Growth/Value Trend Reverses On Week; VIX Dumps, Bonds & Gold Jump As Jobs Slump
A week of reversals? The S&P 500 reversed into a new bull market (off the October lows) as jobless claims reversed to a 19-month high...
Source: Bloomberg
After a two-week rebound in macro-surprise data, US Macro data disappointed this week - most notably jobless claims...
Source: Bloomberg
But, the market's expectations for Fed rate changes shifted modestly hawkishly, holding on to post-payrolls shifts, with June expected be a 'pause' but July pricing in almost a full rate-hike. At the same time, rate-cut expectations by year-end have shrunk significantly as soft-landing (not crash landing) hopes reshape the distribution of outcomes...
Source: Bloomberg
On the week, Small Caps outperformed while Nasdaq lagged (another reversal) and The Dow and S&P struggled for gains...
The S&P 500 algos battled for a 4300 close...but lost...
The trend of Nasdaq outperforming Russell 2000 ended abruptly this week - after tagging its all time high from Feb 2000 peak of the dotcom bubble - but today saw some bouncing...
Source: Bloomberg
Following 7 straight weeks of growth outperforming value, this week saw a notable reversal with value outperforming growth by the most since the first week of January...
Source: Bloomberg
One thing that didn't change was the collapse in VIX, which hit a 13 handle - its lowest since Feb 2020 - this week. However, VVIX started to decouple from VIX's demise hinting at trouble ahead...
Source: Bloomberg
Regional bank shares rose for the 4th straight week, but stalled at resistance...
As far as the AI bubble, NVDA ended the week where exactly where it opened the morning after its blockbuster earnings... not exactly an exuberant follow through...
TSLA rose for the 11th straight day to its highest since Oct 2022...
...equaling its record winning streak...
Treasuries were very mixed this week with some big jumpy swings intraday. By the close, the long-bond outperformed (-1bps on the week) while the short-end was up around 9-10bps...
Source: Bloomberg
The yield curve (2s30s) inverted deeper this week as
Source: Bloomberg
The dollar fell for the second week in a row
Source: Bloomberg
Crypto was mostly lower this week as the SEC sued Binance and Coinbase prompting more FUD. Solana was hardest hit of the larger coins with BTC and ETH down around 3%...
Source: Bloomberg
Bitcoin clung to $26,500 after the Binance puke and bounce...
Source: Bloomberg
Gold rallied for the second week in a row, but had a very volatile dump and pump week...
Oil prices fell for the second straight week after the Saudi production cut news failed to impress (with WTI within a tick of a $68 handle at the week's lows having touched $75 at the highs)...
Finally, the "trilemma" continues to confuse...
Source: Bloomberg
The dollar, tech stocks and real rates are not supposed to act like this into a recession.
The dollar rallies (fact) on higher real rates (check) OR rising risk aversion (not present), tech rallies (fact) on lower real rates (not present) OR higher risk appetite due to US exceptionalism (check).
Goldman believes that the dollar is right and equities aren't.
Mega-Cap tech continues to ignore the tightening of financial conditions...
Source: Bloomberg
How long before The Fed worries they have blown another bubble with their pandering?
And don't forget, there is an alternative now...
Source: Bloomberg
Six-month T-Bill yields are 50bps higher than the S&P's current earnings yield - the widest spread since Jan 2021.
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