... Source: Bloomberg Higher yields don't matter... Source: Bloomberg Tumbling rate-cut expectations don't matter... Source: Bloomberg Rising bond volatility doesn't matter... Source: Bloomberg Valuations don't matter (Tech is now trading 7 turns richer than the market - the highest since 2005)... Source: Bloomberg Treasury yields were higher overall but the short-end suffered most today (2Y +5bps, 30Y unch).... Source: Bloomberg Which bear-flattened the yield curve (2s30s) back to its most inverted of the year... Source: Bloomberg The dollar ended unchanged after a big roller-coaster (plunging into the Asian close and rallying back in Europe)... Source: Bloomberg Bitcoin end higher, testing back up to $52,000 (after testing below $51,000 intraday)... Source: Bloomberg Gold mirrored the dollar's ride today, ending marginally lower... Source: Bloomberg Oil prices pushed higher today (though did see some early weakness), with WTI back above $78.50... Source: Bloomberg Finally, bear in mind what the FOMC said in the Minutes yesterday "Several participants mentioned the risk that financial conditions were or could become less restrictive than appropriate, which could add undue momentum to aggregate demand and cause progress on inflation to stall." Well, financial conditions are very easy compared to Fed Funds... Source: Bloomberg ...and US financial conditions are extremely easy relative to the EU and UK... Source: Bloomberg In other words, the higher NVDA goes, the tighter credit spreads compress, and the more the MOMO and FOMO funboys chase this malarkey, the longer The Fed will sit on its hands and not cut rates. Of course, that assumes we get through March without a banking crisis.
Best Week For Bullion In 2024 As Mega-Caps Melt-Up On Bad Breadth FRIDAY, FEB 23, 2024 - 04:00 PM Ok, so everyone knows, NVDA is awesome, topping $2 trillion in market cap intraday this week (after a $2BN hike above consensus)... Source: Bloomberg ...but today saw a smidge of profit-taking... MAG7 stocks were obviously up on the week (the sixth in the last seven), but today's weakness took the basket back below its prior record high... Source: Bloomberg There's no way, right? Source: Bloomberg Small Caps ended the week down around 1% while the rest of the majors surged 1.5-2% on this holiday-shortened week... And the best-performing sector of the week was... drum roll please... NOT tech. Consumer Staples were best, energy worst (but green), and Technology middle of the pack... Source: Bloomberg Bonds were bid to end the week with the long-end outperforming overall and the curve flattening around the 5Y... Source: Bloomberg The yield curve (2s30s) flattened bigly on the week to its most inverted since 2023... Source: Bloomberg Rate-cut expectations for 2024 continued to slide, now at just a 30% chance of 4 cuts (70% of 3)... Source: Bloomberg ...and June is now the favored month for rate-cuts to start... Source: Bloomberg But stocks don't care about The Fed... for now... Source: Bloomberg Macro data continued to strengthen - just as we said it would given the lagged impact of the massive loosening of financial conditions... Source: Bloomberg Gold ended the week with its best day in February, up 6 of the last 7 days to close at the highs sine the start of the month... Source: Bloomberg The dollar drifted lower on the week, but recovered from an ugly overnight puke on Wednesday Source: Bloomberg Bitcoin drifted lower this week... Source: Bloomberg Despite solid net inflow from ETFs... Source: Bloomberg While bitcoin was down, ethereum significantly outperformed, topping $3,000 during the week. This dragged ETH up to one-month highs relative to BTC... Source: Bloomberg Oil prices tested up to January's highs (WTI $79) before fading back lower today and lower on the week... Source: Bloomberg Finally, under the hood, it's kinda worrying... the S&P jumped more than 2% on Thursday as investors cheered blowout results from Nvidia Corp., even though only 73% of its members advanced. That’s the lowest participation for an up day of this magnitude since the immediate aftermath of the 2020 election, when the S&P 500 gained 2.2% while only 47% of its members went up. Since then, 2% up days have been accompanied by an upward move in 92% of its stocks, on average, data compiled by Bloomberg show. As Jason Goepfert noted on X, the performance divergence between the S&P 500 Index and individual stocks on the New York Stock Exchange was even more extreme. The index’s 2.1% rally came as less than 60% of stocks on the New York Stock Exchange advanced. The mismatch was seen just three other times in the past 60 years - 1987, 2008 and 2020, data compiled by Sentimentrader show. The Arms Index, also called the Short-Term Trading Index, or TRIN, compares the number of advancing and declining stocks to advancing and declining volume. Readings below 0.5 historically suggest there’s more demand for shares since that would mean volume is higher in the average up stock than down ones, while a move above 2.0 is a sign investors are dumping equities, according to market technicians. Following Thursday’s rally, it sat at a level of 1.3, meaning buying pressure was still well off its peak from late last year. And as Nomura's Charlie McElligott noted earlier, the most analogous week to this week, just happens to be 1/7/2000 (in terms of spot, vol, and breadth moves).
