Daily Stock Market Recap per ZH

Dollar, Oil, & Gold Jump; Stocks & Bonds Dump As 'WW3-On'-Risk Reignites
MONDAY, APR 15, 2024 - 04:00 PM

It was all looking so shiny and BTFD-y - Iran had sent some missiles towards Israeli folks; 'allies' blocked 99% of them; and Israel appeared unlikely top respond 'imminently'. Stocks were up, crypto was up, oil was down as 'WW3-off' meant risk-on.

But, then the headlines just kept coming from the MidEast, reigniting fears that things were about to escalate quickly once again, sending oil, gold, and the dollar roaring higher.



Add to that the fact that 2Y yields surged up towards 5.00% (after strong nominal retail sales) and 'risk-off' rapidly spoiled the overnight dip-buyers' fun.

Specifically, 5.00% has not been a fun place for S&P 500 multiples in the last couple of years...



Source: Bloomberg

...and it appears the same it true for now with the majors reversing solid early gains into serious weakness as the day unfolded. Nasdaq and Russell 2000 were the day's biggest losers, swinging from almost 1% gains to 1.5% losses by the close...



This was the biggest two-day drop for the S&P 500 since March 10th 2023 (SVB)...



Interestingly, 0-DTE traders were aggressively buying calls into this plunge in stocks (as it appeared they forgot that the buyback desks are currently in blackout and unavailable to rescue them)...



Source: SpotGamma

Banks remain very mixed with Goldman soaring today after earnings but JPM still holding big losses since its Friday earnings...



Source: Bloomberg

'Most Shorted' Stocks staged the ubiquitous squeeze attempt at the open but were sold pretty consistently from that point on -to close at their lowest in over two months...



Source: Bloomberg

It wasn't just the small-stocks that got hit. The basket of MAG7 stocks puked pretty hard, echoing the Thursday glitch from the week before last...



Source: Bloomberg

Bonds were ugly, but before we go there, we note that stocks did end-up playing catch-down to their reality today...



Source: Bloomberg

Treasuries were sold across the board today with the long-end hardest hit (30Y +11bps, 2Y +4bps)...



Source: Bloomberg

...which implicitly bear-steepened the yield curve (2s30s), erasing all of the CPI flattening...



Source: Bloomberg

The dollar roared back up to its highest since Nov 13th - this is the biggest 4-day gain since early Feb 2023...



Source: Bloomberg

Crypto continued its roller-coaster ride, surging overnight (HK BTC ETFs?) back up to $67,000 (erasing the weekend's plunge on the Iran attack on Israel) and then falling in line with Nasdaq as the equity selloff accelerated.



Source: Bloomberg

Oil prices roared back from earlier weakness with Brent back above $90 and WTI topping $85



Source: Bloomberg

Gold dropped early on after the retail sales print, but then ripped back as war-premium was added back...



Source: Bloomberg

Schwab Global Investment Stratgeist Jeff Kleintop noted gold's extraordinary 'war' gains in a post on X:

Gold has been soaring with a more than 14% gain so far this year. Prices hit an all-time high of $2,448.80 per ounce intraday on Friday as investors braced for a further escalation in the Middle East - a far larger gain than what usually accompanies a geopolitical event.



A few reasons beyond geopolitics:

• Investors remain wary of lingering inflation in the US and may be seeking gold as a hedge.
  
  
• The even stronger 20% move up in silver this year, the most AI chip exposed metal, may also be helping.
  
  
• India's economy continues to boom, boosting gold jewelry demand in the world's top gold consuming country.
  

Finally, don't forget it's Tax Day today...



Source: Goldman Sachs

Which seasonally is the low of the month...

 

Dollar & Yields Soar As Fed-Fears Trump WW3-Worries
TUESDAY, APR 16, 2024 - 04:00 PM

Mixed data overnight out of China (GDP beat, Retail sales & Industrial production miss) was matched by an equally divergent day of macro in the US with ugly housing data but strong industrial production, but once again the markets were ping-ponged by Fed fears (rate-cuts-off - Fed Vice-Chair Jefferson and Powell both sang from the same 'higher for longer' hymnsheet with the latter finally admitting that "recent [inflation] data have clearly not given us greater confidence and instead indicate that is likely to take longer than expected to achieve that confidence") and MidEast tensions (WW3-on, but not yet - Israeli war cabinet plan is 'keep Iran guessing').

All of which pushed rate-cut expectations lower in the US...



Source: Bloomberg

In fact, the majority of investors now see 2 rate-cuts this year...



The odds of a June rate- cut have tumbled to just 15%...



Source: Bloomberg

...and pushed the 2Y yield back above 5.0% for the first time since November...



Source: Bloomberg

Treasury yields were 5-6bps higher overall today (together) but on the week, for now, the short-end is slightly outperforming...



Source: Bloomberg

In fact, it's been a wild ride for all yields...

This was posted last Dec when the 10Y was 3.84%. It is now 4.66% https://t.co/rsXhk7MpqV

— zerohedge (@zerohedge) April 16, 2024
Stocks were volatile today amid the surge in yields and Powell's comments, with Small Caps lagging in the red along with a small loss for the S&P and Nasdaq unch. The last minute saw a big sell program hit to ruin most people's day...



Goldman's trading desk summed it up as follows: "Overall feels quiet though market volumes look elevated...skewed around -3% better for sale with LO’s leading more of the supply. "

MS rallied on earnings but BAC did not, with C catching down to GS...



Source: Bloomberg

MAG7 stocks went nowhere today...



Source: Bloomberg

Month-to-date, there seems like differentiation between what's being sold - Defensives and Cyclicals both down equally...



Source: Bloomberg

The dollar was the only other notable mover - rising for the fifth straight day to fresh highs since November - forming a 'Golden Cross' (50DMA crossing above the 200DMA)



Source: Bloomberg

Oil ended unchanged...



Source: Bloomberg

Gold managed small gains...



Source: Bloomberg

...ending at a new record closing high...



Source: Bloomberg

Crypto was oddly quiet...



Source: Bloomberg

Finally, Joe and Jerome have a problem...



Source: Bloomberg

Get back to work Mr. SPR!

