Just when you thoughjt it was safe to chase the biggest short squeeze in history Fed vice-chair Fischer f##ked it all up...
The US equity market has only been more overbought 3 days in history...
Amid the Biggest short squeeze...ever!
It's not the fundamentals; it's oil stupid!!
As WTI (front-month continuous based on BBG data) has the biggest 3-week gain since August 1990...
And SPY (S&P 500 ETF) saw its lowest volume of the year...
US equities went straight up out of the gate but Fischer took the sting out of it all at 1300ET - *FISCHER: WE MAY BE SEEING `FIRST STIRRINGS' OF HIGHER INFLATION - plunging stocks into the red, before yet another late-day buying panic ensued on PIMCO risk-on headlines...
Energy was the yuuge winner, tech the biggest loser and financials unch...
After closing at 1999.99 on Friday. S&P desperately tried to hold 2,000 today... Look at the sheer panic of the market in the last seconds of the day to get S&P above 2000...
Every time the S&P dropped below 2,000 - VIX was banged lower... and the close was a total joke...
As JPMorgan warned - "The market is trapped" - trapped by USD: it can’t rally to new highs without USD (momentum sectors, FANGs, etc.), and at the same time the strong USD is capping any significant upside due to its negative impact on EPS (via value segments such as multinationals and energy).
Which explains why energy is outperforming Tech...
And Value stocks have greatly outperformed Growth in the last week, almost back to unchanged on the year (and back to the extremes of early feb in terms of divergence)...
US financial stocks are completely decoupled from credit in the last few days...
VIX and stocks decoupled...
One quick question - if everything is so awesome again, why is the most-levered part of the US corporate bond capital structure landscape underperforming so strongly...
The USD Index was monkey-hammered early as commodity currencies soared but recovered very modestly after Fischer's comments...
Treasury yields ended the day higher but 30Y outperformed (with the entire complex sliding after Fischer's comments) - note the last 30 minutes saw bond yield rise once again - driven by PIMCO comments on rotation from Treasuries to riskier debt
Obviously crude stood out in today's berserk market...
And we note that Gold was dumped after Europe closed as chatter went around of margin calls in crude sparking covering in everything...
Gold was thumped lower twice since Friday's close - both saw significant bounces....
Crude is just a swarm of short-covering squeezes - now back at $38 - the lows of 12/31/15...
And finally - leaving the best for last, this happened...
Charts: Bloomberg