Crypto Rips, Mag7 Dips, As Super-Short-Squeeze Sends Small-Caps Soaring MONDAY, FEB 26, 2024 - 04:00 PM Horrible housing data and anecdotally awful manufacturing signals from Texas were the only macro of note as the world awaits an avalanche of FedSpeak and the latest core PCE print later in the week. Rate-cut expectations continue to slide (June is now a 50-50 for the start and 2024 now pricing in only 3 cuts)... Source: Bloomberg Two ugly bond auctions (2Y and 5Y) helped spur Treasury yields higher (as we note that February's damage has come amid huge supply and a record $153 BN corporate bond sales). Yields were up around 3bps across the curve, erasing much of Friday's decline in yields (especially at the short-end)... Source: Bloomberg Bitcoin soared up above $54,500 today, the highest since early Dec 2021... Source: Bloomberg As net inflows into BTC ETFs re-accelerated (and GBTC outflows slowed to a trickle).... Source: Bloomberg Ethereum also soared, getting within a tick or two of $3200, its highest since April 2022... Source: Bloomberg Mag7 stocks continued to limp lower after NVDA's exuberance last week... Source: Bloomberg But 'most shorted' stocks were aggressively squeezed up to pre-President's Day highs today... Source: Bloomberg Which helped pull Small Caps up today and lead the pack as S&P, Dow, and Nasdaq all faded into the red in the last hour... The dollar was very quiet today once again ending practically unchanged for the second day in a row... Source: Bloomberg Gold closed marginally lower on the day, but bounced intraday to hold its 50DMA... Source: Bloomberg But oil surged, with WTI testing $78 intraday, erasing Friday's losses... Source: Bloomberg Finally, NVDA was only able to add a de minimum 0.6% today, losing momentum three times intraday and completing an inside day (lower high and higher low)... Does make you wonder, eh? Source: Bloomberg Still, at least we have Bitcoin...
'Big Shorts', Bitcoin, & Black Gold Bid As Yield Curve Bear-Steepens TUESDAY, FEB 27, 2024 - 04:00 PM For the second day in a row, the biggest shorts, crypto, and oil prices ripped while the rest of the market wistfully drifted unphased by more dismal data. Durable-goods - ugly (blame Boeing); Home-prices higher-er (blame Powell's pivot for unaffordability); consumer sentiment shitshow (and oddly large downward revisions) Source: Bloomberg 'Most Shorted' stocks were squeezed bigly once again... up 9% from Friday's close... Source: Bloomberg Bitcoin ripped once again... topping $57,000 for the first time since Nov 2021... Source: Bloomberg And oil prices jumped once again... to their highest close since early November... Source: Bloomberg Small Caps were the biggest beneficiary of the short squeeze... now up 2% in the last two days while The Dow lags. S&P and Nasdaq managed gains today but are marginally lower and marginally higher on the week so far... Bitcoin ETF inflows have been soaring... Source: Bloomberg And that's started to drive Ethereum higher too (to its its highest since April 2022)... Source: Bloomberg The dollar continued its slow drift lower, back to pre-CPI lows... Source: Bloomberg Gold was steady again today at pre-CPI highs... Source: Bloomberg Treasuries were mixed today with the short-end outperforming (2Y unch, 30Y +4bps)... Source: Bloomberg And that sent the yield curve (2s30s) bear-steepening - after some serious flattening recently... Source: Bloomberg Finally, crypto's total market cap is back above $2 trillion for the first time in two years... Source: Bloomberg No wonder 'unknown' officials have started to spread rumors that they fear bitcoin-mining could put the grid in jeopardy (now that the "only terrorists and money-launderers use crypto" narrative has exploded)! How f**king pathetic and predictable are these people!!! We look forward to hearing how crypto is in a bubble... but NVDA isn't... Source: Bloomberg It's different, of course.
Stocks Slip As Crypto Rips & Dips On Record ETF Volumes WEDNESDAY, FEB 28, 2024 - 04:00 PM Well that escalated... and de-escalated quickly... but in the end, bitcoin was best... Bitcoin rallied a stunning 13% to with a few bucks of $64,000 before a wave of selling pressure appeared (seemingly from perp futures) and triggered Coinbase chaos, wiping out $5,000 of the gains before bouncing back up again. By the end of the US equity trading session, bitcoin was at $60,000, still up 6%... Source: Bloomberg Near record highs intraday... Source: Bloomberg ETF net (in)flows have accelerated remarkably in recent days... Source: Bloomberg And BTC ETF volumes have exploded, driven mostly by trading activity in IBIT... Source: Bloomberg Ethereum had a huge day, ripping up to almost $3500, before it all fell apart and ended unch-ish... Source: Bloomberg ETH has notably lagged BTC in recent days after surging up (relatively speaking) to its highest since the launch of the BTC ETFS... Source: Bloomberg Away from crypto, stocks were lower led by Small Caps and Nasdaq today. Most of the selling pressure hit at the European open (and we bounced back into the European close), but those bounce gains wouldn't hold. The Dow ended the day as the least ugly horse in the glue factory... But skews are back near record lows as there remains no fear... Source: Bloomberg Treasuries were bid across the curve with the short-end outperforming (2Y -5bps, 30Y -2bps). That pulled 2Y and 5Y yields lower on the week... Source: Bloomberg This prompted some bull-steepening in the 2s30s curve... Source: Bloomberg The dollar jumped to one-week highs after drifting lower for a few days... Source: Bloomberg Gold dipped early then ripped to close green... Source: Bloomberg Oil prices ended lower on the day after surging above $79.50 (WTI) before sliding back after the DOE print... Finally, about that 'strong consumer' - The Credit Managers' survey shows that the rate of rejections for credit applications and the number of accounts moved to 'collections' is surging back to near GFC levels... Source: Bloomberg How the hell will all of these struggling Americans afford the $20 a month for a chatbot to tell them that the founding fathers were fat, black, lesbians?