 

Crude-Crash Saves Stocks From CTA-Slaughter; Bonds Bid But Bitcoin Battered
WEDNESDAY, APR 17, 2024 - 04:00 PM

A volatile day for markets (relatively speaking) with crude and crypto the high- low-lights.

Goldman's trading desk (Lee Coppersmith) noted that for the first time all year, it feels like the market is starting to question the strong growth narrative on the back of weaker earnings this AM: ASML -8% spilling into all Semis; JBHT a bellwether transport -7.5% and KNX -3.5% cut their forecast; Industrial REITs (GSSIREID) -3.2% on back of a neg print in the space. All of this weighing on the Momo trade (GSPRHIM) -2%.

Stocks were sliding early on after the cash open but at around 1055ET the following headline hit: STRIKING IRAN'S NUCLEAR FACILITIES 'ON THE TABLE', SAYS EX-MOSSAD INTELLIGENCE CHIEF - SKY NEWS which took stocks down aggressively.

But that was reversed higher as oil prices plunged...



Source: Bloomberg

Oil was drifting lower early on amid a larger crude stockpile build but then Maduro and SPR headlines hit and the price plummeted to three-week lows...



Who could have seen that coming?

Then around 1440ET stocks went vertical.. because, frankly, no idea at all... and then reversed it just as fast! An almost perfect redux of what we saw yesterday around the same time...



Notably, the driver for that spike was a sudden surge in 0-DTE call-buying...



Source: SpotGamma

That did not last long - just like yesterday, and by the close Equities were back near the lows of the day with Nasdaq and Small Caps the biggest laggards. The S&P was down around 0.5% on the day and The Dow was unable to hold unchanged...



The bounce in stocks - thanks to plunging crude prices - rescued stocks critical CTA thresholds that should remain on everyone's radar: medium term threshold = 4880 (~2.7% below spot). Goldman warns this would trigger >$50bn in SPX supply over 1 month. As a reminder, the short-term CTA sell threshold was 5,135 yesterday.



One more thing before we leave equity-land, VIX ended the day unchanged, while stocks were down quite notably - are we finally seeing some call-unwinds?



Source: Bloomberg

Oddly, gold also started to tumble around the same time as oil plunged...



Source: Bloomberg

Treasuries were very well bid today with a strong 20Y auction further emboldening buyers this afternoon. The belly of the curve outperformed, with 5Y -9bps, 2Y and 30Y -5bps...



Source: Bloomberg

The 2Y Yield thoroughly rejected 5.00% for now...



Source: Bloomberg

While yields tumbled, rate-cut expectations were basically unchanged...



Source: Bloomberg

The dollar dropped for the first time in six days - its biggest drop since March 7th...



Source: Bloomberg

But the big move on the day... was in crypto which puked hard along with stocks, losing its $60k handle briefly before bouncing back a bit...



Source: Bloomberg

Ethereum outperformed bitcoin on the day, erasing most of its big relative puke last Friday/Saturday...



Source: Bloomberg

Finally, as we detailed earlier, the market has seen more Hindenburg Omens than in any year since the peak of the



Source: Bloomberg

'Probably nothing!'

 

Bitcoin & Bullion Bid As Hawkish FedSpeak Hammers Stocks & Bonds
THURSDAY, APR 18, 2024 - 04:00 PM

Stocks had limped higher all night after four straight days lower but into the cash open, Fed's Williams ruined the party by admitting that while rate-hikes are not 'his baseline' they are possible if the data warrants. But that dip was bought aggressively after the open.

Stocks were spooked a little by the 'no landing' narrative screaming from Philly Fed's data (showing HL improvement but soaring prices-paid, and despite the weakest workweek since COVID lockdowns, expectations for prices are at multi-year highs...), boringly (and mysteriously) solid jobless claims, and benign home sales...



Source: Bloomberg

But then more hawkish FedSpeak wrecked the ramp-fest as Bostic warned The Fed "won't be in a position to cut rates until the end of the year."

That leg pushed Nasdaq down to break its MT CTA 'sell' threshold (17,569) and things got interesting. A late-day bid put some lipstick on an otherwise pig of a day, but it couldn't hold. The Dow closed green, Nasdaq was the biggest loser, with S&P and Small Caps red...



S&P down for five straight days hasn't happened since October 2023 (just ahead of The Fed 'Pivot')...



Source: Bloomberg

Albeit much smaller, we once again saw a pump-n-dump around 1400ET...



Source: Bloomberg

Additionally, as @Ryan Detrick noted on X:

Since 1990, I found 20 other times the S&P 500 opened green, but eventually closed red three consecutive days. It just happened today.



Negative returns on avg a month later and up only 55% of the time.

Could this be a subtle clue the bulls are losing control?

Having broken down through the ST CTA 'sell' threshold earlier in the week, today saw Nasdaq lose the MT CTA 'sell' threshold (17,569) and chop (support at 17462 (100DMA))...



As Goldman's trading desk confirmed " a combo of continued hawkish fed and strong macro data....testing some key levels too, with 2y notes right around 5%, and would think as we approach the weekend, there's likely gonna be a push/pull between geopolitical weekend risk premium vs supply next week."

“As a strategist, it is an uncomfortable place to be to have a target below the market, but our work continues to lead us in the same direction,” Evercore ISI’s Julian Emanuel said in an interview.



“Valuations are very, very taxing and the forward returns at these valuations tend to be subpar.”

The average pullback in a non-recession year is 13%, Emanuel added, pointing to stickier cost pressures and monetary policy that is “more of a question mark” as catalysts for further declines.

“Part of the story that got us — particularly in the momentum stocks — as overextended as we were at peaks in March, was that the public was an incredibly enthusiastic player in equity markets who saw some record flows,” Emanuel said.

“We now think this is an environment where people are going to temper their optimism and do a little bit of reset.”

Indeed, the US majors are suffering their biggest drawdowns since Sept 2023 (right before the Fed Pivot)...



Source: Bloomberg

VIX is now near its 6m high as markets continue to grapple with geopolitical tensions in the Middle East, and credit markets have started to crack...



Source: Bloomberg

But, while equities were not pretty, bonds were just as ugly with yields up 6bps across the short-end and belly with the long-end modestly outperforming (30Y +4bps)...



Source: Bloomberg

...with 2Y yields pushing back up to 5.00%...



Source: Bloomberg

For some brief moments today, May rate HIKES were more likely than CUTS...



