Crude Crashes, Tech Tumbles; But Bonds, Bullion, & Bitcoin Bid

Quite a day… Headlines on Israel reportedly agreeing not to blow up energy facilities wiped a chunk of geopolitical risk premium off crude; the Empire Fed manufacturing survey crashed from multi-year highs, crushing the ‘no landing’ narrative; ASML’s dismal earnings and outlook wrecked the AI “insane demand” narrative; and LVMH poured cold water on the ‘consumer is strong’ narrative.

The result of all that was bonds bid (yields lower), oil dumped, bitcoin & gold jumped along with the dollar, and growth stocks puked as value spiked.

ASML puked 17%, erasing all of 2024’s gains…

…and that hit big-tech, smashing Mag7 stocks lower, erasing all of yesterday’s gains…

Source: Bloomberg

…which snapped Nasdaq lower, weighed down the S&P, while Small Caps soared. The Dow was pummeled by UNH’s big drop (-300 Dow points) and selling pressure weighed on everything by the close, erasing most of the Russell 2000’s gains on the day…

Small Caps outperformed Big-Tech by the most since July today (and also the biggest 3-day outperformance since July)

Source: Bloomberg

Value outperformed Growth stocks dramatically early on but that reverted to practically no differential by the close…

Source: Bloomberg

More bank earnings today left Citi down hard (now in the red since bank earnings started on Friday), but Wells Fargo outperforming the bunch…

Source: Bloomberg

VIX continues to decouple from spot SPX, back above 20 today…

Source: Bloomberg

After being closed yesterday, bonds re-opened mixed with the long-end outperforming…

Source: Bloomberg

…and the short-end seeing yields pushed higher during the US day session, flattened the yield curve (2s10s) dramatically…

Source: Bloomberg

The STIRs market is adjusting to a new ‘landing’ narrative with rate-cut expectations for 2024 being reduced while 2025 expectations are dovishly rising..

Source: Bloomberg

The dollar kept rising, breaking above its 100- and 200-DMAs today to its highest close since the start of August…

Source: Bloomberg

Despite the dollar strength, gold also kept rising today, back near record highs…

Source: Bloomberg

Oil prices tumbled on Washington headlines that Israel would not bomb energy facilities (but didn’t bounce back on Israel denials)…

Source: Bloomberg

Bitcoin broke out of its down-channel today, blowing through the 200DMA…

Source: Bloomberg

…and perhaps on its way to new highs as it tracks global liquidity…

Source: Bloomberg

Finally, the market’s inflation expectations are soaring in recent weeks…

Source: Bloomberg

In fact, as Deutsche Bank reports, 5yr US inflation swaps have seen their largest 5-week climb since just before SVB’s collapse in March 2023, an event that shifted the narrative away from around 4 more hikes to imminent cutsfor a period of time.