S&P

In a day full of upside catalyst for the reflation trade including the strong TIPS auction, the speculation that the Obamacare repeal effort is back on track, and perhaps best of all the absence of hard data (today's Philly Fed "soft data" was, well, quite soft), the dollar, the S&P and Treasury yields all rose, after Treasury Secretary Steven Mnuchin said that "we are close to bring forward major tax reform", refuting speculation that it may be delayed into 2018.

While various Fed presidents continue to  toe the party line, saying they expect 3 rate hikes in 2017, most recently the Fed's Kaplan earlier this morning, the firm which not only sets Fed policy but now openly tells the president what to do, Goldman Sachs, is starting to get cold feet, and in a note released overnight, the firm's chief economist Jan Hatzius says that "we have become a bit less confident about near-term hikes." The U-turn was to be expected as it comes just days after Goldman threw in the towel on its long-dated strong Dollar call, which traditionally comes hand in hand wit

One day after covering its long-standing long dollar call (coincidentally, just one week after former Goldman COO Gary Cohn urged Trump to flip on his own "strong dollar" policy), Goldman has gotten even more cautious and in a note released this morning it warns that "Investors are increasingly concerned about an S&P drawdown." Here's why:

Last February, as Chinese stocks and the Yuan were crashing every day, sending the S&P tumbling and government bond yields crashing to record lows, in the process aborting the Fed's first attempt to hike rates, volatility was soaring and confidence in the economy was in the dumps: in short, the bottom appeared like it was about to fall off.

Bank stocks down on earnings day... "inconceivable"

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And all it took to break the Trump trade was the mother of all bombs...

The S&P and Dow closed the week at 2-month lows...