Source: Bloomberg

...and 2024 rate-cut expectations closed at a new low with just 38bps priced-in...



Source: Bloomberg

After a couple of hard days, Bitcoin extended yesterday's bounce off $60,000 ahead of what is expected to be the 'halving' tomorrow...



Source: Bloomberg

Gold also gained on the day, back above $2390 intraday...



Source: Bloomberg

...even as the dollar rallied...



Source: Bloomberg

Oil prices ended unchanged on the day, recovering from an early puke to an $81 handle (WTI)...



Source: Bloomberg

Finally, the "no landing" narrative is winning...



Source: Bloomberg

...and as Nomura's Charlie McElligott pointed out "'no landings' lead to 'hard landings'".

 

Tech Wrecks As FedSpeak F**ks FOMO-Followers; Gold Hits New Record High
FRIDAY, APR 19, 2024 - 04:00 PM

Well, that escalated quickly...


In a week characterized by data supporting 'no landing' from a growth perspective and disappointment from a disinflation perspective...



Source: Bloomberg

This was reinforced by FedSpeak that was without exception - hawkish!

As they suddenly realized that all that 'pivot' optimism did nothing but dramatically ease financial conditions and fuck their 'best laid plans' for a rate-cut and soft landing...



Source: Bloomberg

Even the dove-est of the doves - Austan Goolsbee - bent the knee today:

“So far in 2024, that progress on inflation has stalled,” Goolsbee said Friday in remarks prepared for an event in Chicago.

“You never want to make too much of any one month’s data, especially inflation, which is a noisy series, but after three months of this, it can’t be dismissed.”

“Right now, it makes sense to wait and get more clarity before moving,” Goolsbee said.

And sure enough, rate-cut expectations for 2024 and 2025 have both plunged this week...



Source: Bloomberg

...and that has finally started to weigh on investors' risk appetites (that's a long way to catch down to reality)...



Source: Bloomberg

Most traders thought the worst was over last night as the panic-puke in futures was BTFD'd back to unchanged ahead of the cash open, but then the selling started (on Nasdaq) and never really stopped. On the day, Nasdaq was down over 2% while The Dow managed to gain 0.5%. Small Caps were almost unchanged by the end of the day with the S&P lagging...



But, all the majors ended the week red (with The Dow desperately trying to get back to even). Nasdaq was down over 5.5% on the week! S&P and Small Caps down around 3%...



Nasdaq is down for six straight days for its biggest weekly drop since Nov 2022, breaking below its 100DMA as CTA 'sell threshold's were crosed. Goldman's trading desk noted:

"The NDX now pacing for its worst week in over a year (down 6 of 7 weeks) as a complicated technical backdrop (CTAs, lower retail participation, NDX now testing 100-dma, seasonality), sideways earnings revisions thus far (ASML, TSM and even Sheridan’s NFLX EPS revisions were only 1-2% last night), a tense geopolitical backdrop (overnight headlines) and elevated positioning are testing conviction into a busy week of earnings … some debate if this all ‘helps’ the set-up into FAAMG prints or if the market is just read to ‘take a breather’ and sell any good news..."

The MAG7 basket broke below its 50DMA this week - the first time since October, when The Fed 'pivoted' and save the world. The market cap of the MAG7 is now down over $1 Trillion from its highs a week ago...



Source: Bloomberg

AI Leaders crashed relative to firms 'at risk from AI', plunging to their lowest in two months...



Source: Bloomberg

Of note is that the AI Leaders are perfectly back to their prior peak in 2021 (which was driven by chip demand for crypto mining and COVID disruptions), breaking down to the 100DMA and through the medium-term uptrend...



Source: Bloomberg

Semis were slaughtered this week...



Source: Bloomberg

NVDA plunged 10% today back to two month lows, closing below its 50DMA for the first time since Nov 2023...



... now in bear market (down over 22% from its highs) and the CSCO analog doesn't look so crazy anymore...



Source: Bloomberg

Interestingly, amid all this carnage, banks had a decent week with WFC and MS outperforming (JPM still lagging from its drop on last Friday's earnings)...



Source: Bloomberg

The Russell 2000, Nasdaq, and Dow are all back below their 100DMA, and the S&P 500 is pushing down towards its 100DMA (having blow thru the CTA 'sell' thresholds)...



Goldman's trading desk warns, it could get worse: "CTA supply is building – our team’s work shows this group sold $25B globally this week ($9B in SPX) with next week expected to bring another $27B globally (and $10B SPX) in a flat tape scenario. Reminder the medium term threshold (aka most important) level is 4886 – less than 100 handles away from spot."

Next week brings 43% of SPX set to report earnings highlighted by META/MSFT/GOOGL (aka $6.1T of mkt cap) reporting on Thurs night...on the macro front, key reports include 1Q GDP on Thurs & March PCE on Fri.

VIX soared this week to six-month highs, and credit markets also - finally - started to crack...



Source: Bloomberg

Treasury yields ended the week higher, but not before plunging overnight on a flight-to-quality bid as Israeli missiles hit Iran, taking yields lower on the week. By the close of the week, the belly slightly underperformed but yields were all up by around 8-10bps....



Source: Bloomberg

The dollar rallied for the second straight week, hitting its highest since early Nov 2023 last night on the mid-east attacks before sliding back...



Source: Bloomberg

Heading into today's 'halving' - likely to occur within the next few hours - Bitcoin was down, puking once again overnight on geopolitical chaos like it did last weekend, only to see buying come right back (after testing below $60,000 for the first time since early March)...



Source: Bloomberg

5.00% remains a key level for the 2Y Yield...



Source: Bloomberg

Despite two major attacks in the Middle East, oil prices ended lower for the second week in a row (well WW3 hasn't started yet). Some knock-on effects from an evaporation of hope for demand-sponsoring rate-cuts also weighed on sentiment as WTI



Source: Bloomberg

Spot Gold prices spiked overnight on the Israel attack, pulled back, then rallied up to $2400 once again to close at the highs...



Source: Bloomberg

Gold closed the week at a new record high...



Source: Bloomberg

Silver soared 3% on the week to new cycle highs (its highest since Feb 2021)...



