‘Squeezey’ Stock Market Extends Gains; Bonds & Bullion Bid

More of the same today after last week’s tepid payrolls and dovish Powell with gold, stocks, and bonds bid as rate-cut hopes inched higher.

The market is now pricing in two rate-cuts in 2024 and three more cuts in 2025…

Source: Bloomberg

For now the market appears to prefer the ‘bad news’ from declining growth expectations to the ‘bad news’ from soaring inflation prints…

Source: Bloomberg

But, hey, for now, as Goldman’s trading desk noted, the market feels “squeezey” and 12% gains for the basket of ‘most shorted’ stocks in the last three days would support that thesis (and overall activity was lower than average)…

Source: Bloomberg

That helps explain why Small Caps (dominated by the heavily shorted names) outperformed but Mag7 stocks also continued higher today with all the majors green on the day (Dow lagged)…

All the majors rallied back above their 50DMAs (but The Dow fell back to test its key technical level)…

A mixed picture in bonds today with the short-end underperforming (2Y +1.5bps, 30Y -2bps), but the whole complex sold off from its US open…

Source: Bloomberg

The dollar ended basically unchanged on the day, recovering small losses from overnight…

Source: Bloomberg

An early surge in bitcoin – up to $65,500 – was quickly sold following headlines that Robinhood had received a Wells Notice…

Source: Bloomberg

As a reminder, we saw huge net inflows into ETFs on Friday, so it will be fascinating to see what happened today…

Source: Bloomberg

Oil prices roller-coastered amid confusing headlines in Israel-Hamas peace deal proposals but ended the day higher with WTI finding support at $78…

Source: Bloomberg

Gold prices completed ‘ye olde ‘W’ formation’ extending gains from Friday’s bounce…

Source: Bloomberg

Finally, Goldman’s Vol Panic Index has tumbled back to ‘normal…

…just as the buyback-blackout window lifts…

…and with CTAs back in ‘buy mode’ and sentiment back off its extremes, short-term tacticals (until a hot CPI print) remain positive.

But bear in mind….

…there’s a reason why Warren Buffett has a record cashpile here.