Dow Hits 36k, Small Caps Soar As Stocks Shrug Off Uber-Hawkish Fed Expectations

An extremely mixed day today with Small Caps exploding higher at the cash open and the rest of the majors limping lower early led by the long-duration-suffering tech-heavy Nasdaq (as rates rose). Stocks dipped on comments from Sen. Manchin who appeared to throw a wrench into the Democrats’ stimmy process gears, but that dip didn’t last. TSLA’s late-day panic-bid explosion higher lifted Nasdaq and S&P into the green…

TSLA is 80 points of the Nasdaq’s 100 points today.

That was the biggest Russell 2000 outperformance versus Nasdaq since early March…

Dow 36,000 was finally reached…

…but could not hold it…

The book was published in September 1999 and the authors guessed the 36,000 level would be reached in three to five years…

…not the 22 years it actually took. 

One of the authors, James Glassman, spoke to Bloomberg:

“What I do regret is intimating that Dow 36,000 was going to happen soon, that is, within a few years. The late Alan Meltzer, a serious economist and student of the Fed who gave our book a very nice blurb, told me, ‘Never associate a date with a number’. Good advice.”

In other words – never say anything you could be held accountable for.

Today’s farcical meltup in Small Caps was brought to you by a massive short-squeeze to start the month (the biggest short-squeeze since June) but we do note that the squeeze-ammo appeared to run in the afternoon…

Source: Bloomberg

And this ramp-fest in Small Caps (much more domestically-dependent companies by their nature) is occurring as the market prices in a dramatic rate-hike trajectory…

Source: Bloomberg

TSLA was up almost 8% today, topping $1200…

SpotGamma explains WTF is going on!!!

MSFT surpassed AAPL as the largest market-cap company and TSLA is soaring relative to FB since it topped $1 trillion…

Source: Bloomberg

 

 

Treasury yields were higher today with the long-end underperforming (30Y +5bps, 5Y +1bps)…

Source: Bloomberg

30Y Yields remain below 2.00% still…

Source: Bloomberg

Interestingly, the 5s30s (flattening) and 2s5s (steepening) converged (the last two times we saw this convergence were quickly followed by recessions)…

Source: Bloomberg

The dollar trod water today, holding Friday’s spike gains.

Source: Bloomberg

Crypto was choppy (but rebounded after late-day regulatory chatter about Stablecoins) with Bitcoin pump-n-dumping to end slightly higher but holding above $60k…

Source: Bloomberg

And Ethereum managing very modest gains, hovered around $4300 all day…

Source: Bloomberg

In other crypto news, SQUID  – the Squid Game Token – was a scam…

Gold rebounded today, erasing Friday’s loss but unable to get back to $1800…

Despite Biden’s demands, oil prices continued to rise with WTI nearing $85…

Finally, we note that today’s surge in rate-hike expectations is significantly more hawkish than The Fed expects and also implies a policy error before 2024 (when the market  implies The Fed folding on its normalization path once again)…

Source: Bloomberg