Reflation trade bitches...between Yellen tomorrow (hawkish), China end of reverse repo drought, Trump "phenomenal" taxes, and expectations for a hot CPI on Wednesday - everything is awesomely inflationary.
Before we start - Spot The Odd One Out...
Stocks were up despite crude weakness...
VIX was notably higher despite the melt-up in stocks...
And March rate-hike odds near highs...
New All-Time Highs In Dow, Nasdaq, S&P, and Russell 2000.
Dow topped 20,400 (up 400 points in 3 days)...
Notably GS and CAT accounted for one third of Dow gains - which is just fucking ridiculous when you look at fundamentals...
3rd day in a row of opening short-squeeze gap-up open...
But notably Small Caps faded significantly in the afternoon (as the squeeze ran out of energy)...
S&P 500 topped $20 trillion and its Price-to-Book is now back above 3.00x - the highest since 2004...
S&P 500 is notably overbought now...
Bank stocks leading the way again... Up 3 days in a row to the highest since Feb 2008 - bouncing perfectly off the 50-day moving average once again...
So here are some chart food for thought...
Bank investors don't care about rate hikes anymore...
Bank investors don't care about the yield curve or NIM...
And Bank investors don't care about credit risk...
It's the deregulation-stupid!
Apple stock reached a new closing high...
So buy and hold for 2 years and bonds still outperformed?
Treasury yields limped higher on the day (but rallied lower from the US Open) - 30Y holding above 3.00%
HY bonds rallied to new cycle highs back to July 2015...
The USD index whipsawed up and down intraday (ending higher)... with cable strength and Yen weakness
Which fits with the 2016 analog...
Copper gained (along with every China industrial commodity) after renewed liquidty operations, PMs drifted with a stronger dollar and crude tumbled...
Will Yellen spoil the party tomorrow?