Source: Bloomberg

Silver has been broadly speaking outperforming gold in recent weeks after peaking at a gold-to-silver ratio of around 92x in January, it is ow down to 83 (still well above the 65x average since 1980... implying silver remains 'cheap' to gold)...



Source: Bloomberg

...and then there's Cocoa...



Source: Bloomberg

And finally, are bank reserves at The Fed still the driving force for reality?



Source: Bloomberg

We saw the reality check from Aug-Oct last year; are we about to get another?

 

Gold Hammered As Short-Squeeze Saves Stocks Ahead Of Micro/Macro Storm This Week
MONDAY, APR 22, 2024 - 04:00 PM

The "calm before the storm" of earnings and big macro this week (and no WW3 this weekend) was all the algos needed to ramp stocks during the US cash session after being reminded that the buyback-blackout period is almost over...

Stocks had fallen from up around 0.6% at the cash open to unchanged by the European close... and then the algos all remembered, buybacks are coming back soon to save the world and stocks went vertical... together... with everything up 1.5% at the highs before the 1430ET margin-calls and the squeeze ammo ran out, leaving stocks fading into the close (but still a solid green day after some recent pain).



...as a basket of the 'most shorted' stocks exploded higher (biggest short squeeze in a month). We not note that the squeeze stalled at an interesting level...



Source: Bloomberg

TSLA was twatted again - seventh straight down-day (equal longest-losing-streak ever). The last two times it dropped seven straight days, it ripped back (Sep 2018, +50% in next two months; Dec 2022, +100% in next two months)...



Source: Bloomberg

Interestingly Goldman's trading desk noted overall activity levels are flat vs. the trailing 2wk avg, with mkt volumes down -8% vs. the 10dma

• For the 2nd straight session we lean better to buy at +6.5% overall – this is our highest buy skew since 3/1/24
  
  
• HFs are a massive driver of that demand tilting +22% better to buy, this ranks 98th %-ile & backs up last week’s PB report highlighting single stocks saw the largest notional long buying in over a year. HF demand tils towards Fins, Cons Disc, Indust, Info Tech & HCare with modest supply in Materials, Comm Svcs, Staples & REITs.
  
  
• LOs are -5% better for sale which continues their theme from Friday. Supply is most concentrated in Info Tech, Fins & Industrials with modest demand for Staples, REITs & Cons Disc.

Equity vol markets are primed for the next week's action though...



Source: Bloomberg

Treasuries were relatively quiet with an overnight sell-off but bid during the day session with the short-end outperforming (2Y -2bps, 30Y unch)...



Source: Bloomberg

Once again, 5.00% was resistance for the 2Y yield...



Source: Bloomberg

The dollar roller-coastered a little today ended unch...



Source: Bloomberg

Bitcoin extended the weekend's rebound (post-halving), testing back up towards $67,000...



Source: Bloomberg

Gold, on the other hand, was clubbed like a baby seal - after rising for 13 of the last 17 days, today saw its biggest daily loss since June 2022. But that drop only pulled it back to one-week lows...



Source: Bloomberg

Oil prices chopped around all day with WTI hovering at $82 and ended unchanged...



Source: Bloomberg

Finally, there's this... market liquidity in stocks...



...and bonds...



...is dismal - and in a week full of major macro catalysts (e.g. PCE) and massive micro events (MAG7 earnings), that will likely mean some serious gaps (and with gamma so negative, things could get violent, one way or another).

 

Bonds & Stocks Bid As 'Bad News'-Buyers Trump CTA-Sellers
TUESDAY, APR 23, 2024 - 03:19 PM

'Bad news' was certainly good news today as 'soft' survey data showed the US Manufacturing sector dropping back into contraction (<50) and Services sliding too (with pries rising), sending US MAcro Surprise dats slumping..



Source: Bloomberg

That gave 2024 rate-cut odds a small lift...



Source: Bloomberg

..which seemed all the markets wanted to be able to extend yesterday's big squeeze as stocks soared from the open... The Dow was the laggard on the day with Small Caps the biggest gainer, but all the majors ended green...



0-DTE traders faded the opening ramp aggressively but were force to cover as the afternoon wore on. Notably the positive delta flow from 0-DTE did nothing to boost stocks suggesting there were 'fundamental' sellers offsetting that flow...



Source: SpotGamma

Yesterday's 'short squeeze' was dwarfed by today's extending the gains from yesterday's lows in the 'most shorted' basket to today's highs to over 6%... - the biggest two-day squeeze since late-Feb. We do note that in context, this is not so impressive, but every trend starts as a reversal...



Source: Bloomberg

MAG7 stocks rallied again, but were unable to get back to even on the week and started to run out of steam into close ahead of TSLA's earnings...



Source: Bloomberg

Continuing the trend of the last two days, Goldman's trading desk noted that hedgies were buying and long-only's were selling:

• Our floor is skewed 6% better to buy overall with HFs driving most of our flows. The HF demand is a function of Info Tech Buying (again... mix of LC Tech, semis, select SW), Discretionary demand (mostly e-commerce), Industrials, Comms Svcs, Energy, and Staples... Hcare is the only Sector being sold by HFs. Short Ratios are moderate to low today
  
  
• LOs are selling Info Tech (pockets of SW), Energy selling, Comm Svcs, Fins.
  

Additionally, they highlighted the following chart showing the number of Nasdaq components below their 50DMA was at the same levels as the October 2023 swing lows as we rip here...



Source: Bloomberg

Notably, Goldman's 'Vol Panic' Index is off the highs... but not by much (ahead of thee big event risk this week)...



Source: Bloomberg

Treasuries were mixed by the close (with 30Y +1bps, 2Y -5bps), but all well off their overnight (pre-bad-news) high yields of the day...



Source: Bloomberg

Once again, 5.00% was too much for the 2Y yield to handle...



Source: Bloomberg

The yield curve steepened dramatically, off pre-CPI levels from last week...



Source: Bloomberg

The dollar dived on the (dovish) bad news, back to Thursday's lows...



Source: Bloomberg

USDJPY just couldn't get it together. Twice they tried to rally the JPY against the USD and twice they failed (just look at last Friday too)... Jawboning is just not doing it guys...



Source: Bloomberg

Gold ended the day basically unchanged having recovered from yesterday evening's puke...



Source: Bloomberg

Bitcoin also ended the day unchanged, around $67,000...



