Update: Trade deal 'incomplete'
TLDR: US-China reach deal to spark massive S&P short squeeze based on rumors and hearsay and in exchange Trump won't slam upcoming Chinese incursion in HK
— zerohedge (@zerohedge) October 11, 2019
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So... China trade deal done (ok, not really, but don't tell Trump or the market), Fed is printing again (but don't call it QE), an oil tanker is blown up in the MidEast and oil barely budges (nothing to worry about there either), Brexit Deal is increasingly likely (so leaving EU is a good thing now?)! Everything is awesome!
What Wall Of Worry? VIX tumbled to a 15 handle (but note the steepness of the vol term structure through the US primaries and blip around the election)...
Source: Bloomberg
But, will The Fed still cut rates?
*ROSENGREN: CUTTING NOW ENCOURAGES RISK-TAKING AT WRONG TIME (wait what?!)
Source: Bloomberg
And if everything is so f**king awesome, why is The Fed opening its massive money spigot once again?
*ROSENGREN SAYS RESUMPTION OF FED BALANCE SHEET EXPANSION NOT QE (oh ok)
Source: Bloomberg
Ignore this...
Source: Bloomberg
Because this...
Source: Bloomberg
China stocks strengthened notably on the week as investors returned from Golden Week...
Source: Bloomberg
European stocks also soared (with UK's FTSE 250 exploding 4.2% higher today, biggest jump since May 2010)
Source: Bloomberg
US equities soared again today on the trade deal hype, extending yesterday's gains...until the actual 'news' broke of the not-complete, could-still-fall-apart partial trade deal...
Also erasing the October losses (nasdaq the big gainer) until the news hit and stocks faded...
Futures show the chaos this week best...
with today's mini-flash-crashes and spikes...
US equity gains were dominated by a massive two-day short-squeeze...
Source: Bloomberg
Quants suffered as momo was battered...
Source: Bloomberg
AAPL surged to a new record intraday high today but remains, very marginally, smaller in market cap than Microsoft (based on the latest available share count of course)...
Source: Bloomberg
Treasury Bonds were clubbed like baby seals this week with yields surging 20-23bps...
Source: Bloomberg
30Y Yields dropped very briefly below 2.00% on Sunday night/Monday morning, then exploded higher from mid-week (biggest 3-day jump since Trump's election)...
Source: Bloomberg
The yield curve exploded steeper today with 3m10Y un-inverting (up a wopping 25bps this week, biggest jump sine Trump's election)...
Source: Bloomberg
The dollar dumped as trade hopes soared (and Brexit hopes)...
Source: Bloomberg
Cable soared a stunning 5 handles in the last two days, the biggest 2-day jump since Nov 2008 (even though -*TUSK SEES 'NO REASON' FOR OPTIMISM AFTER '3 YRS OF PROBLEMS')...
Source: Bloomberg
Offshore yuan surged on the trade hype - a strong few days after coming back from Golden Week...
Source: Bloomberg
The Turkish Lira was monkeyhammered this week as Erdogan moved back into Syria...
Source: Bloomberg
Cryptos weakened for the second day in a row but Bitcoin and Ethereum managed to hold on to very modest gains...
Source: Bloomberg
Oil ended the week the big winner as trade talk optimism juiced demand hype and gold was dropped like a used needle on Market Street as who needs safety when everything is awesome...
Source: Bloomberg
WTI rallied up near $55 handle - highest since September...
Gold futures fell back below $1500...
Finally, we wonder when this gets priced in...
It could never happen again, right?
Source: Bloomberg
And in summary:
We have no agreement.
— Sven Henrich (@NorthmanTrader) October 11, 2019
We have nothing in writing.
We have agreed to discuss a process on how to consult during which we will discuss what to agree upon.
Now get ready for phase 2 and meeting #14.
Trade wars are easy, didn't I tell you?