Leap-Of-Faith: Feb Favored Bitcoin-Bulls, Bond-Bears, AI-Advancers, & Anti-Obesity Advocates THURSDAY, FEB 29, 2024 - 04:00 PM Overall February was great for crypto, good for stocks, bad for bonds, and ugly for rate-cut doves. Endlessly hawkish FedSpeak (confirmed by the FOMC Minutes), and troublingly sticky inflation prints (hard and soft) sent 2024 rate-cut expectations reeling from over 6 cuts (154bps) at the start of the month to less than 4 cuts (84bps) at the end, as better-than-soft-landing data spoiled the "rescue-me" fantasy so many had for The Fed... Source: Bloomberg ...and expectations for the start of rate-cuts is getting pushed further back with July now moist likely. Quite shift in February from 60% odds of a March-cut to basically 0 and a May-cut fully priced to just 18% now... Source: Bloomberg The market is suddenly aware that this disinflationary path may not be as easy as the world and their pet rabbit was hyping at the start of the year. Breakevens have soared higher this year with February pushing 5Y BEs back up near their highest since April 2023... Source: Bloomberg And small businesses are obviously price-gouging (well, that's what President Biden told us anyway)... We are not amused... But stocks didn't care... Source: Bloomberg Inflation and AI (well CPI and NVDA) were all that mattered really... All the US Majors were higher in February, led by Nasdaq and S&P as The Dow lagged (but still closed Feb to the upside). Source: Bloomberg The algos did everything they could to close the Nasdaq Composite above 16,057 - its prior record closing high... Fun fact: When you're hot, you're hot. Barring a 0.5% drop in the last 10 minutes of the trading day, this will be the first time in 10 years that the last trading day of February will be an up day for the S&P. It will also be the first positive Leap Day since the year 2000... pic.twitter.com/ZdPUxNxjSk — Bespoke (@bespokeinvest) February 29, 2024 Consumer Discretionary and Industrial outperformed in February while Utes lagged (but closed higher on the month)... Source: Bloomberg But as Goldman's Chris Hussey explained, there is some heavy-lifting ahead if stocks are to withstand this: "For now, markets have sided in favor of the better growth over the higher rates when considering stock valuations -- a product perhaps of just how much skepticism in the US growth trajectory remained a month-plus into 2024. But as we move forward, the ability of this better growth narrative to continue to surprise to the upside may be critical to keeping stocks working (at least from a top-down standpoint)" Anti-Obesity drug-related stocks massively outperformed In Feb... Source: Bloomberg And while AI-related stocks also outperformed, they lagged the GLP-1 Analogs... Source: Bloomberg But AI didn't float all boats as while NVDA rose 29% in Feb, GOOGL dropped 2% as Gemini's launch was a massive woke embarrassment. AAPL was alos down 2% in Feb (abandoned its EV car idea after decades)... Source: Bloomberg MAG7 stocks overall were up over 7% on the month but really have gone nowhere since the initial thrust into the month... Source: Bloomberg MSFT overtook AAPL and remains the only $3TN market cap name while NVDA over took GOOGL and AMZN right up against $2TN market cap... Source: Bloomberg And all that exuberantly-added market cap means stocks are anything but cheap... Source: Bloomberg As rate-cut expectations fell and better-than-soft-landing data showed up (and stickier than expected inflation data), so bonds were battered in February with the short-end monkey-hammered over 40bps higher in yield while the long-end rose around 20bps... Source: Bloomberg Which means the yield curve (2s30s) is bear-flattening significantly... Source: Bloomberg The dollar was up for the second straight month in a row in Feb Source: Bloomberg It was a big month for crypto with Ethereum outperforming Bitcoin (+49% vs +45%)... Source: Bloomberg Bitcoin traded just shy of $64,000... Source: Bloomberg And Ethereum traded just shy of $3500... Source: Bloomberg Flows into Bitcoin ETFs soared in February (+$5.9BN) with IBIT inflows dominating... Source: Bloomberg ...and overall since inception, Bitcoin ETFs have seen +$7.4BN flows while Gold ETFs have seen $2.9BN outflows... But, despite the outflows, gold managed to end February unchanged. Oil was up while NatGas was ugly... Source: Bloomberg Oil prices bounced off January's close four times this month, with WTI testing up to $79... Source: Bloomberg Finally, the better-than-expected macro data in February should not have been a surprise as we had been warning about the renaissance of 'animal spirits 2.0' due to the lagged effect of the massive loosening of financial conditions that occurred in Q4... Source: Bloomberg But, be careful, as that tailwind is set to run out right as the Ides of March strike, which would line up rather ominously with the dot-com peak analog... Source: Bloomberg Will The Fed allow a market crash in an election year? Or close to the election will The Fed wait for its first (completely apolitical) cut?
