With US Macro slumping to 3-month lows, is it any surprise that markets everywhere traded with a decidedly Taper-off confidence this week. USD was sold (-0.6% on the week) though commodity currencies (CAD/AUD) were sold also. Stock 'traders' bought every dip, lifting the Russell 2000 for the 8th straight week (first time since 2003). Gold completed its best 2-weeks (+6.4%) in 23 months. Treasuries have been very quiet since Tuesday, ending the week 5-8bps lower in yield. Growth hope faded as Copper (-1%) and Oil (-3%) fell on the week and earnings overall tumbled. Of course, it wouldn't be Friday if we didn't melt-up into the close (helped by a VIX slammer) and sure enough the S&P tagged its all-time highs as panic buying ensued with just minutes left in the week. Headlines will crow of new all-time-highs for the S&P (but credit remains a non-believer, not buying the rip).
US Macro has collapsed at its fastest pace in 8 months over the last 3 weeks... (notice the continual lower highs of US Macro since the recovery...)
and as we have now been indoctrinated into the "bad news is good news" mantra, that means buy stocks... (with Trannies leading the way off the lows...)
Discretionary, Industrials, and Homebuilders lead the pack off the lows across sectors...
And on the basis that the Fed wil never step away, Gold has seen its best 2 weeks in 23 months...
and gold and silver recoupled perfectly in the week as Copper and Oil (growth?) slide...
Treasuries have been very dull as stocks soared the last 3 days...
and despite notable dispersion (CAD/AUD weakness - global growth?) the USD has sunk on the back of more EUR buying...
Of course EURJPY was in charge again...
and of course the ubiquitous VIX-slam, ES melt-up into the Friday close...
and credit markets remain the great non-believers...
and this was NOT a short squeeze - as "most shorted" names sold off very rewardingly for the shorts... (doubling the markt's move to the downside)...
This is the first time in.. well as long as we can remember... that the market rallied and "most shorted" names did not get squeezed... smalls awfully like a euphoria stage to us...
Charts: Bloomberg
Bonus Chart: (via Phil Capone from BNP): On a weekly basis going back to 2010 the SPX and the Bloomberg Weekly Economic Index have been 86% correlated... until now...