Source: Bloomberg

Oil prices traded a perfect 'V' today, dumping overnight *WTI testing an $80 handle) before finding support and ramping up above $83...



Source: Bloomberg

Finally, tonight brings us TSLA earnings... 0-DTE traders were buying into the close...



Source: SpotGamma

...and the vol market is ready!!



Source: Bloomberg

...implying a one-day move in stocks of +/-8%-plus!

 

Yen Dumped, Yield-Curve Pumped, Bonds & Bitcoin Slump
WEDNESDAY, APR 24, 2024 - 04:00 PM

Quiet macro day with Durable Goods Orders looking like a beat - but only because of sizable downward revisions - as orders and shipments are actually down on a YoY basis.



Source: Bloomberg

But stocks were messy with an opening bid immediately squelched and post-EU-close ramp faded into the US close. Small Caps were the day's laggard as Nasdaq outperformed while The Dow and S&P desperately tried to get green...



Nasdaq and The Dow got back above their 100DMAs while Small Caps cannot hold above theirs...



Goldman's Chris Hussey pointed out that, despite an uptick in rates today (yields on 10-year Treasuries are up 6bp to 4.66%), yield sensitive sectors like Tech, Utilities, and Real Estate are outperforming.

On the flip side, Industrials are lagging on the back of particularly weak earnings in Transports.



Source: Bloomberg

And stepping even further back, 9 of the 10 worst-performing stocks in the S&P 500 today reported results after the close yesterday, or before the open this morning -- highlighting how earnings are driving stocks amidst a macro vacuum (at least for today).

Volumes were muted today once again, according to Goldman's trading desk, as they noted once again that hedge funds were slightly better to buy (buying Indust., Info Tech, Disc.), Long-Onlys slight for sale (selling Mats, Disc.,).

TSLA had a big day - its best since Jan 2022 - after earnings last night (that reaffirmed its strategy wasn't too crazy)...



The basket of MAG7 stocks ended unchanged after a strong open thanks to TSLA's gains as traders await META's earnings after the bell...



Source: Bloomberg

Treasury yields were higher across the board today (with the long-end underperforming) as the following two-day chart shows, the 10Y & 30Y yields are back above pre-PMI levels from yesterday while 2Y is at the lows from yesterday...



Source: Bloomberg

The yield curve (2s30s) steepened dramatically once again, now up 14bps in two days, back to one-month highs (still inverted)...



Source: Bloomberg

The dollar ended modestly higher on the day, pulling back during the US session from overnight gains...



Source: Bloomberg

Yen was slammed (again) as traders continue to call The BoJ's interventionist bluff...



Source: Bloomberg

...as JPY is now well below the last intervention threshold (back at its lowest in 34 years)...



Source: Bloomberg

Bitcoin took another kicking today, tumbling back to a $63,000 handle...



Source: Bloomberg

...once again driven by extreme selling pressure from the perpetual futures market...



Amid all the excitement today, gold ended unchanged and traded in a narrow range...



Source: Bloomberg

Crude prices slipped back from yesterday's surge despite a big crude draw...



Source: Bloomberg

Finally, Goldman's Dominic Wilson and Kamkshya Trivedi highlight how geopolitical tensions and stickier than expected US inflation prints have transitioned markets to trading more of a 'policy shock' than a 'growth upgrade'...



...a development that is making directional trades trickie.

 

Stagflation Signal Slams Stocks & Bonds; Bullion & Black Gold Bid
THURSDAY, APR 25, 2024 - 04:00 PM

Overall, US macro data has suddenly started to disappoint (not the least of which was today's ugly GDP print)...



Source: Bloomberg

But, while 'bad news' for the economy has recently been 'good news' for stocks (enables an easier Fed), today's data 'punched that narrative in the face' with Core PCE price index in Q1 soaring considerably more than expected. And here's the problem - inflation expectations are surging at the same time as growth expectations are sliding - the nemesis of every central banker is upon us: STAGFLATION.

It's been a theme all year but recently has become so much more pronounced that not even the best 'spinners' can ignore...



Source: Bloomberg

And that sent rate-cut expectations plummeting to cycle lows (and took June completely off the table for a cut)(



Source: Bloomberg

Combine the ugly macro data with some ugly micro (META) and Goldman's trading desk noted overall flow was skewed better to sell:

LO’s driving more of the supply here with a -3% sell skew. An outlier is that we are seeing very real demand in AAPL from both HF and L/O community. META seeing very little defense from L/O . Overall activity from the group feels muted.

In the HF community we are slightly better to buy. Very notable that in macro products, short ratios are elevated to 75%. We are seeing cover buying in the Tech.

Overall, the majors were all lower close to close, but well off their knee-jerk lows from the GDP/PCE data... The Dow was the laggard on the day (with IBM & CAT the biggest points drag). The rest of the majors were all equally pummeled (though we do note that Nasdaq is still up over 2% on the week)...



The initial puked slammed The Dow and Nasdaq back below their 100DMAs and the ramp-fest back up to that critical technical level, but that couldn't hold into the close...



As you'd expect, given META's meltdown, the basket of MAG7 stocks was ugly out of the gate - and ended red - but staged a decent comeback during the day...



Source: Bloomberg

And 'most shorted' stocks followed a similar trajectory - squeezing higher after an ugly open...



Source: Bloomberg

Tech stocks overall ended marginally lower, Energy outperformed while Real Estate and Healthcare lagged...



Source: Bloomberg

Treasuries were clubbed like a baby seal on the macro data and pulled back only modestly during the day with the short-end and belly underperforming the long-end...



Source: Bloomberg

2Y Yields broke above 5.00% AGAIN... but were unable to close above it AGAIN...



Source: Bloomberg

The dollar spiked immediately higher on the GDP data, but as the day wore on, the dollar bled back its gains to end lower on the day...



Source: Bloomberg

Gold prices rallied on the day, shrugging off the vol in the dollar...



Source: Bloomberg

Bitcoin managed gain on the day after overnight weakness...



Source: Bloomberg

Crude prices managed solid gains after early weakness with WTI rallying back up towards $84...



Source: Bloomberg

Finally, we are down to the vinegar strokes of the week with GOOGL & MSFT tonight, and PCE tomorrow...



Source: Bloomberg

...and don't forget The Fed next week where no action is expected, but the words may speak even louder this time.