'Everything' Rallies On First Day Of March After Fed Hints At Next 'QE' FRIDAY, MAR 01, 2024 - 04:00 PM And ugly data day was brightened up when Fed Governor Waller wrecked the wall of worry. ISM Manufacturing was a shitshow (in contraction for 15 straight months), Construction spending unexpectedly declined (first MoM drop since Dec 2022), UMich confidence declined (and inflation exp ticked higher) - all of which dragged US Macro surprise index back near neutral... Source: Bloomberg And although 'bad news is good news', it was Waller's remarks that prompted the market's "everything is awesome" response as he hinted that The Fed would unveil a new QE 'Reverse Twist' for its balance-sheet (buying short-term Treasuries and dumping Agency MBS). Of course, as we detailed earlier, the timing of Waller's comments are convenient too as shifting The Fed's holdings towards Bills perfectly complement's The Treasury's recently stated expectation that their Bill-share will rise above their prior 20% guideline. In other words: Treasury is going to issue more bills, and Fed will buy more of them as well. Waller's comments come as Dallas Fed chief Lorie Logan reiterated it’ll likely be appropriate to start slowing the pace at which it shrinks its balance sheet. And Waller's comments come right on cue as The Fed's reverse repo facility saw a simply stunning $128BN of liquidity sucked out of it over the last two days (a 22% drop) across month-end... Source: Bloomberg We warned four days ago this was coming... Leaving the Ides of March in play for a liquidity crisis... Source: Bloomberg So - Unleash the dollars... And just like - everything was higher... Stocks went vertical, gold soared, Treasury yields plunged (and the yield curve steepened... in a good way), oil ramped up too (and so did crypto, even after the week it had). Small Caps led the face-ripping melt-up on the week (with Nasdaq's big day today pulling it to a 2% gain on the week). The S&P managed gains on the week (thanks to today's meltup), but The Dow ended the week marginally lower... NVDA officially closed above $2TN market cap today. For context, in Oct 2022, the company was worth $280BN... Source: Bloomberg Interestingly, while the last few months have seen 'Vol Up, Spot Up' in Nasdaq as traders chase the market with levered bets, the last week has seen vols decline as stocks soared (implying less of a FOMO chasefest)... Source: Bloomberg But... demand for downside protection is still non-existent as skews test record lows once again... Source: Bloomberg Bonds were aggressively bid today, led by the short-end (2Y -9bps, 30Y -5bps), dragging all yields lower on the week (again led by the short-end)... Source: Bloomberg And that bull-steepened the yield curve... Source: Bloomberg Crypto had a giant week with huge inflows to BTC ETFs... Source: Bloomberg Bitcoin roared up to just shy of $64,000 this week... Source: Bloomberg Ethereum also spiked, all the way above $3500 this week... Source: Bloomberg The dollar tumbled today after Waller but ended the week unch... Source: Bloomberg Gold soared up near end-Dec highs... Source: Bloomberg Oil prices also spiked today, breaking out to their highest close since Nov 6th... Source: Bloomberg Finally, are these the vinegar strokes (Google it) of the melt-up-rally-top? Source: Bloomberg Will the March FOMC meeting be used to introduce the public to NOT-QE "Reverse Twist", because the first rule of Fed QE-club is you never mention QE.
