Stocks Slammed Into Red For 2018: Powell Plunge, Dudley Dump, Or Trump Turmoil?

Gluskin Sheff’s David Rosenberg summed it all up nicely“Hmmm. Let’s see. Tariffs. Sharp bond selloff. Weak dollar policy. Massive twin deficits. New Fed Chairman. Cyclical inflationary pressures. Overvalued stock markets. Heightened volatility. Sounds eerily familiar (from someone who started his career on October 19th, 1987!).”

h/t Doug Kass

Only The Nasdaq remains green for 2018…

A very chaotic day across asset classes today amid headlines from Powell, Dudley, and Trump (note the post-Trade-War move sent USD, Bond yields, and stocks all lower together – a different regime from earlier in the day)…

 

While the blame for today’s tumble has been laid at Trump’s feet (for his trade war talk), we do note that both The Fed’s Powell (hawkish with comments about getting behind the curve on inflation) and Dudley (uber hawkish noting that 4 rate hikes is still gradual) went full hawk intraday and didn’t exactly help things…

 

Dow’s bounce stalled perfectly at 75%, then snapped back below Fib 68.2 and 50 and found support today at Fib 38.2…

 

Notably The S&P is down 1% for 3 straight days – the first time since the global growth scare in January 2016.

The week got ugly once Powell started…

 

VIX spiked to over 25 but was hit hard there…again

 

But the VIX term structure remains inverted…

 

The S&P bounced at its 100DMA

 

Tech was hammered today with FANGs and AAPL making good use of buyback this afternoon…

 

Treasury yields tumbled today – with the entire curve now lower in yield on the week…

 

30Y Yields dropped to 3-week lows…

Breakevens were hammered lower again… smelling a lot like the VIXgeddon week’s moves…

 

The Dollar Index was slammed lower – worst day in a week (first down day in a week)…seemingly unable to break that critical resistance above the Mnuchin Massacre…

 

As the dollar sank so commodities rebounded (PMs most and crude less so)…Silver surged back into the green on the week…

 

Cryptos were broadly higher today (as the dollar slumped)…

 

Is Bitcoin still leading The Dow?

 

Just as we started with him, it seems appropriate to give Rosie the last word… “I’ve always been a huge fan of Paul Tudor Jones. If he’s right and the 10-yr note yield jumps to 3.75% within a year, that would imply a -5% total return. But the implications for the ERP, all else equal, would mean a near-15% slide in the SPX. Oops — he left that part out!

“The laugh of the day really has to come from the front page WSJ article titled “Investors’ Overriding Fear: Missing Out on Stock Rally”. What perfect timing, just as the SPX moves into negative terrain year-to-date.

#BringBackOurYellen