Plunge Protection Team Saves Stocks But Credit, Crude, Cryptos Collapse

800 Dow points – !!!! Remain calm! No wonder The PPT was called in…

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But, but, but… the US economy is extremely strong (ignore the 4.4% crash in durable goods orders and collapse in housing), this weakness in stocks (remember the stock market is not the economy – when the former goes down) is all exogenous – blame them!:

Blame China – Huawei exec arrested at a particularly inopportune time for the trade truce

Blame Russia – Not acquiescing to OPEC’s or Trump’s demands to cut crude production

Blame Britain – Just get it done Theresa!! Forget what the people want!

Blame Italy – Why don’t the democratically-elected leaders just fold, slash their deficits, and maintain their nation’s march into oblivion?

But definitely don’t blame The Fed for tightening financial conditions into a slowdown (as they desperately tried to keep the delusional shell game of “well they wouldn’t be hiking rates if everything wasn’t awesome”).

 

China stocks did not like US arrest of Huawei exec…

 

And while initially slow on the uptake, Offshore yuan tumbled too…

 

Europe was a bloodbath…

DAX tumbled back below 11,000 – its lowest in two years (erasing the post-Trump gains)…

And Italian bond yields surged…

 

US Equities crashed at the re-open (after the Bush funeral holiday) last night and saw no bid at the cash market open… but once Europe closed, algos went vertical… and reaccelerated into the close… (from Tuesday’s cash close)

 

Stocks ended well “Off The Lows” thanks to a well-placed WSJ article suggesting The Fed could hold in December.

A 1600 points swing in Dow futures

Nasdaq was the only index which manage to get green however…

Did not hear many people screaming about the algos panic-buying stocks into the close?

S&P and Dow ramped back into the green for 2018…

 

And the moment Europe closed a short-squeeze was engineered…”Most Shorted” stocks surged…

 

Be careful getting to excited – relative volume crashed as stocks soared – not the kind of ramp to support follow-through.

 

FANG Stocks opened down large but were bid aggressively into the green…

 

S&P Financials plunged to its lowest since Sept 2017…

 

The S&P 500’s Put/Call ratio has plunged to 2018 lows…

 

52 week lows are surging as it seems the Hindenburg Omen that hit in September was quite prophetic this time…

 

The VIX Term Structure inverted once again…

 

As equity protection (VIX) played catch up to credit protection (IG/HY CDX)…as IG spreads blow out to new cycle wides…

 

Stocks caught down to bonds reality once again…

 

Treasury yields tumbled once again – down around 4bps across the curve…

 

10Y Yield broke down to 2.82% intraday

 

Back to its lowest since August…

 

The yield curve remains inverted from 2s to 5s..

 

10Y Inflation Breakevens (following crude’s collapse) fell to their lowest since Dec 2017…

 

The Dollar did its usual trend reversal intraday – this time from positive to negative…

 

 

Cryptos dumped further with Bitcoin Cash now crashing 33% on the week!!

 

PMs remain positive on the week but crude and copper have dumped…

 

 

WTI closed lower but oscillate around the $50/51 level all day as OPEC headlines jockeyed with inventory data…

 

Gold tagged $1250 intraday – highest since October 28th…

 

Notably Silver is back a key level of support relative to gold (85x ratio)…

 

Finally, during tonight’s business channel infomercials… expect to hear this…

But maybe – in the back of your mind – remember this – The market has entirely given up on The Fed’s rate-hike trajectory (half a hike in 2019, and a rate cut in 2020) suggesting serious economic trouble ahead…

So, to be clear, the market spikes higher on an engineered short-squeeze at the EU close and a well-timed WSJ report that the Fed is turning dovish BUT the market has already priced in less than 1 rate hike in 2019.