Gold & Bitcoin Close At Record Highs As Bonds & Stocks Dip MONDAY, MAR 04, 2024 - 04:00 PM A quiet macro day let the grown-ups play... and today saw gold and bitcoin roar up to record closing highs (amid rising breakevens and falling rate-cut expectations) as all eyes and ears and algos remain glued to any further hints of QE (Reverse Twist) as Waller revealed last week. 2024 rate-cut expectations drifted (hawkishly lower) to barely three cuts priced in for 2024 now... Source: Bloomberg But breakevens are soaring in the face of disinflationary delusion... Source: Bloomberg And it appears gold got the hint... Source: Bloomberg ...soaring to a new record closing high (just shy of its intraday record high)... Source: Bloomberg And the other alternative currency also soared, Bitcoin topping $67,000... Source: Bloomberg ...up to its record closing high (yes, we know bitcoin doesn't 'close')... Source: Bloomberg ...amid another high volume day in BTC ETFs... Source: Bloomberg Ethereum also caught a bid, topping $3600 for the first time since Source: Bloomberg Still has some room to go its record highs... Source: Bloomberg Elsewhere, stocks ambled along with Small Caps pumped (at the European open) and dumped back to unchanged-ish. A late-day sell program dragged the Nasdaq to the lows of the day and the ugliest horse in today's glue factory... VIX continued to decouple from stocks here (and this time it was not call-buying FOMO malarkey as skews ticked higher)... Source: Bloomberg As NYCB collapsed to 28 year lows... Source: Bloomberg Bonds were sold with the short-end underperforming.... Source: Bloomberg Which prompted bear-flattening in the yield curve... Source: Bloomberg The dollar limped lower but remains broadly speaking in its recent range... Source: Bloomberg Oil prices declined, apparently not enthralled by the idea of The Fed printing money to buy short-dated bills anymore, round-tripping Friday's gains... Source: Bloomberg Finally, NVDA just refuses to drop, up another 6% today... ...overtaking Aramco as the 3rd most valuable company in the world... Source: Bloomberg It's different though this time... Source: Bloomberg ...probably nothing.
Bitcoin & Bullion Hit Record Highs As "FOMO, YOLO, MOMO Stocks" Slump TUESDAY, MAR 05, 2024 - 04:00 PM The big headlines for today were good (Gold bulls happy as the barbarous relic hit record highs), bad (bitcoin bulls happy then sad as the cryptocurrency broke to record highs and was then clubbed like baby seal), and ugly (Nasdaq - and MAG7 stocks - suffered their worst day since October). Investors also faced a slew of disappointing macro releases which may be weighing on the goldilocks growth sentiment at the margin, with ISM services printing weaker than expected and factory orders plunging... Source: Bloomberg Interestingly, Goldman's Chris Hussey notes that the pullback in secular growers is driving a broader risk-off sentiment and likely even weighing on rates as 10-year US Treasury yields are down ~8bps (short-end down around 5bps)... Source: Bloomberg All the 'Magnificent 7' stocks are trading 2% lower (finding support at the up-trendline)... Source: Bloomberg As AAPL fell faster than a Vision-Pro off your forehead... Source: Bloomberg ...now trading over 7.5% below its 200DMA... Source: Bloomberg ...and even GLP1-exposed names are seeing some selling pressure on the day.... Source: Bloomberg Goldman Sachs trader Bobby Molavi summed things up well for stocks: "It feels very much like a fomo...yolo...and momo market. Still like the quote...’long, staying long, but slightly uncomfortable’ as the best way to describe how many investors feel at the moment." He also added on 'positioning' (which is extremely long), that "Not a problem unless it becomes a problem." Today's 2%-plus tumble in Nasdaq was the worst day for the meg-tech index since October 2023 and makes some wonder if 'positioning is suddenly becoming a problem'. A small late-day bounce put a little lipstick on this pig The sudden resurgence of fear prompted a decent spike in VIX, back above 15... Source: Bloomberg Bitcoin surged up to a new record high this morning... Source: Bloomberg ..., but then the stops were run and the algos monkey-hammered the cryptocurrency $8500 from its highs before some buying returned... Source: Bloomberg BTC ETFs saw a record volume day (with major volume in BITO)... Source: Bloomberg Ethereum followed a very similar trajectory, rallying up to $3825 at its highs before puking back down to $32,00 and catching a bid... Source: Bloomberg And then there's gold... The spot price of the precious metal rose for the 5th straight day, taking out the prior record spike high on Dec 4th... Source: Bloomberg Pushing the yellow metal to a new record high... Source: Bloomberg What is gold pricing in about future Fed action? Real rates dramatically negative? As Luke Gromen noted on X: "When gold rises in your currency DESPITE positive real rates, the gold market is saying 'Your government will have a debt spiral if real rates remain positive'." Source: Bloomberg Silver closed lower on the day, after three big days topping $24... Source: Bloomberg With silver looking positively cheap here with gold trading at 90x... Source: Bloomberg Oil prices traded in a choppy range today but closed lower ahead of tonight's API data... Source: Bloomberg Finally, there's Nvidia, which has stalled the last two days... We hand the commentary back to Goldman's Molavi for his take: "A company now worth more than AT&T, Boeing, Coca-cola, Disney, Fedex, Gen motors, IBM, MCdonalds, Nike, Starbucks, UPS and Wallmart.....COMBINED. A company with 75% margins and 75% market share. A company that in spite of its rally trades at 33.4x forward PE for the 4th lowest multiple of the Mag 7. One word of caution, if you plot Nvidia on a chart 2020 to today vs Cisco 1996 to 2002…and then zoom in at the year 2000…you see eerily similar graphs..." Source: Bloomberg "Cisco then was the belle of the ball and internet was the new new thing. At the moment in time…the prevailing thinking was that the whole internet would run on Cisco routers at 50% gross margins. Until it didn’t. " But, it's different this time, durr!
