Business

One month ago we wrote that as a result of the vicious gyrations in the market, even one of the top performing poster children of successful hedge fund investing, one which had so far avoided the P&L misery shared by many of its peers (mostly due to its "tactical trading" or HFT frontrunning group) Ken Griffen's Citadel had been quietly unwinding its Surveyor Capital multi-manager long/short (not, as some mistaken assume "market neutral") strategy.

"We're in a bear market — we can't get away from it," warned CNBC's Jim Cramer on February 5th, exclaiming that "the stock market is not working."

In his own words...

http://player.cnbc.com/p/gZWlPC/cnbc_global

But a month later - following a 13%, almost irrepressible ramp in stocks - Cramer has changed his tune, explaining last night that "signs of a massive rally could be coming."

Over the past month we have documented the surreal reemergence of China's latest housing bubble (recall the first one burst in early 2014 which forced Beijing to reflate the stock market bubble, which also burst over a year later), in recent articles such as:

The 2016 market can be described as a sequential bursting of pain trades: first it was the momentum trade; then it was the whipsawed action in Treasurys where record shorts were burned on the way up, and then longs screamed when central banks unleashed the latest coordinated attempt at reflation, then it was the FX whipsaws where central bank easing led to the opposite reaction in the underlying currencies (as noted earlier), then the sudden trapdoor under the USD which many had expected would continue rising, then it was the healthcare sector where hedge fund hotels got crushed in the late

But, but, but - low gas prices, high stock prices... everything is awesome. It appears not even the average joe American consumer is fooled by the latest manufactured rally in stock prices as UMich confidence tumbles to 5-month lows (90 vs 92.2 exp) with future expectations "hope" perfectly anti-correlated with the surge in stocks...

On the bright side, inflation expectations picked up modestly... but that hardly helps given the overall confidence hovers near 18 month lows.