 

Micro Trumps Macro As Stocks Shrug Off Week Of Higher Inflation, Higher Rates, & Lower Growth
FRIDAY, APR 26, 2024 - 04:00 PM

It was an ugly macro week...



Source: Bloomberg

...and worse still, 'growth' surprises disappointed significantly while 'inflation' surprises surprised to the upside significantly...



Source: Bloomberg

Soaring inflation expectations sent rate-cut expectations to new cycle lows...



Source: Bloomberg

...pushing yields higher across the board (led by the long-end)...



Source: Bloomberg

But, stocks didn't care about any of that because a handful of mega-cap tech stocks' earnings were awesome (except META) - and that's what matters (for now)...



Source: Bloomberg

Nasdaq outperformed, up 4% on the week (its best week since the start of Nov 2023). The Dow was the laggard on the week but all the majors had a decent week...



Not the best week for some observers...

This week saw the biggest short-squeeze since the first week of March...



Source: Bloomberg

And the basket of Magnificent 7 stocks soared over 5% this week, its best week since the first week of November (Fed Pivot) - but it was noisy as TSLA surged, META tumbled, and then GOOGL/MSFT lifted the lid...



Source: Bloomberg

TSLA pushed back above $500BN market cap this week and Alphabet soared above $2TN market cap for the first time ever...



Source: Bloomberg

Tech and Discretionary outperformed on the week with Energy and Materials lagging (but all sectors ended the week green)...



Source: Bloomberg

5.00% remains the Maginot Line for the 2Y Yield...



Source: Bloomberg

Interestingly, the dollar ended the week practically unchanged - despite a lot of noise...



Source: Bloomberg

...despite the seventh straight week of declines in the yen vs the dollar as it appears the BoJ and MoF have given up...



Source: Bloomberg

Gold was dumped this week - its worst week since the start of December 2023. Spot prices did find support at $2300 though...



Source: Bloomberg

After two down weeks, oil prices rallied this week, with WTI back above $83...



Source: Bloomberg

Finally, intraday volatility has picked up dramatically in the last couple of weeks...



Source: Bloomberg

...as the distribution of possible rate outcomes has picked up significantly. Don't forget next week's QRA and FOMC as Yellen and Powell get 'back to work'.

 

Yen & Yellen Yank Stocks, Bonds, & The Dollar On Otherwise Quiet Day
MONDAY, APR 29, 2024 - 04:00 PM

A quiet micro and macro day was dominated by Treasury's QRA news (which spoiled all the fun by coming in less than some hyperbolic expectations), and Japanese intervention the FX markets.

Before the QRA headlines, Goldman's trading desk noted that overall activity levels were down -19% vs the trailing 2 weeks with market volumes down -7% vs the 10dma, and added that "our floor is dead-paired buy vs sell, but HFs are net sellers and LOs are net buyers."

After the QRA, activity picked up... to the downside.

And that prompted a rapid down-draft in stocks shortly after 3pmET (led by Small Caps which had been outperforming). However, that didn't last long as traders quickly remembered that the buyback window reopens later this week. All the majors ended higher on the day with Small Caps leading and the S&P and Nasdaq lagging. By the last few minutes, all the QRA anxiety was long-gone and stocks were surging back towards the highs...



The Dow and Russell 2000 both found support at their 100DMA on the initial QRA dip and bounced right off it...





'Most Shorted' stocks dumped on the QRA news, after extending the large two-day squeeze from Thurs/Fri. The basket still ended green on the day...



Source: Bloomberg

TSLA made headlines with news from China that the carmaker's full-self-drive will be cleared for us, rallying 15% for its best day in three years...



Yields also kneejerked higher on the QRA news but not enough to ruin the day, with yields down 2-4bps across the curve (with the belly outperforming)...



Source: Bloomberg

By the end of the day, yields were at the low of the day and stocks at the high of the day...



Source: Bloomberg

Elsewhere the reaction was muted as traders tried to figure out what the QRA news meant.

The dollar index was dominated by Japanese officials fiddling while Tokyo burns...



Source: Bloomberg

...after yen plunged overnight to its 1990 lows and the very visible hand stepped in...



Source: Bloomberg

Did Japan's "benign neglect" come to an end?



Source: Bloomberg

Gold was magnificently unmoved by the Borrowing and BoJ buggery, ending very modestly lower...



Source: Bloomberg

Oil ended lower on the day, legging down three times, interestingly in tune with Japan's intervention...



Source: Bloomberg

Bitcoin was lower today after a modest rollercoaster over the weekend. Notably BTC found support at $62,000 and bounced this afternoon...



Source: Bloomberg

Finally, fear is being rapidly rinsed out of the markets once again...



Source: Bloomberg

...and financial conditions will start easing...



Source: Bloomberg

...too much (again) for Powell's liking (even in an election year)

 

Gold Flowers Amid April 'Stagflation' Showers; Stocks, Bonds, & Crypto Crushed
TUESDAY, APR 30, 2024 - 04:00 PM

The final day of April was really ugly: ECI way hotter than expected (spooked markets), Case-Shiller home prices soared far more than expected (spooked markets more), Chicago PMI puked (while prices paid increased), Consumer Confidence crashed, and Dallas Fed Services slumped... all of which left stocks, bonds, gold, crude oil, and bitcoin all languishing into month-end while the dollar rallied.

Stocks puked into the month-end close today ahead of AMZN earnings...



April was a disaster from a macro perspective...



Source: Bloomberg

...with soft survey data collapsing while 'hard' data limped modestly higher...



Source: Bloomberg

...and worse still growth surprises slumped as inflation surprises soared - screaming stagflation so loud no one could ignore it...



Source: Bloomberg

Against the backdrop of US 10Y yields up ~45 bps in the month of April...



Source: Bloomberg

... and the market taking another rate-cut off the board...



Source: Bloomberg

...price action in April is perhaps not overly surprising with Equities broadly lower, albeit, with NDX / Quality / Mag7 continuing to outperform.



Source: Bloomberg

Goldman's Peter Callahan notes that since 2006, the S&P 500 has fallen by an avg of 4% when real yields rose by more than 2 stdev in a month.

April was the first down-month for stocks since The Fed Pivot (Oct 2023). This was the worst month for The Dow since Sept 2022. Nasdaq suffered its worst month since Sept 2023.