'Bad Data' Sparks 'Buy All The Things'-Day, Despite Hawkish Powell WEDNESDAY, MAR 06, 2024 - 04:00 PM Bonds, big-tech, bitcoin, and bullion all rallied today as the dollar dived after disappointing jobs data and a no-less-hawkish Fed Chair Powell. ADP and JOLTS both printed weaker than expected and the Beige Book signaled weakness for the consumer... Source: Bloomberg A new record high for spot gold prices... Source: Bloomberg As the dollar dived on a small rise in rate-cut expectations... Source: Bloomberg All the US Majors managed gains on the day but were well off the highs with The Dow lagging and Nasdaq and Small Caps leading... Mag7 Stocks gave back their early day gains following a similar pattern to yesterday... Source: Bloomberg Bonds were mixed with the short-end lagging as the long-end saw yields 5-6bps lower on the day. On the week, 2Y remains the only segment higher in yield.. Source: Bloomberg The 10Y yield hit a one-month low today... Source: Bloomberg Which has flattened the yield curve further... Source: Bloomberg After yesterday's insane day in crypto, Bitcoin recovered a lot of its crash-from-record-high losses, back above $67,000... Source: Bloomberg Which should not be total surprise given yesterday saw MASSIVE net inflows into BTC ETFs... Source: Bloomberg Ethereum did even better, taking out yesterday's high to trade above $3900... Source: Bloomberg Oil price ended higher but not before a good pump and dump intraday that lifted WTI above $80.50... Source: Bloomberg Finally, New York Community Bancorp was a total shitshow and deserves a section of its own. From $3.20 close to $1.70 lows... then Mnuchin and his hot wife stepped in at $2 and the stock ripped up to $4.40... only to sink back basically to unchanged... Source: Bloomberg What are the odds that a billion will solve their problem? Options traders dumped their puts on the news (and some calls were bought), but... Source: SpotGamma NYCB share price did not extend gains on the news or the cover? We're gonna need a bigger boat.
Dollar Dives Near 2-Month Lows As Bitcoin & Bullion Hit New Record Highs THURSDAY, MAR 07, 2024 - 04:00 PM Another day, another 'buy all the things' move in markets as the dollar extended yesterday's decline. The dollar was down for the 5th straight day to the lowest close since Jan 15th. This has been the biggest 2-day-decline since mid-December... Source: Bloomberg The dollar's losses were driven in large part by yen's strength (after wage growth soared and sent BoJ rate-hike expectation soaring)... Source: Bloomberg And Euro strength (after ECB) also helped push down the dollar Source: Bloomberg As the dollar dived, everything else rallied - stocks, bonds, bitcoin, and gold all gained.. Source: Bloomberg All the majors were higher again today, led by Nasdaq. The Dow as the laggard but still managed decent gains on the day, even though its closing below the cash-session open. The European session was a buy-fest The S&P's gains today took it positive for the week and puts it on pace to be the 17th positive week in the last 19 weeks - the longest streak since 1964... Mag7 stocks rebounded from Tuesday's decline (can't help but feel like that was a very technical move ahead of tomorrow's payrolls print)... Source: Bloomberg VIX refused to play along with the equity squeeze... Source: Bloomberg Bonds were bid today with the short-end outperforming (2Y -5bps, 10Y -2bps) Source: Bloomberg Which prompted some bull-steepening in the curve... Source: Bloomberg Bitcoin extended yesterday's bounce, back up to $68,000 and ending at a record close... Source: Bloomberg Which comes after another solid net inflow day (+$332mm) for BTC ETFs... Source: Bloomberg Ethereum extended further today, topping $3900 once again... Source: Bloomberg Oil prices chopped around but ended basically unchanged with WTI just below $79... Source: Bloomberg Finally, we keep hearing about the 'broadening' of the rally (as some way to compensate for Mag7's slowdown). But, judging from the underlying members and their moving averages, that just ain't true... Source: Bloomberg "Today just feels… different," says JPMorgan trader Matt Reiner in a note to clients this morning. "I can’t help but sense that we’re at the apex of some unknown pivot point in the market. I can’t shake it."
