An odd – holiday-shortened week – with hawkish actions (foreign) and words (domestic) from central bankers; weak macro data globally (US hard data outperformed but ‘soft’ survey data is completely decoupled); the yield curve collapsed, screaming recession; gold dumping as bitcoin soars; banks and big-tech both down; and then there’s a Russian military coup!??
The yield curve crashed back to its most-inverted this week – shouting ‘recession’ from the rooftops…
Source: Bloomberg
First things first, ‘hope’ – as measure by the ‘gap’ between US hard and soft data – is at its lowest since 2015…
Source: Bloomberg
Bitcoin soared to one-year highs…
Source: Bloomberg
…completely decoupling from its recent trend with VIX…
Source: Bloomberg
…as the fear index crashed to a 12 handle – lowest since Jan 2020
Source: Bloomberg
Today saw more of the same – macro weakness and hawkish speak – stocks weakened early on (pre-open) after weak EU & US PMIs and hawkish chatter from Fed’s Bostic. The late-day weakness seemed to occur as Russian military coup rumors spread…
On the week, Nasdaq saw its biggest weekly loss since March, but Small Caps were the week’s biggest losers (also biggest weekly loss since March)…
Nasdaq is at its strongest relative to the Russell 2000 once again…
Banks and Big-tech were both down on the week – that’s the first time in 7 weeks (with the biggest drop in tech since March)…
Source: Bloomberg
On a side note before we leave equity-land, meme stock trading activity has increased to ~99th percentile in the last 5 years. Sounds like a good time for an equity market stumble…
Treasuries were mixed on the week with the short-end underperforming and long-end lower in yields on the week. It was a choppy week though overall…
Source: Bloomberg
The dollar rallied strongly on the week – 2nd best week since February…
Source: Bloomberg
Cryptos had their strongest week since March with BTC outperforming ETH…
Source: Bloomberg
Commodities were mostly down this week as recession/growth-scares hit. Oil & Copper were down, silver was ugly as PMs fell as the dollar rallied…
US NatGas rallied on heat-driven demand as air-conditioning demand from a Texas heat wave outweighed ample stockpiles.
Gold fell to 3-month lows…
Oil was down with WTI closing back below $70…
Finally, we note that VIX and equity markets are the most positively correlated ever over the last 10 days (typically they are negatively correlated – the red line)…
…or it really is different this time.
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