“Good News” Sparks Equity Algo Chaos But Batters Bonds & Bullion

While Markit’s PMI disappointed and dropped to 3-year lows, ISM’s survey of non-manufacturers beat expectations and that was all the market needed to be reassured that everything is about to be awesome again…

Source: Bloomberg

And that “good news” sparked a decidedly hawkish surge in Fed rate-cut expectations (only 1 rate cut priced in by end 2020)…

Source: Bloomberg

Which instantly sent stocks lower as algos saw “good news” as “bad news” – but that didn’t last…

As the odds of a US-China trade deal surged (despite China talking it down)…

Source: Bloomberg

Treasury yields have retraced all the post-Powell drop…

Source: Bloomberg

The dollar has retraced all of the post-Powell drop…

Source: Bloomberg

Gold retraced its gains post-Powell…

Leaving the asset-gatherers and commission-rakers all cock-a-hoop…

[youtube https://www.youtube.com/watch?v=lAkuJXGldrM]

Meanwhile, elsewhere in the world, Chinese stocks gained overnight…

Source: Bloomberg

European stocks managed modest gains today…

Source: Bloomberg

And European bonds are selling off – for example that 100Y Austrian debacle…

Source: Bloomberg

US Stocks were mixed with Trannies once again exploding higher, and thanks to a weak close, the rest ended marginally unch…

 

As shorts were massively squeezed once again at the open (but note that after Europe closed, “most shorted” stocks began to sink back (ran out of ammo?)…

Source: Bloomberg

Given all the excitement over the trade deal being close, odd that Semis would flounder…

Source: Bloomberg

VIX was monkeyhammered back to a 12 handle – its lowest since July…

And at the same time, the market has never been this short vol…

Source: Bloomberg

The one-way street higher in yields continued amid a heavy calendar of corporate issuance (and the associated rate-locks)…

Source: Bloomberg

As the dollar rallied, yuan also surged back below 7/USD…

Source: Bloomberg

Cryptos all lifted since the start of European trading…

Source: Bloomberg

Bitcoin futures flash-crashed overnight but spot barely budged…

Source: Bloomberg

Despite weak China data, hope for a trade deal once again levitated crude and copper and crushed PMs…

Source: Bloomberg

WTI extended its gains, topping $57 and hitting 6-week highs on trade-deal optimism ahead of tonight’s API inventory data…(timing of this ramp is interesting considering the Aramco IPO is imminent)

 

Finally, the market is gripped by “Extreme Greed” – that hasn’t worked out so well in the past…

Source: CNN

And the meltup has decoupled stocks from Ed Yardeni’s infamous fundamental market indicator…

Source: Bloomberg