New Record Highs For Bitcoin & Gold As Dollar Suffers Worst Week In 3 Months FRIDAY, MAR 08, 2024 - 04:00 PM US macro data serially disappointed this week... Source: Bloomberg 'Bad' news was good news for the doves and the market's expectations for rate-cuts in 2024 ticked back up to 4 rate-cuts (from 3)... Source: Bloomberg Bonds were bid on the week with the belly outperforming the wings... Source: Bloomberg The 10Y Yield dropped down to almost 4.0% (closing below its 50DMA) at its lowest in almost six weeks... Source: Bloomberg But, while yields were lower on the week, stocks were more mixed with Nasdaq down on the week as a red-end to the week for mega-cap tech spoiled the party... Mag7 stocks ended the week lower after fading from today's gains... Source: Bloomberg Small Caps outperformed, The Dow lagged, and the S&P 500 desperately tried to close green on the week (but failed)... If it had closed green, that would have been the 17th positive week in the last 19 - the greatest streak in stocks since 1964... 'Most shorted' stocks were squeezed hard at the open today, into the green for the week, before tumbling back to the lows of the week... Source: Bloomberg The dollar is down for the sixth straight day, ending the worst week in three months for the greenback... Source: Bloomberg And dollar weakness helped spur gains in gold which soared to a new record high just shy of $2200 today. Gold is up for 8 straight days - the longest winning streak since July 2020... Source: Bloomberg Golds gains continued despite outflows from Gold ETFs (as Bitcoin ETF inflows soared)... And in the meantime, cryptos roared higher this week with Bitcoin topping $70,000 (a new record high) for the first time... Source: Bloomberg But, Ethereum outperformed Bitcoin on the week (+14% vs +10%), hitting $4000 for the first time since Source: Bloomberg Oil prices ended the week lower (at the low end of its recent range)... Source: Bloomberg Finally, this is fucking nuts...yes a trillion dollars added YTD... Source: Bloomberg And this... Source: Bloomberg It's fine!
Crypto Crack-Up Continues As Stocks & Bonds Sink Ahead Of CPI MONDAY, MAR 11, 2024 - 04:00 PM With all eyes, ears, fingers, and toes tingling ahead of tomorrow's "most important data item in the whole wide world ever" CPI print (and PPI and Retail Sales later in the week), stocks stumbled on muted volume, bond yields rose, the dollar and gold flatlined, but crypto kept going to the moon... Bitcoin face-ripped once again up to almost $73,000 - well above the prior record nominal high... Source: Bloomberg ...and getting very close to its inflation-adjusted high... Source: Bloomberg Ethereum also surged today, testing up towards $4100 for the first time since Dec 2021... Source: Bloomberg It appears crypto (Ethereum in this case) is following the resurgence in inflation expectations priced into the market... Source: Bloomberg US Equity markets were less enthused on the day, with Nasdaq and S&P red (but Small Caps worst). The Dow desperately tried to cling to green... NVDA is down almost 8% (close to close) over the past two days - its biggest two-day decline since October - and down almost 14% from its highs to today's lows... Source: Bloomberg VIX has been bid into this event-risk-prone week... Source: Bloomberg Treasuries were sold today with the short-end underperforming... Source: Bloomberg The yield curve (2s30s) bear-flattened, erasing Friday's payrolls steepening... Source: Bloomberg The dollar ended the day down (very very) marginally - for its 7th straight down day... Source: Bloomberg Gold mirrored the dollar, ending (very very) marginally higher... Source: Bloomberg Oil prices ended higher, with WTI finding support at $77, bouncing back above its 200DMA ($77.97) Source: Bloomberg Finally, back to crypto. Bitcoin is now 'larger' than Silver and Ethereum has overtaken WalMart in terms of Market Cap... Source: 8MarketCap Overall, the total crypto ecosystem's value, according to CoinMarketCap, is now closing in on the previous record high around $2.8 trillion.
Big-Tech Bounces But Hot Inflation Hits Bonds, Bullion, & Bitcoin TUESDAY, MAR 12, 2024 - 04:00 PM It seems Breakevens were on to something... Source: Bloomberg This morning's CPI was not at all what the narrative-peddlers wanted to see and that sent rate-cut expectations tumbling... Source: Bloomberg ...and the timing of the first cut extended (May is now off the table).... Source: Bloomberg Treasury yields were higher across the board with very little spread across the curve (up around 6bps on the day) Source: Bloomberg Of course, higher inflation, less dovishness in STIRs, higher bond yields are not a good sign for stocks... but that would be in a normal world. But as we highlighted overnight, this market was priced for worse... and so Nasdaq, S&P, and The Dow all surged higher along with bond yields... Source: Bloomberg ...just like it has been for months... Source: Bloomberg Small Caps did suffer... but all the other US majors were up large with Nasdaq leading... Mag7 stocks bounced strongly to pre-payrolls levels... Source: Bloomberg The pre-CPI anxiety priced into VIX was immediately eviscerated... Source: Bloomberg The dollar spiked higher on the CPI data but faded back some gains... Source: Bloomberg Bitcoin ended lower on the day, but well off its lows after puking down to yesterday's lows and bouncing off $69,000... Source: Bloomberg But once again we saw huge net inflows yesterday (over $500mm)... Source: Bloomberg Gold was clubbed like a baby seal, also erasing yesterday's gains... Source: Bloomberg Oil was marginally lower on the day, ahead of tonight's API inventory data... Source: Bloomberg Finally, in case you were under any impression that The Fed is still apolitical... Source: Bloomberg Powell and his pals are 'allowing' financial conditions to be at their loosest/easiest since before The Fed began tightening... and doing very little, if anything to push back against that market-driven narrative. How do you think this ends? And then there's this... four years ago today, it all started to go pear-shaped...
