Hot PPI initially spooked markets (yields and dollar up, stocks down) but that faded fast (on lower revisions) - but the stag-flation trend continues this week...
Source: Bloomberg
Powell did briefly spook stocks around 1030ET with the following comment:
"it's a possibility - but I dont think it will be the case - that the next action we take will be a rate hike... most likely we will stay the course...."
Between that comment (basically jawboning away any rate hikes) and the CPI-related components within PPI actually looking positive (well actually not positive and thus implying CPI may come softer), we actually saw rate-cut expectations rise today. 2024 now pricing in almost two cuts and 2025 now pricing in just over three cuts...
Source: Bloomberg
Goldman's John Flood noted that trading volumes finally tracking higher +31% vs the 20dma, with ETF’s capturing 25% of the overall tape.
Floor skews +106bps better to buy with HFs +100bps better to buy (squeezes in consumer discretionary + ETF buying driving this) while LOs -300bps better for sale (selling tech + industrials), but overall flows here feel muted.
Another big day for the 'meme stocks'...
Source: Bloomberg
...with AMC and SunPower (among others) joining GameStop
Source: Bloomberg
All of which means that 'indicative' hedge funds were clubbed like a baby seal for the second straight day - down a stunning 15% at the lows of the day...
And that meant several crowded longs (ABDE, V, SHOP) were hit as the squeeze in shorts forced de-grossing overall...
Source: Bloomberg
Small Caps were the winners today (and Dow was the laggard) but all the majors ended higher on the day. The Nasdaq closed at a record high...
The basket of MAG7 stocks broke out to new record highs today...
Source: Bloomberg
Treasury yields kneejerked higher on the PPI print then swiftly reversed to all end lower on the day by 3-4bps...
Source: Bloomberg
The dollar drifted back to the week's lows - after a brief spike higher on PPI...
Source: Bloomberg
The dollar's loss was gold's gain...
Source: Bloomberg
Bitcoin erased yesterday's gains which erased Friday's losses...
Source: Bloomberg
The roller-coaster in crude prices continues - today was back down again, with WTI finding support at $78...
Source: Bloomberg
Finally, spot the odd one out - Nasdaq at record highs while US macro data at its weakest in two years...
Source: Bloomberg
Financial Conditions are as easy as they've been in years...and Fed Funds are at 23 year highs...
Source: Bloomberg
...will you be the greater fool?