Interestingly, while US majors and sectors were red (broadly speaking) in April, Chinese Internet stocks soared back to life (+9.5% vs US MegaCap -2%)...



Source: Bloomberg

Sectors were very mixed in April with Energy and Utilities outperforming (the latter on AI energy use, since its typical relationship to rates decoupled) and Real Estate lagged (along with Tech)...



Source: Bloomberg

The basket of Magnificent 7 stocks saw red in April for its first monthly loss since October and worst monthly loss since September. The last week has been tempestuous to say the least as TSLA (win), META (lose), MSFT and GOOGL (win) all hit...



Source: Bloomberg

Still, stocks have a long way to catch down to the new reality priced into the short-end of the bond market...



Source: Bloomberg

As we noted above, the TSY curve was up relatively uniformly on the month, but perhaps most notably was the 2Y yield which tested 5.00% numerous times and broke out today...



Source: Bloomberg

One more notable event in April was the tightening of financial conditions (admittedly only marginally), but definitely more what The Fed wants relative to the extreme 'easiness' that had been priced in after Powell's pivot...



Source: Bloomberg

The dollar rallied for the fourth month in a row with the big gains coming mid-month....



Source: Bloomberg

Despite taking a battering today, Gold managed solid gains on the month, topping $2400 at its record highs...



Source: Bloomberg

Oil prices ended the month marginally lower, thanks to today's selloff...



Source: Bloomberg

Copper was the outstanding commodity in April, soaring around 14% to two year highs with practically no drawdown as the reflation trade came back to life (on the back of AI demand)...



Source: Bloomberg

Bitcoin had an ugly month, down 15% after seven straight months of gains...



Source: Bloomberg

As BTC ETF flows started to ebb - Net Flows (including GBTC): April -$183mm, March +$4.62bn, February +$6.03bn, January +1.47bn...



Source: Bloomberg

Finally, the ultimate analog remains in play...



Source: Bloomberg

...with NVDA bouncing back, just like CSCO did.

And bear in mind, as Goldman's Peter Oppenheimer points out, US equity market valuation is currently at an extreme level relative to history...



...also a condition that typically means higher rates weigh more heavily on stocks.

And while April showers are over...



The S&P 500's vol term structure suggests the storm is not over yet.

 

Taper 'Tantrum-ette' - Stocks Pump'n'Dump As Fed 'Eases' Balance-Sheet Pressure
WEDNESDAY, MAY 01, 2024 - 04:00 PM

Powell to traders today...



h/t @ForexLive

The bigger than expected QT taper announcement juiced markets (stocks and bond prices up, dollar down) into Powell's press conference, then got spooked lower as he admitted "inflation has shown a lack of further progress... and gaining confidence to cut will take longer than thought."

But that dip didn't last long and yields puked, stocks soared, gold rallied and the dollar puked...



Source: Bloomberg

The market shrugged off Powell's comments about "whether rates are at their peak will depend on data" which opened up the path of possible rate-hikes, but he dd add that "he doubts next move will be a hike."

CNBC's Steve Liesman asked the big question that everyone should be asking: you are 'sort of easing' by reducing QT while holding rates flat because you're not confident that inflation is under control - wassup with dat?

Powell replied with some words that meant nothing, stating that they have long planned on tapering QT and claimed that 'reduction in balance sheet run-off is not policy-easing'.

"This is not the easing you're looking for..."



By the close, all of Powell's pig-kissing lipstick had been wiped off (see below for the coordinated crypto/nasdaq take-down) as stocks saw solid gains erased in the hour after Powell stopped speaking... Small Caps and The Dow managed to hold on to the gains but Nasdaq and S&P closed nearer the day's lows...



'Most Shorted' stocks saw a massive squeeze (+5%) on the FOMC headlines, before the late day selling pressure hit...



Source: Bloomberg

MAG7 stocks ended the day unchanged after giving back their post-Powell gains...



Source: Bloomberg

Treasury yields plunged 6-8bps across the curve on the day, with the short-end outperforming, dragging all yields lower on the week...



Source: Bloomberg

The 2Y Yield snapped back below 5.00% once again...



Source: Bloomberg

The yield curve (2s30s) jerked flatter initially, then steepened dramatically back to flat on the week...



Source: Bloomberg

The dollar tumbled on the non-easing 'easing' (but bounced back a bit after Powell finished speaking)...



Source: Bloomberg

Gold surged back above $2300 on the non-easing...



Source: Bloomberg

Bitcoin bounced back on the FOMC statement, recovering some of last night's bloodbathery, but somebody did not want it back to $60,000 and that smackdown dragged stocks down with it...



Source: Bloomberg

Oil prices ignored all the fuss around The Fed and fell for the third day in a row (its biggest daily drop since early Jan) with WTI back below $80 at six-week lows...



Source: Bloomberg

Finally, rate-cut expectations (hawkishly) rose on the day with one-or-two cuts in 2024 now 50-50 and two-or-three cuts more in 2025 around 50-50 also...



Source: Bloomberg

And, also Powell explained that he "doesn't see the stag or the 'flation" in markets... well this should help Jay...



Source: Bloomberg

We can't help but feel like Powell is awfully eager to 'loosen' policy... but he made it clear that the 2024 election "just isn't a part of the Fed's thinking."

So, that's that then!

 

Markets Chop As Wall Street Awaits Apple Earnings After Bell, NFP Friday For Market Direction
THURSDAY, MAY 02, 2024 - 04:00 PM

US equities ended their two-day slide as tech companies surged late in the session. The trading day has been choppy, with Wall Street now turning its attention to Apple's earnings after the bell. Some analysts anticipate Apple will reveal a major buyback program to offset potentially disappointing earnings amid countless reports from research firms in recent months about slumping iPhone sales overseas.

Let's begin with the choppy session in main equity index futures. Futs tumbled at the start of the cash session and caught a bid about 30 minutes later, or around 1000 ET. Since then, price action has been mostly higher into the late afternoon trade.



Despite the chop, Goldman's Most Shorted index (GSCBMAL) surged higher, up 4% on the session. Names like Carvana Co. were up 32% late in the session after a better-than-expected first-quarter earnings release. The company is heavily shorted, with about 27.6% of the float short, contributing to the surge in price.



