Quite a day… Headlines on Israel reportedly agreeing not to blow up energy facilities wiped a chunk of geopolitical risk premium off crude; the Empire Fed manufacturing survey crashed from multi-year highs, crushing the ‘no landing’ narrative; ASML’s dismal earnings and outlook wrecked the AI “insane demand” narrative; and LVMH poured cold water on the ‘consumer is strong’ narrative.
The result of all that was bonds bid (yields lower), oil dumped, bitcoin & gold jumped along with the dollar, and growth stocks puked as value spiked.
ASML puked 17%, erasing all of 2024’s gains…
…and that hit big-tech, smashing Mag7 stocks lower, erasing all of yesterday’s gains…
Source: Bloomberg
…which snapped Nasdaq lower, weighed down the S&P, while Small Caps soared. The Dow was pummeled by UNH’s big drop (-300 Dow points) and selling pressure weighed on everything by the close, erasing most of the Russell 2000’s gains on the day…
Small Caps outperformed Big-Tech by the most since July today (and also the biggest 3-day outperformance since July)
Source: Bloomberg
Value outperformed Growth stocks dramatically early on but that reverted to practically no differential by the close…
Source: Bloomberg
More bank earnings today left Citi down hard (now in the red since bank earnings started on Friday), but Wells Fargo outperforming the bunch…
Source: Bloomberg
VIX continues to decouple from spot SPX, back above 20 today…
Source: Bloomberg
After being closed yesterday, bonds re-opened mixed with the long-end outperforming…
Source: Bloomberg
…and the short-end seeing yields pushed higher during the US day session, flattened the yield curve (2s10s) dramatically…
Source: Bloomberg
The STIRs market is adjusting to a new ‘landing’ narrative with rate-cut expectations for 2024 being reduced while 2025 expectations are dovishly rising..
Source: Bloomberg
The dollar kept rising, breaking above its 100- and 200-DMAs today to its highest close since the start of August…
Source: Bloomberg
Despite the dollar strength, gold also kept rising today, back near record highs…
Source: Bloomberg
Oil prices tumbled on Washington headlines that Israel would not bomb energy facilities (but didn’t bounce back on Israel denials)…
Source: Bloomberg
Bitcoin broke out of its down-channel today, blowing through the 200DMA…
Source: Bloomberg
…and perhaps on its way to new highs as it tracks global liquidity…
Source: Bloomberg
Finally, the market’s inflation expectations are soaring in recent weeks…
Source: Bloomberg
In fact, as Deutsche Bank reports, 5yr US inflation swaps have seen their largest 5-week climb since just before SVB’s collapse in March 2023, an event that shifted the narrative away from around 4 more hikes to imminent cuts for a period of time.
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