Credit Squeeze "Vibes" Leave Bonds & Banks Lower; Bitcoin Battered By Binance Blockages
The day started off optimistically with regional bank stocks rising for literally no good reason. Then wholesale sales/inventory data poured cold water on any hopes of a soft landing as the ratio hit its highest since the Great Financial Crisis (ex COVID lockdowns)...
Source: Bloomberg
So much for the consumer.
Then Chicago Fed President Austan Goolsbee cited his 'vibes':
“I am certainly getting vibes - as you are - in the market and in the business contacts that the credit crunch, or at least a credit squeeze, is beginning,”
“We know that credit conditions, like the ones we’re seeing now, in the past have been correlated with recessions, credit crunches — kind of done the tightening work of monetary policy.”
Of course the machines lifted stocks with the S&P back to green just in time for SLOOS to hit and crash everything as credit trends collapsed. But that was quickly BTFD'd as tighter credit means less need for Fed which means 'buy all the things' even if all the things are going to get battered by the recession that SLOOS is signaling.
By the close, only Nasdaq had held its gains with the S&P unch, The Dow down and Small Caps the worst performer...
The early gains seen in Regional Banks - proclaimed by many talking heads this morning as a sign of the end of the crisis - turned red very quick and ended red on the day...
PACW was up over 30% in the pre-market, but gave it all back as investors realized that issuing a statement suspending the dividend at 10pm on a Friday night is not a buying opportunity!!
Oh, and if you hear more about short-selling bans on banks, here is what The Fed (yes The Fed) said about its effectiveness in 2008:
The 2008 ban on short sales failed to slow the decline in the price of financial stocks;
...in fact, prices fell markedly over the two weeks in which the ban was in effect and stabilized once it was lifted
"Most Shorted" stocks gapped down at the cash open but were squeezed back to unchanged ahead of the SLOOS data... dumped.. and then were squeezed again...
Source: Bloomberg
The long-bond saw a modest bid in Asia but once Europe got going Treasury selling surged. The US open saw bonds bid but yields started rising again around 1300ET and spiked more after SLOOS...
Source: Bloomberg
2Y yields pushed back above 4.00% but stalled there...
Source: Bloomberg
This is weird too... with The Fed signaling its done, specs pushed their record short Treasury bond futures positions even more shorter-erer....
Source: Bloomberg
Bloomberg notes that the persistence of leveraged fund bearish bets suggests the possibility that at least some of the positions are a result of the revival of the so-called basis trades.
That’s when investors buy cash Treasuries and short the underlying futures in an attempt to profit from any difference in pricing.
The market is adjusting (hawkishly) to The Fed's 'higher for longer' jawboning...
Source: Bloomberg
The dollar ended modestly higher on the day after being sold in Asia and bid in Europe...
Source: Bloomberg
Bitcoin tumbled back below $27,500 - back to the fake Mt.GIX dump spike lows - after reports that Binance halted BTC withdrawals as the network got congested thanks to Ordinals volumes...
Source: Bloomberg
Oil prices were higher once again, extending gains off last week's flash crash lows with WTI back above $73...
Gold closed higher on the day with Spot back above $2020 (after bouncing off $2000 on Friday)...
Source: Bloomberg
Finally, Apple hit a new record high relative to the S&P equal weight technology ETF today...
Source: Bloomberg
'Safe Haven'? Probably nothing to worry about right?