Bitcoin, Bullion, & Black Gold 'Hot'; Bonds, Banks, & Big-Tech 'Not' WEDNESDAY, MAR 13, 2024 - 04:00 PM Higher rates didn't matter to long-duration (tech) stocks yesterday, but apparently, absent macro data today, it does (bond prices and stock prices fell together)... Source: Bloomberg Mid-week, mid-month, and mid-way between earnings meant a pause in the euphoria today with Small Caps leading and Nasdaq lagging...until about 30 minutes before the close when a massive sell-program hit (ahead of tomorrow's PPI and Retail Sales?). The Dow and Small Caps managed to bounce back to modest gains while Nasdaq and S&P ended red... The sell program that suddenly hit at around 1525ET was the largest in over three weeks... Source: Bloomberg While the S&P 500 was down today, it has now been 266 days without a 2% daily drop... Source: Bloomberg Nasdaq reversed yesterday's relative outperformance to Small Caps... Source: Bloomberg A peak under the hood of the market today does reveal a more dynamic picture... Pro-cyclical sectors like Energy and Materials are outperforming today, while Tech is the worst performing subsector. Source: Bloomberg Notably, 5 of the Magnificent 7 are underperforming today and while they recovered from their lows, the Mag7 basket was lower on the day, finding resistance at the post-payrolls print open... Source: Bloomberg NVDA continues to lead in March and TSLA lag... Source: Bloomberg 'Most Shorted' stocks were insta-squeezed up to Friday's close at today's open, then faded back... Source: Bloomberg Bank stocks opened 'hot' but ended 'not'... on the day that The Fed's BTFP expires... Source: Bloomberg Treasury yields were higher across the curve once again (all up uniformly around 4bps), continuing the recent weakness... Source: Bloomberg One of today's biggest stories was the record net inflow into BTC ETFs yesterday - above $1BN for the first time since inception... Source: Bloomberg And that helped send Bitcoin to new record highs above $73,000, bouncing back hard from yesterday's CPI-driven dive... Source: Bloomberg Gold also rallied today, erasing yesterday's losses... Source: Bloomberg Oil prices also surged back today, up to Friday's pre-payrolls highs... Source: Bloomberg And worse still for President Biden, wholesale gasoline prices are soaring (another big draw today), which means pump prices are going to start rising very soon... Source: Bloomberg Finally, we're sorry but this doesn't get old... Source: Bloomberg There's only one way this ends... and it won't be with 'happy tissues'...
'Bad News' Is Bad News For Stocks, Bonds, Crypto, & Gold THURSDAY, MAR 14, 2024 - 04:00 PM A lof of macro bad news... Softer-than-expected Retail Sales, hotter-than-expected Producer Prices, Jobless Claims up (from dramatically revised-down levels)... sending rate-cut expectations lower... Source: Bloomberg ...and tomorrow's big OpEx gamma unclenching left the 'bad news is good news' narrative in the dust, wiping the smiles off many faces... Bond yields were higher - notably higher - with the long-end significantly underperforming on the day (30Y +10bps, 2Y +5bps)... Source: Bloomberg That left 10Y yields back up near their highs of the year... Source: Bloomberg And for the second day in a row - higher yields mattered for long-duration stocks... Source: Bloomberg Small Caps were monkeyhammered lower today (as were all the majors). Today was the biggest RTY underperformance relative to NQ in a month. A late-day panic-melt-up put some lipstick on an otherwise pg of a day... Banks were buggered, erasing all the post-NYCB bailout gains... Another down-day for NVDA!! That's 4 straight days without a new record high... Meme stocks and unprofitable tech were dumped... Source: Bloomberg 'Most Shorted' stocks tumbled once again (with no squeeze attempt at all)... Source: Bloomberg VIX topped 15 again today... Source: Bloomberg Stocks remain in a world of their own compared to Fed expectations... Source: Bloomberg The dollar soared today - its best day in a month - retracing all the pre-payrolls slide... Source: Bloomberg Bitcoin was clubbed like a bay seal back below $70,000 (with no bounce yet).. Source: Bloomberg After another big ETF inflow day yesterday... Source: Bloomberg Once again, it was the perps that spanked crypto lower... Ethereum was also hit hard today, back at two-week lows, below $3800 as the Dencun upgrade completed successfully... Source: Bloomberg The dollar's gains were gold's losses... Source: Bloomberg Oil prices extended their gains to the highest since Nov 6th (WTI back above $81)... Source: Bloomberg Finally, as you're re-mortgaging the house to pile into more levered bets on NVDA, one thing to bear in mind is that more companies have defaulted around the world since January than in any start to the year since the financial crisis, according to rating agency S&P Global. This year’s tally of corporate defaults stands at 29, the highest year-to-date count since the 36 recorded during the same period in 2009, according to S&P. There have been 17 defaults in the US, with eight in Europe. The average number of defaults for the same period in the years 2010-23 was slightly more than 16, according to the S&P data.