US Stock markets message to the world…
The post-election shenanigans continue with only US equities positive post-Trump… EM Bonds, EM FX, DM Bonds, US TSYs, and Non-US Stocks are all lower…
The Peso remains near record lows and gold and bonds at post-Trump lows…
Post-Trump, bonds and bullion are worst…
But not all US equities are exuberant…
With Nasdaq the big laggard today… S&P 500 closed perfectly unchanged?!
Tech stocks continued to weaken with FANG stocks suffering their worst month since March 2014 dropping to 3-month lows (down 4 weeks in a row, down 13 of last 15 days for a 12% plunge)
RBC's Charlie McElligott reminds readers that,
In Q3, the Tech sector became THE ‘hiding place’ place of respite in the post Brexit-period, with 13Fs showing us that the sector was 14.9% of HF allocations / 13.4% of MF holdings / 14.9% of pension fund notional holdings. S&P Tech sector returned 12.4% in Q3, while the 4-stock liquid proxy “FANG” was +12.7% on the quarter. Why? Because it is simply impossible to ‘slap on’ a bunch of cyclical exposure, even in US—Energy, Industrials and Materials as sectors simply don’t provide enough liquidity. Add in the OPEC headline noise component as a massively important factor in driving enormous cyclical volatility on a daily basis, and most generalists simply couldn’t “go there” with regards to getting appropriately weighted in these cyclical spaces…and even if you were one of those very tactical funds, you were there to hit singles and doubles, with many having chosen to cut exposure over the past few weeks into the US election risk and now very real doubts on any sticky OPEC production cut deal ever getting done.
Fast forwarding to this past week: unfortuantely for so many funds, in light of the aforementioned shift post-election into the “Trumpflation” trade, the tech sector has become the “source of funds” (crowded longs in AMZN, GOOG, FB, MSFT all down last week, as the broad sector was a 99th %ile ‘long’ since ‘10) . Ouch.
"Most Shorted" Stocks continue to get their faces ripped off – now up a stunning 14% in 7 straight days of squeeze – the biggest squeeze since the bounce off the March 2009 lows!
Bond-Stock Correlation tumbled back to its 'norm' below 0…
But the bond bloodbath continues as 2Y rates topped 1.00%, 30Y topped 3.00%, 30Y Mortgage topped 4.00%
And bond 'risk' is dramatically higher than equity 'risk'…
Emerging Market bonds continued to slide…
The Dollar Index tagged 100.00 for the first time since early December
Emerging Market FX continues to collapse (against the USD), completely decoupled from the Dow (and in the red for the year)
Offshore Yuan plunged to a record low…
WTI Crude dropped to a $42 handle intraday ($42.20)
Copper closed higher (despite Friday's key reversal day), but looks very head-and-shoulders toppy…
Gold and Silver are down post-Trump but gold has notably outperformed silver – sending Gold/Silver to post-Brexit highs…
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