Within the S&P500, consumer discretionary and technology stocks were up 1.49% and 1.39%, respectively. Almost green across the board.



Regarding the chop, most S&P500 sectors are still below levels after Wednesday's late session pump and dump.



NYSE TICK data shows that most buy programs were out ahead of Apple's earnings.



Again, more chop with individual names in the tech sector & Mag7.



Ahead of Apple earnings, here's Goldman's preview:

All eyes on AAPL tonight. We have positioning at a 7 out of 10, with a recent uptick in interest in the name (altho remains a BM underweight). Focus commentary 1) China trends in March qtr (cons has China revs -11% y/y in March vs the -13% y/y last qtr) .. 2) commentary on AI.. 3) Services visibility (including TAC + App Store)

In the macro world, Wall Street traders are preparing for Friday's announcement of March non-farm payrolls data. The median estimate tracked by Bloomberg is 240k.



22V Research polled investors and found that 30% of respondents believe Friday's jobs report will be "risk-on," 27% expect a "risk-off" reaction, and 43% said "mixed/negligible."

Meanwhile, the S&P500 is wedged between the 100-day Simple Moving Average (4979) and the 50-day Simple Moving Average (5129). A combination of Apple earnings (after the bell) and jobs data (Friday) could determine the next direction in price action.



One day after the Federal Reserve kept the target range for the benchmark rate at 5.25% to 5.5%—after serious concern that the US is headed for stagflation—bond yields across the curve leaked lower late in the session.



In FX, the greenback is on pace for its biggest drop this year as yields continue sliding. Cryptos, such as Bitcoin and Ethereum, trade mainly in chop. BTC/USD is trying to recover the $60k handle late in the cash session.



We noted early that BlackRock's ETF saw around $37 million in outflows for the first time, while the remaining spot Bitcoin ETFs collectively notched over $526.8 million in outflows.



Rate traders have priced in about 1.6 cuts this year—up from 1.15 yesterday—but down from nearly 7 earlier this year. There has been dramatic repricing in Fed cuts due to sticky inflation.



On inflation, using Bloomberg data, the number of mentions in earnings calls for "sticky inflation" surged to record highs in this earnings season. Several mega-corporations like Starbucks and McDonald's have warned about struggling working poor consumers.



Here's the recap of some of today's top corporate news (courtesy of Bloomberg):

• Peloton Interactive Inc. said Chief Executive Officer Barry McCarthy is stepping down as the company undergoes a major restructuring that will reduce its global workforce by 15% in an effort to slash costs.
  
  
• MGM Resorts International reported first-quarter sales and earnings that beat analysts' projections, benefiting from the post-pandemic recovery in Macau and a new partnership with Marriott International Inc. that helped fill hotel rooms.
  
  
• Carvana Co. reported stronger earnings with revenue topping expectations as the company digs into its restructuring plan and regains sales momentum.
  
  
• DoorDash Inc., the largest food delivery service in the US, offered a disappointing profit forecast for the current quarter as the company invests in expanding its list of non-restaurant partners and improving efficiency.
  
  
• Moderna Inc. reported a narrower first-quarter loss than Wall Street had expected, as the biotech giant's cost-cutting helped offset a steep decline in its Covid business.
  
  
• Apollo Global Management Inc. reported higher first-quarter profit as the firm raked in more management fees and originated a record $40 billion of private credit, a key area of growth.
  

By the way, Boeing shares continued to surge even after another Boeing whistleblower died.

A recap of this morning's macro data:

• Thursday Humor: Jobless Claims
  
  
• Unit Labor Costs Soar In Q1 As 'AI Productivity Boom' Fails To Show Up
  
  
• US Factory Orders Rise In March... But February Saw Yet Another Downward Revision
  

.... and it's an election year - remember that... We cited a note from Goldman's Adam Crook that points out the Fed and US Treasury are in 'full-blown stock support mode'... Powell can't let Biden's stock market crash... Pro subs read here.

Anyways, all eyes are on Apple after the bell.

 

Big Taper, Bad Data, & Buyback Bonanza Sparks Buying Frenzy In Bonds & Stocks
FRIDAY, MAY 03, 2024 - 04:00 PM

The markets took on a Dickensian dimension this week as while "it was the worst of times (for economic data), it was the best of times (for stocks)"...

The US Macro Surprise Index continued its serial disappointment plunge into the red - the weakest since Feb 2023 (not helped at all by today's payrolls miss)...



Source: Bloomberg

With growth data plunging while inflation data soared...



Source: Bloomberg

Bad news was good news though as the market only had eyes for Powell's big taper and the buyback bonanza (from AAPL and the rest), and today's NFP Goldilocks results (175k vs. 240k expected) as wage softness helps to ease inflation fears.

Small Caps leading the bunch amid a big short-squeeze and S&P lagging (but all green on the week)...



All the majors rallied up to their 50DMAs but were unable to breakout...



Nasdaq performed well with MAG7 stocks wildly choppy, but overall pushing back up towards record highs...



Source: Bloomberg

'Most Shorted' stocks suffered the biggest squeeze in two months (and biggest two-week squeeze since Jan 2023)...



Source: Bloomberg

Of particular note was Utes outperforming (while energy lagged) as the 'Next AI Trade' goes mainstream. Financials were also red on the week...



Source: Bloomberg

Bonds were also bid all week with yields down 12-20bps as the short-end outperformed...



Source: Bloomberg

And 2Y yields at 5.00% were thoroughly rejected as yields plunged today back below pre-CPI spike levels..



Source: Bloomberg

The dollar dropped this week, erasing almost all of the post-CPI gains...



Source: Bloomberg

Gold prices were lower on the week (second week in a row), despite the weak dollar and 'easing' by The Fed...



Source: Bloomberg

Despite a decent bounce back today, bitcoin was down on the week, testing back up to $62,000...



Source: Bloomberg

...after an ugly week of aggregate net outflows from BTC ETFs...



Source: Bloomberg

Oil prices plunged this week - down all five days for the worst in three months - back to near two-month lows...



Source: Bloomberg

And finally, rate-cut expectations have surged this week with 2024 now pricing in two full cuts and 2025 three more cuts...



Source: Bloomberg

Is this what Powell wanted? To ease financial conditions again!?